Home Real Estate: Sellers market likely to continue through 2021
By L.C. Leach III
Since becoming a Realtor in 1973, Nick Sabatine has seen numerous trends in residential real estate – from bustling to stagnant, from urban to suburban and vice versa, and, most often, the back-and-forth shift in leverage between buyers and sellers.
But not until last year did he get to see how the market would be affected by the forces of a pandemic, known as Covid-19.
And whether the pandemic lasts another year, or is soon neutralized through vaccines and increased immunity, Sabatine and other real estate professionals foresee Greenville and much of South Carolina remaining a strong home sellers’ market for the rest of 2021, and perhaps longer.
“We have a good, solid real estate market with steady growth,” said Sabatine, CEO of the Greater Greenville Association of Realtors since 2000. “And I don’t think the pandemic is the primary reason for it.”
He cited that while the pandemic has had its own peculiar influence over residential real estate, he pointed to several more important factors that create and sustain every sellers’ market, which include:
Low Inventory of Available Homes. Sellers’ markets happen when the number of buyers significantly exceeds the number of available homes. And in the Greenville area market, which includes Laurens County, parts of Pickens County, and Greer, the number of available homes has dropped considerably in the last five years.
For example, in 2017, the Greenville area market had 5,200-5,500 homes listed for sale each month.
“Which at that time was low,” Sabatine said. “Now, those figures are down to 3,200-3,500 – a drop of 36-38 percent from 2017 – and 25 percent lower than what we had in 2020.”
As for sales numbers, the Greater Greenville Association of Realtors reports that from July 2020 through January 2021, residential homes and property in Greenville surpassed the 9,600 sales mark – compared to 8,152 units sold during the same time period in 2019-20.
And, the average time of selling a home is approaching record lows.
From 2010-2019, the average time that a home stayed on the Greenville market was 120-150 days.
“Now we’re down to 60 days – and it’s rarely been lower than that,” Sabatine said.
Greenville Realtor Susan McMillen added that in just the last half year alone, with the pandemic escalating month after month, the average time on the market for homes in her listings has been as low as 35 days, “with many homes often selling in less than a day.”
“I had a recent sale in Ridgestone Cottages where the buyer narrowly escaped a multiple-offer scenario,” McMillen said. “And when multiple offer situations happen, I see buyers heartbroken over the dream home they didn’t get after offering over the list price.”
Low Interest Rates
Financing that carries low interest rates also suggests that people will have lower monthly payments, and, hopefully, a shorter time to pay off their mortgages.
But whether interest rates are considered low or high depends on the time frame and the circumstances.
In 1968, for instance, when Greenville County’s East Side was beginning to develop, a new $22,000 home carried an interest rate of around 6-7 percent.
Now, in 2021, as home prices have increased exponentially in the last 53 years, Sabatine said that interest rate from 1968 would likely frighten away most of today’s buyers.
Interest rates recently have been under 3 percent. But in the 1980s they hit 20 percent and many people couldn’t afford the mortgage payments, he said.
McMillen also pointed out that while asking prices can influence the outcome of a home sale, interest rates carry much of the weight because “the lower the interest rate, the more house you can buy.”
“The average sales price for a single-family home in Greenville County over the past year was $311,185,” she said. “And at any time, the current low rates could drop even further, which would simply add more power to area sellers, especially if the desired home in question is a resale.”
Migration and Remote Work. Another current advantage to Greenville area sellers is the continuing migration of U.S. citizens to South Carolina.
The Darla Moore School of Business in Columbia, S.C., reported that from 2010-19, about 414,000 people moved to South Carolina from other states.
Douglas Woodward, director of research and professor of economics with Darla Moore, said the urban exodus was the beginning of a budding trend toward people wanting to live in places with lower costs of living while being able to work remotely from almost anywhere.
“People are looking for space to be able to work at home and (keep) a quality of life,” Woodward said.
It is the main reason why Tom and Kris Vining relocated from New Jersey to Greenville in mid-2020, in the middle of the current sellers’ market.
“We made the decision to move for many reasons, including lower taxes and a better quality of life,” Tom Vining said. “With the pandemic, our jobs went remote so we felt the timing was right to make a move.”
The trend of moving to South Carolina, as exemplified by the Vinings, is expected to further strengthen home resales in 2021.
In a recent report entitled “Five Questions for Housing in 2021,” Charles Dougherty, an economist with Wells Fargo in Charlotte, N.C., predicted sales of existing single-family homes would rise 4 percent, while sales of “existing condominiums and co-ops should rise 2.6 percent.
“Sales would be even stronger if there were more homes available for sale,” Dougherty said. “Growth is…driven by both the need to find more affordable communities to live in and the greater ability to work remotely.”
Dougherty also predicted new home sales to rise 16 percent to 940,000 units, “which would be the strongest year since 2006.”
But even if that prediction happens, McMillen thinks existing home sellers are likely to keep a strong negotiating position.
“Fortunately for recent resales, new construction slowed down somewhat through the pandemic,” she said. “And, construction costs are also going crazy – which is another positive note for our sellers.”
A lot of the competition for resales has come from rentals, especially in Greenville’s downtown.
In 2017, The Beach Company in Charleston, erected two downtown developments called South Ridge and Main + Stone. Monthly rents for all 643 units ranged from $1,250-$2,415 – and leases were gobbled up as if these prices had been cut in half.
Now, The Beach Company is looking to expand on this success with its recent completion of Canvas Lofts and Tower at Heritage Green. The new development, anchored by 31 new townhome units, will also offer 21,000 square feet of retail/commercial space; a renovated 130,000-square-foot office building; and 48 new multifamily rental units.
“Demand for multifamily rental units in the Greenville market has remained strong,” said Dan Doyle, The Beach Company’s chief operating officer. “Those choosing to rent in the near term will likely be able to take advantage of specials, discounts or other incentives that may be offered by a number of properties looking to lease remaining units.”
So where in this sellers’ market has the pandemic exerted a peculiar influence?
In the realm of what has come to be called social distancing.
“Some sellers are hesitant to have people come through their homes with the pandemic going on, which is part of the reason for the low inventory of available homes,” Sabatine said.
But with the help of area Realtors, sellers have another way to get people into their home through what Susan McMillen calls “long-distance buying.”
“Many of my long-distance buyers see a home by Facetiming – that is, conversing with a Realtor and seeing their home by way of a remote walk-through over the internet,” McMillen said. “This way, buyers often don’t actually see their new home in person until a day or two before closing.”
Even after Covid-19 is conquered, she said long-distance buying is certain to remain.
“I had already been involved in some long distance buying before the pandemic,” McMillen said. “However, Covid really emphasized, and increased, this virtual buying frenzy when buyers had difficulties traveling.”
Really, Really Smaller Homes
There is also a different kind of buyer who doesn’t want a starter home, a median home, a big home, a rental, a condo, or any other kind of customary dwelling.
They want a tiny home – currently far fewer in number than traditional homes.
And now, there is a tiny-home community just north of Travelers Rest.
Begun in 2018, the 74 homes on the 24-acre site are only 399 square feet, yet complete with kitchen, bedroom and bath, and front living room – with room for full-size refrigerators, washers and dryers, dishwashers, and beds.
The price tag is $80,000-$120,000 per home.
But developer Justin Draplin is so confident of their future that he has launched a new manufacturing company to soon begin mass-producing these tiny units – and the new models will be net-positive, meaning that these homes will produce more energy from renewable energy sources than they import from external sources.
“This is a revolutionary product,” said Draplin, who held a groundbreaking in February for the first of the new type of homes. “And I think it’s going to have the lead in green technology, maybe even setting a new standard across the board for home construction.”
Among other things, the net positive homes will have incinerating toilets, anti-mold and optimal insulation, fully integrated solar rooftop shingle systems, and both LED lighting and green technology to save inhabitants on monthly power bills.
Draplin added that with a variety of finishes and floor plans, the net tiny homes will generate “far more energy than they consume, providing consumers the option to live smaller, smarter and more sustainably.”
“To me, this tiny-home concept represents another way to live,” he said, “with like-minded people wanting to live green and within their means.”
But whether their homes are tiny or large or somewhere in between, home sellers likely will hold nearly all of the cards for a long while yet, local experts say.
They say that if you’re looking to sell your home, this could be the best year to do so – pandemic or not.
“Unlike the recession of 2008, not everyone in the current market is getting qualified for homes,” said Nick Littlefield, owner of Stone’s Edge Team, with EXP Realty. “So this should be a fantastic year to cash out, before interest rates rise and inventory increases.”