Great article in the Savannah Morning News about the current real estate market in Savannah...and check out the spotlight on the great things happening at Keller Williams!
Posted: December 29, 2010 - 11:04pm Updated: December 30, 2010 - 8:06am
By Adam Van Brimmer
Charles Dickens didn't have the Savannah real estate market in mind when he penned the line, "It was the best of times, it was the worst of times."
The notion certainly applies, however.
The best of times: Available housing and commercial buildings are as affordable as they've ever been. Even with interest rates rallying off historic lows in the last month, it's a buyer's market. And there is plenty of property to choose from. The supply and diversity, particularly on the commercial side, should be an advantage for Savannah.
With Savannah's economic engines - the port, manufacturing facilities, distribution centers - slowly spooling up in the second half of 2010 and tourism booming, the outlook is for a busy 2011.
The worst of times: The real estate bust has handcuffed those who work in the industry and brought community banks to the brink. The area has lost 3,000 construction jobs since 2007, and the local home builder ranks have been halved over the last two years.
A handful of real estate brokerages now handle the majority of transactions. For example, residential brokerage Keller Williams Coastal Area Partners had several record months in 2010 despite the weak housing market.
As for the banks, the drop in real estate values attracted regulator attention. Two Savannah-based community banks were closed in 2010 as was another bank with a Savannah branch. Two more received a public scolding from regulators. Several others are saddled with loads of non-performing loans.
Yet the underlying reasons for the housing slump - limited job creation, stagnant incomes and constrained in-migration - will dissipate as the economy recovers.
Real estate will follow, according to economist Michael Toma, the director of Armstrong Atlantic State University's Center for Regional Analysis.
"We will continue to grow, because in the long run this remains an attractive place to live, work and retire," Toma said. "And as we grow going forward, we'll do so in a much more sustainable and healthier way economically."
Good supply
Savannah has what home buyers and businesses are looking for - and at a good price.
The average sales price of a home is relatively unchanged compared to a year ago. But buyers are getting more for their money: The average list price is down 17 percent.
Sales are up in Chatham County's traditionally desirable areas such as the Historic District, Wilmington Island, Skidaway Island and Isle of Hope. The areas that benefited most from 2009's first-time homebuyer tax credit programs were off those marks in 2010.
Yet inventory remains high across the Savannah metro area, which includes Bryan and Effingham counties, and the result is low prices and a wide range of amenities.
"We do have a little something for everyone, from starter homes to waterfront," said Monica Spillane, president of the Savannah Board of Realtors.
The commercial real estate sector is "starting to percolate," as one broker in town put it. The oversupply of space that resulted from the Port of Savannah's growth prior to the recession will be attractive to companies looking to expand and relocate.
Chatham County alone has more than 40 million square feet of ready-for-lease warehouse and manufacturing space.
"Savannah has all types of facilities, in different configurations and different increments of space," said David Sink, a commercial real estate agent with Collier Neely Dales. "Somebody coming into this market can get what they want. That's not the case anywhere else in the region."
Undeveloped land, complete with City of Savannah services and close to the interstates and the port, is also available. High-profile locations in Chatham County include the State of Georgia megasite, Crossroads Business Park, the CenterPoint Intermodal Center, Dean Forest Business Park and the Newton Tract.
Bryan County features Interstate Centre and Belfast Commerce Centre, and Effingham County boasts the Effingham County Industrial Park and the Research Forest Tracts.
Stability needed
Just as Savannah's real estate collapse trailed most of the rest of the country, the fear is a recovery may come late, too.
Residential sales and sales prices didn't start to trend down here until September 2007 and didn't enter freefall mode until a year later. Foreclosures began to mount about the same time. Values have dropped about 30 to 40 percent - depending on who you talk to - since the bust and continue to creep down.
Some bankers doubt prices have hit bottom while others believe values are "bouncing along" the bottom.
Stemming foreclosures and selling off repossessed properties will lend stability.
Unfortunately, Savannah's foreclosure rate has been climbing since April, according to foreclosure research firm CoreLogic, and the number of bank-owned properties is double what it was 18 months ago. Savannah's community banks alone count repossessed properties as 2.5 percent of their assets on average.
Throw in the market's big banks - Wells Fargo, Bank of America, SunTrust - and it's easy to see why Realtor signs with "bank-owned" scrawled on them dot seemingly every street in town.
"We're going to have to get through the majority of those issues to see across-the-board stability," Spillane said. "There are just too many things we have no control over. When a bank owns 10 foreclosures in one neighborhood, they obviously can't hold on to those, and that impacts prices. Fortunately, some neighborhoods are through it and have stabilized. Are prices moving up or are they going to move up? I'll let the statistics speak to that."
On the commercial side, all rates and prices are negotiable. Vacancy rates have risen from 7.5 percent at the end of 2007 to close to 20 percent currently. Lease rates are averaging $3.73 a square foot for warehouse space and $8.14 per square foot for office space, according to a report by Gilbert & Lattimore Commercial Real Estate.
Commercial values won't stabilize until inventory shrinks and then will likely rise rapidly as no speculative construction is under way or in the planning stages.
"Once the current oversupply of inventory is absorbed, the real estate market should turn around very quickly," said Harvey Gilbert of Gilbert and Lattimore. "It's really just a matter of when."
View original article: http://savannahnow.com/exchange/2010-12-29/real-estate-market-primed-turnaround
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