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In your opinion, how do you think the housing market in Greenville will fare in the current economic conditions? You may be able to throw up all this data about the market in the area, but with the current credit crunch and with banks limiting the loans they are initiating (and, no offense, your profession of a realtor), how do you think that Greenville will be immune from what the rest of the country is experiencing? One could theorize that Greenville isn't feeling the effects of the market decline as much as other areas due to fact that property values did not inflate as much as other areas but when you have banks, such as Wachovia (which has a large presence here) failing due to their leveraging of mortgage back securities as well as ARMs, it seems that no area is totally immune. I guess the point of this long winded statement is:
A) if the "crunch" hasn't hit Greenville, when will it?
B) if/when it does hit, how will the economy bounce back?
C) when will housing prices here reflect what is truly going on with the rest of the county?
its obvious that the poster is using relevant data directly related to his occupation to show that Greenville has not been largely affected by the economic decline(yet). He did not say that Greenville was immune to the national economy's problems, only that figures currently show we will continue to appreciate. I don't live in some lala land where nothing can touch me and we are all safe and cozy, and I don't think anyone else does either. I don't think anyone knows the answers to your questions, so to me it seems quite pointless to ask them.
its obvious that the poster is using relevant data directly related to his occupation to show that Greenville has not been largely affected by the economic decline(yet). He did not say that Greenville was immune to the national economy's problems, only that figures currently show we will continue to appreciate. I don't live in some lala land where nothing can touch me and we are all safe and cozy, and I don't think anyone else does either. I don't think anyone knows the answers to your questions, so to me it seems quite pointless to ask them.
I asked the questions because the OP has knowledge in an area that I do not and I am curious what his, and other's who may be working in real estate or banking, opinion may be.
Just because you or I don't know the answer to a question doesn't mean it's not worth asking.
In your opinion, how do you think the housing market in Greenville will fare in the current economic conditions? You may be able to throw up all this data about the market in the area, but with the current credit crunch and with banks limiting the loans they are initiating (and, no offense, your profession of a realtor), how do you think that Greenville will be immune from what the rest of the country is experiencing? One could theorize that Greenville isn't feeling the effects of the market decline as much as other areas due to fact that property values did not inflate as much as other areas but when you have banks, such as Wachovia (which has a large presence here) failing due to their leveraging of mortgage back securities as well as ARMs, it seems that no area is totally immune. I guess the point of this long winded statement is:
A) if the "crunch" hasn't hit Greenville, when will it?
B) if/when it does hit, how will the economy bounce back?
C) when will housing prices here reflect what is truly going on with the rest of the county?
Interesting post, and I'd be more than happy to give you my insight. I can also tell that you watch a lot of national news.
Anyway, regardless of what you hear in the media, there a far fewer lending limitations in the Greenville area compared to other areas around the country. Obviously subprime is gone, so those with 500 credit scores may have difficulty finding 100% financing nowadays, but those with with decent credit can still actually find 97-100% financing through Rural Development, FHA, and other programs available. Many of the lenders I speak with on a weekly basis say it is "lending as usual" (direct quote) in the Greenville market. I believe that this is due to the fact that Greenville is considered a low risk market. In fact, recently some pre-approval letters from banks include the verbiage "this pre-approval is subject to your selection of the property, and will be made invalid if your property is found to be in a declining market". The bank verifies this by looking at the report in the subject of the original post, and also based on the appraisal where the appraiser states the "one-unit housing trends" for the surrounding area (i.e. increasing, stable, or declining).
Let's briefly talk about conforming loan limits, which I don't think I need to explain based on the recent press. FNMA and Freddie Mac currently back approximately 50% of the nation's mortgages, but in Greenville, approximately 94.7% of all home sales since January 2007 have fallen within those conforming loan limits. Also, Greenville has a rate of foreclosure 65% lower than the current national average.
Don't get me wrong, I never said that Greenville was immune. Greenville is experiencing its own version of decline, but not in regards to price or absorption rate. You are correct that Greenville property values did not inflate as much as other areas, and that has helped our market remain stable. The number of properties sold in the Greater Greenville area has declined by approximately 18% from its 2006/07 peak. I believe that this is due to the following:
People in declining markets not being able to sell their own home.
Those with less than good credit, no longer being able to take advantage of the subprime lending programs.
Nervous buyers thinking that there are lending limitations or thinking that property values are declining in our market, because of what they heard on the news.
There is no surprise that Greenville is a growth market, which has also helped our area minimize the impact of the financial crisis. See the office vacancy report released by Grubb & Ellis today, which showed Greenville as being a city that actually had a decrease in office vacancy compared to this time last year. Greenville has also consistently ranked high in the top 40 real estate markets in Expansion Management magazine (a magazine dedicated to site location executives).
I mentioned absorption rate (aka inventory) in the last paragraph. I don't know that I've mentioned it before on city-data, but it provides some eye-opening data about the status of our real estate market. As you may know, the measure of absorption rate is calculated by taking the number of homes currently available, and dividing it by the number of homes sold in a given time period. While the national average has increased dramatically to an 11.5 month supply of homes, the Greater Greenville area maintains an absorption rate of 6.49 months as of 9/30/08. The scale that most use to interpret this data is:
1-4 months = Sellers' Market
5-6 months = Neutral Market
7+ months = Buyers' Market
As for your last point, I'm not really sure how to answer. "When will housing prices here reflect what is truly going on with the rest of the country?" I don't really know if you mean, when will prices decline or when will prices see the dramatic increase that was seen in the rest of the country? Regarding the latter option, I hope never. I would prefer to see our values increase at a stable rate, rather than anything that was seen in California or Florida. As for the first option, read the original post. I can't predict the future, but trying to is the sole purpose of a company like The PMI Group Inc.
Very interesting information, thank you for the response. As an "arm-chair economist", it's nice to see substance behind an answer.
For the statistics that you mentioned, you site them as being for "Greenville". I have seen on other posts that the definition of "Greenville" and "Greenville Metro" can vary widely. How do the various sources you cited define "Greenville"?
I remember back in 2004-5 when we were looking to move from one rental to another here in South Florida and EVERYONE was saying we should buy. I knew the market was WAY overinflated and there was no way I was going to buy. My brother got out of the Marines in 2005 and has been wanting to buy a home and my mother and I kept telling him not to. Thank God he listened! Now he's been a firefighter for almost two years, has a very good salary and is in prime position to get into the market. Houses he was looking at last year for $250k are as much as $100k less!
Anyway, my hubby and I will be up there searching for a home to purchase early next year!
Interesting post, and I'd be more than happy to give you my insight. I can also tell that you watch a lot of national news.
Anyway, regardless of what you hear in the media, there a far fewer lending limitations in the Greenville area compared to other areas around the country. Obviously subprime is gone, so those with 500 credit scores may have difficulty finding 100% financing nowadays, but those with with decent credit can still actually find 97-100% financing through Rural Development, FHA, and other programs available. Many of the lenders I speak with on a weekly basis say it is "lending as usual" (direct quote) in the Greenville market. I believe that this is due to the fact that Greenville is considered a low risk market. In fact, recently some pre-approval letters from banks include the verbiage "this pre-approval is subject to your selection of the property, and will be made invalid if your property is found to be in a declining market". The bank verifies this by looking at the report in the subject of the original post, and also based on the appraisal where the appraiser states the "one-unit housing trends" for the surrounding area (i.e. increasing, stable, or declining).
Let's briefly talk about conforming loan limits, which I don't think I need to explain based on the recent press. FNMA and Freddie Mac currently back approximately 50% of the nation's mortgages, but in Greenville, approximately 94.7% of all home sales since January 2007 have fallen within those conforming loan limits. Also, Greenville has a rate of foreclosure 65% lower than the current national average.
Don't get me wrong, I never said that Greenville was immune. Greenville is experiencing its own version of decline, but not in regards to price or absorption rate. You are correct that Greenville property values did not inflate as much as other areas, and that has helped our market remain stable. The number of properties sold in the Greater Greenville area has declined by approximately 18% from its 2006/07 peak. I believe that this is due to the following:
People in declining markets not being able to sell their own home.
Those with less than good credit, no longer being able to take advantage of the subprime lending programs.
Nervous buyers thinking that there are lending limitations or thinking that property values are declining in our market, because of what they heard on the news.
There is no surprise that Greenville is a growth market, which has also helped our area minimize the impact of the financial crisis. See the office vacancy report released by Grubb & Ellis today, which showed Greenville as being a city that actually had a decrease in office vacancy compared to this time last year. Greenville has also consistently ranked high in the top 40 real estate markets in Expansion Management magazine (a magazine dedicated to site location executives).
I mentioned absorption rate (aka inventory) in the last paragraph. I don't know that I've mentioned it before on city-data, but it provides some eye-opening data about the status of our real estate market. As you may know, the measure of absorption rate is calculated by taking the number of homes currently available, and dividing it by the number of homes sold in a given time period. While the national average has increased dramatically to an 11.5 month supply of homes, the Greater Greenville area maintains an absorption rate of 6.49 months as of 9/30/08. The scale that most use to interpret this data is:
1-4 months = Sellers' Market
5-6 months = Neutral Market
7+ months = Buyers' Market
As for your last point, I'm not really sure how to answer. "When will housing prices here reflect what is truly going on with the rest of the country?" I don't really know if you mean, when will prices decline or when will prices see the dramatic increase that was seen in the rest of the country? Regarding the latter option, I hope never. I would prefer to see our values increase at a stable rate, rather than anything that was seen in California or Florida. As for the first option, read the original post. I can't predict the future, but trying to is the sole purpose of a company like The PMI Group Inc.
- Cameron Keegan
Thank you for that most informative and perfect explanation in layman's terms. That took you some time and thought, you certainly are dialed into the market.
Very interesting information, thank you for the response. As an "arm-chair economist", it's nice to see substance behind an answer.
For the statistics that you mentioned, you site them as being for "Greenville". I have seen on other posts that the definition of "Greenville" and "Greenville Metro" can vary widely. How do the various sources you cited define "Greenville"?
Thanks for bringing that up. The honest answer is that it varies, depending on what I am quoting.
Certain indicies take information based on the Greenville Metropolitan Statistical Area (officially defined as Greenville/Spartanburg/Anderson), while other indicies break it down further by taking data from Greenville-Mauldin-Easley (OFHEO uses this).
Whenever I quote statistics from the MLS, those figures are taken directly from the Greater Greenville MLS, which predominantly focuses on Greenville County, Eastern Pickens County, Northern Laurens County, and Western Spartanburg County.
I always try to specifically state where my data is coming from, and what that data is based on. In regards to this specific thread, and the PMI Group risk index, they use the Greenville MSA, consisting of the Greenville, Spartanburg, and Anderson areas.
Rather than start another thread, I just thought I would post the info from the Winter 2009 index (released 1/13/09). The PMI Group Inc. once again rated the Greenville-Mauldin-Easley MSA as having "minimal risk for price decline over the next 2 years."
Source: Economic and Real Estate Trends (ERET) (http://www.pmi-us.com/products_services/eret.html - broken link)
I saw that latest survey also. However, I did note that the last sale (December 22, 2008) in our small subdivision (Laurel Oaks) went FAR lower than I would have expected. It (18 Overcup Ct) was sold by a relocation company for $10's of thousands lower than previous sales. This 3000+ sqft home sold for $60/sqft versus previous sales for about $85/sqft.
Why do you think that the relo company sold it so low?
I saw that latest survey also. However, I did note that the last sale (December 22, 2008) in our small subdivision (Laurel Oaks) went FAR lower than I would have expected. It (18 Overcup Ct) was sold by a relocation company for $10's of thousands lower than previous sales. This 3000+ sqft home sold for $60/sqft versus previous sales for about $85/sqft.
Why do you think that the relo company sold it so low?
Well, relocation in many cases is a different breed than your traditional sale.
It is also important to note that typically the larger homes in any given subdivision sell for a lower price per foot than the smaller. Just not usually by the margin of 18 Overcup.
It's honestly hard to say why they sold it for what they did. Fortunately it shouldn't effect the value of your home by too much. There are still more reasonable sales to use as comparables if you chose to sell your home.
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