Monday, January 24, 2011

Lot sales may spur more home building in Myrtle Beach area-Prices reel in buyers for new construction

Lots are a great way to invest in the future, and right now they are super cheap, more under valued than single family detached and condos! And Myrtle Beach has more than its fair share of build-able lots.

Here is the article our local paper, the Sun News.

By Adva Saldinger

Toward the end of 2010, residential lot sales along the Grand Strand quietly started to pick up, driven by low prices, a shift that may slowly help improve what has been a struggling home building industry, according to area Realtors and builders. Residential lot sales increased almost 43 percent in 2010, up from 406 sales in 2009 to 580 last year, according to Site Tech Systems, a local company that tracks the real estate market.

Prices on lots have dropped dramatically, and that has allowed some buyers the ability to build a new home they may not have been able to afford several years ago. The increase in lot sales may boost the home building industry as construction gets under way on neighborhoods where there has been little activity on vacant land. Those partially empty communities may start improving and the local economy will benefit from the added construction activity, according to area Realtors and builders.

This large home is under construction by Dash Home
Building in The Bluffs at Carolina Forest
Fred Coyne, who just completed his term as the president of the Horry Georgetown Home Builders Association and is the owner of Westbridge Homes, said that the real estate market and the home building industry have changed and that 2011 should bring improvements.

"I think everything has been reset," he said. "We're now in the new normal. I think things have leveled off, we've seen the absolute worst."

Todd Woodard, a principal at Site Tech, said the activity in the market is good news, but added that there is still a lot of inventory on the market.

The absorption rate for residential lots in Horry and Georgetown counties is 59.01, which means there is a roughly 59-month or nearly five-year supply of lots on the market.

Greg Harrelson, the owner of Century 21 The Harrelson Group, said lot sales picked up in 2010 for his company with a majority of the buyers he sold to planning to build on the property.
"Someone can buy out there and build and their price per square foot is equal to or less than the resales," he said.
The pick-up in lot sales follows the downturn that brought the sales almost to a standstill, Harrelson said.

"A year ago this wasn't even a conversation," he said. "The prices of these lots have come down so much that it starts to make sense."
Many of the lot owners who are selling, or losing the properties in foreclosure, bought the land as an investment or planned to move from up North but plans changed, Harrelson said. Some of those owners have had to take a "massive" loss, and the buyers are sometimes getting lots for the cost of putting in the sewer, water and electric lines, he said.

The median sales price for a residential lot on the Grand Strand in 2010 was $44,900, which was down from $57,000 in 2009, and down about 55 percent from the peak in 2006, according to Site Tech Systems.
Penny Boling, the broker-in-charge of Century 21 Boling & Associates, said the lot sales, some of which are in what were nearly dormant subdivisions, are good for the real estate market as a whole.

"You've got to have sticks going up to create activity, and it's working," she said. "I think you're going to see more new construction than the past two years, but not massive amounts."

Builders along the Grand Strand have mostly struggled as business dropped with the collapse of the real estate market. Despite what some describe as an improvement in consumer attitudes, the number of building permits continued to drop last year.
The number of building permits issued by Horry County was down slightly, dropping from 1,471 in 2009 to 1,440 in 2010, according to Market Opportunity Research Enterprises, a company that tracks the real estate market. In Georgetown County, the number of permits rose from 119 in 2009 to 132 last year. Brunswick County, N.C., permits dropped to 779 in 2010 from 852 in 2009, according to MORE.

Builders are having to find ways to get business, and the dropping land prices, which allow them to offer the finished home at a lower price, are helping. Coyne said that lot sales are a good indication but it's unlikely that every one of those sales will translate into an immediate build. Some buyers are seeing good values on lot prices and are buying with the intention of building a year or two from now, he said. The low prices on lots have helped some potential customers, though, Coyne said.

"For a long time over the last several years a lot of [lot prices] got to a point that they were squeezing people out of the marketplace, and what's kind of happened is that prices have been reset and readjusted," he said. "That has given some people an opportunity that may have been priced out." Coyne said he is optimistic about the year ahead, and the number of inquiries to his company is up about 15 percent so far in January over what it was last year.

He said there may be some more challenges ahead, including with financing, but that the industry can only improve.
Financing does still present a challenge to some buyers, but Coyne said banks' tightening of restrictions makes sense.
"Without a doubt it's been challenging," he said, adding "I feel like some of that has been overly restrictive, but it will find its level too."

Another improvement, said Roger Terreberry, the owner of Dash Home Building, is that cash purchasers have more confidence and are comfortable spending their money. Despite some financing challenges, more lenders are offering financing on new homes than were at this time last year, he said. Dash has 11 homes under way, and Terreberry said the company's philosophy is that prices have to meet the market, because that is what buyers want. He said he builds new custom homes that compete with or beat the prices of existing homes, even those in foreclosure.

"When the market turns you have to find product that will sell, that the market will bear," Terreberry said.
The company has been able to do that by keeping margins low and using a volume-based mentality, negotiating contracts with suppliers and subcontractors in advance in bulk, to be able to provide lower prices. "Lot prices have depressed and now somebody can buy those lots, have a warranty and can have exactly what they want," he said. That ability to customize a new home is a draw to many buyers, said Tom Maeser, a real estate analyst with the Coastal Carolinas Association of Realtors.

"Most people if they had the option of a new and a resale home and they were the same price, people would choose the new home," he said. Maeser said the builder building in the right price range is most likely going to do well, especially if that price is competitive with prices of an existing house in the same neighborhood. Typically new construction helps boost prices in a neighborhood or subdivision, and while in the short-term current construction may not do that, the activity should benefit the community, he said.

Terreberry said that in some communities homeowners' associations have started working with Realtors and builders to resolve potential issues and try to get lots sold and houses built. "The market is recovering. Building is growing here," he said. "Everybody's starting to think towards the future and doing what everybody has to do to get these products going."

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