As 'for sale' signs linger, some worry

Below is the first article about the Charleston Market Report to appear in Post and Courier. This article created a whirlwind of controversy and some people disputed my local real estate analysis and comments. Although the article misconstrued my statements somewhat I stand behind the fact that part of the reason behind the increased inventory in Mt. Pleasant is due to non-traditional mortgage financing.

Funny how my comments about certain exotic mortgages are becoming more exposed to the public. To this day I can not understand why so many banks and lenders called my former employer after this article was published and request they fire me. What is even more perplexing to me is why my former employer caved into to this pressure.
1. Everything in the article is true.
2. I thought the appraisal industry was supposed to be independent of the banking industry.
3. I am honest and did excellent analytical work for my clients. The banking/lending industry and my former employer just lost one of the good guys in the appraisal industry. Adios amigos!
4. I have more outside qualifications than almost any appraiser in the entire industry.
5. Find an appraiser who has a real estate, securities and insurance licenses.
6. Find an appraiser who is an expert in technical and trend analysis to measure the supply and demand of the market.
7. Find an appraiser who used his own money and time to create a website to help give the public a true picture of the local and national real estate market.
8. What are the banks/lenders so scared about? The fact is they are scared because they have underwritten many of these loans that will turn out to be crap on their books.
9.. Then they will turn around and sue the appraiser who wrote the report.



Copyright The Post and Courier Sep 14, 2006

Mount Pleasant -- Amy Campbell Kelly wishes she had listed her $315,000 home for sale in Snee Farm three months ago when the market was better.
"Everything was selling like crazy," Kelly said.

Now, things are different. "If I would have listed this in May, I have a feeling it would have sold in two weeks," she said. Instead, she's shown her home only twice in three weeks. It's a storyline that could be coming to a neighborhood near you. Mount Pleasant has more than double the number of homes for sale than last year, and town leaders are worried.

The Town Council is directing city staff to research the implications of a growing area trend. As of Sept. 6, Mount Pleasant had 1,399 homes on the market. On Sept. 5, 2005, the town had 645 homes for sale, according to Multiple Listing Service information provided by Councilman Joe Bustos.

"What the trend means is something that we don't understand completely," said Bustos.
The abundance of "Take Me" fliers isn't specific to Mount Pleasant. In April, May and June, Berkeley, Charleston and Dorchester counties had 3,903 homes for sale compared with 2,798 homes on the market for the same period last year, according to The Charleston Market Report, a new quarterly newsletter published online.

"I think it's a lending bubble. Lending is out of control. The way some people finance their homes is crazy," said Brad Rundbaken, a real estate appraiser, investor and consultant at Atlantic Appraisals in Mount Pleasant who recently launched the newsletter.

An adjustable rate mortgage with lower payments gets a buyer into a house he couldn't otherwise afford. But sooner or later, the interest rates climb and so do the payments. The results can squeeze some buyers out of their homes, he said.

Rundbaken said the apparent downturn in the area housing market was inevitable because real estate was sizzling hot here for so long.

"Everything runs in cycles. It can't go up forever. Now the market has gone to more normal conditions," he said.

Rundbaken said the implications of the housing sales downturn are particularly important for Mount Pleasant, where new jobs are less plentiful than in Dorchester and Berkeley counties. Newcomers get more house for the buck in North Charleston and Summerville, and they're closer to the new jobs, he said.

"There are not really any high-paying jobs coming into Mount Pleasant," he said.
Mount Pleasant's ability to borrow money for its projects by issuing bonds could be affected by a housing downturn, and there's the issue of lost property tax revenue if an owner walks away from a house he can no longer afford, Bustos said.

"I'm not an economist, but the questions occur to me as an observer," he said.
Bustos brought up the housing market issue recently before the Town Council Planning Committee. This week, at his urging, council agreed it's time to look further into what's going on with home sales.

"We know nationally that it's become a buyer's market," he said. At Town Council, Bustos shared figures from the Multiple Listing Service to show why he is concerned. Currently, a Mount Pleasant home is on the market an average of 75 days compared to 38 days a year ago. In a year, the average list price has climbed from $388,194 to $420,261, and the average sales price rose from $380,404 to $407,261.

Bustos noted that housing is a primary source of revenue for the town, but new jobs have been harder to come by. "We're not hitting a lot of home runs," he told the Planning Committee.
Councilman Paul Gawrych also expressed concern at the committee meeting about houses that aren't selling like they used to.

"All of a sudden, there's a flood of houses out there that are for sale. Why are there 1,300 houses on the market right now? Are we doing the right things?" Gawrych said. Rick Atkinson, an agent for Prudential Carolina Real Estate, said home sales in Mount Pleasant are slightly slower, but for the most part homes are selling. "I don't know that there's an overwhelming sense of frustration," Atkinson said.

The Charleston Market Report details the local housing market for the months of April, May and June. During that time, Charleston County had 2,237 homes for sale compared to 1,422 houses on the market at the same time last year. Dorchester County had 860 homes for sale during April, May and June compared to 757 homes on the market last year during the same time. Berkeley County homeowners were selling 806 homes during the second quarter of the year compared to 619 homes during the same time last year.

An attorney who has handled real estate closings, Kelly said she thinks that because of 100 percent financing, people have bought more home than they can really afford. As a result, she predicts a glut of foreclosures and even more homes on the market. She worries that plans for a 400-home subdivision in Awendaw will only make the problem worse in Mount Pleasant.

"I'm sure there are more homes on the market and not enough buyers," she said. "Because of the glut, I'm hurting."

Reach Prentiss Findlay at 937-5711 or pfindlay@postandcourier.com.
Credit: The Post and Courier