By Scott Miller
Published May 30, 2012
The lower-end residential real estate market is leading an uptick in home construction.
“People who five to seven years ago were looking for a $250,000 to $275,000 house are now looking for a $200,000 house,” said Tyler Civils, business development manager for Raby Construction in Greenville.
Raby just sold a home in Greer that had sat vacant since it was built three years ago, Civils said.
“Some of our existing inventory has been taken off the shelf so we’re going to build some more,” he said.
Home construction is mixed across the state’s largest metropolitan areas. In Spartanburg and Anderson, for example, 2011 was another down year, with residential construction value dipping 12.4% and 15.4%, respectively, from 2010.
But Charleston, Columbia and Greenville experienced growth.
The Greenville MSA, particularly, shows promise, with home construction value increasing nearly 30% to $431.9 million in 2011, according to U.S. Census data.
“We’re all keeping our fingers crossed and hoping this isn’t just a short-term spike,” said Todd Usher, president of Addison Homes in Greer.
“Our business model shifted to what we call to pre-sold homes,” he said. “We’re actually looking into a few communities to possibly dip our toe back into the speculative building market if that comes back.”
Even with the bump in construction during 2011, the industry remains well below pre-recession levels. The construction value in the Greenville MSA last year, for example, equaled 65% of 2006’s volume. In 2006, 4,980 single-family home permits were issued in the Greenville area. That figure stood at 1,639 last year.
“We have had ups and downs, but we are beginning to see more of a positive trend,” said Duane Bellamy, sales manager of ABC Supply in Greenville. “I don’t think we have blown through near the inventory of foreclosures or near foreclosures that the government is telling you.”
So far this year, homes in South Carolina are selling faster and at higher prices than they did during the first quarter of 2011, according to data released by the SC Realtors. Sales, including older homes and new construction, are up 6.1% statewide, while sales price ticked up 2.1% and average days on market dipped 1.1%. That includes existing and new inventory. The organization said homes priced above the $300,000 level made up the only segment seeing sales decline.
“The real estate market remains a mixed bag. Construction of new homes faces stiff competition from deeply depressed properties,” said Craig Nix, CFO of First Citizens Bank and Trust. “Banks are sitting on millions of foreclosure-in-process (property) that is going to add to supply and put pressure on prices.”
Money in real estate
Construction value was up in several South Carolina cities in 2011 but remains far behind pre-recession levels.
% change from 2010-2011
Home building market mixed in S.C. cities
Figures represent new privately owned residential building permits for the past two years and 2006.