Deals abound as home sales stay in doldrums

Real estate agent Julia Cunningham was scouting homes for a California couple on the brink of enjoying a laid-back Lowcountry retirement.

But the financial markets crashed those plans, and the would-be buyers called the Coldwell Banker United agent last week to notify her of their decision to keep working.

"Considering what happened with the market, they decided to continue working because their retirement portfolio didn't look so good anymore," she said.

Potential home buyers were hesitant before the financial crisis, but given the latest wave of bad news, activity in the local real estate market is expected to slow even more. The drama on Wall Street, which has spread around the world, has dampened the chance of an uptick in local home sales.

"The consumer confidence in housing was already abysmal," said William Harrison, a local real estate developer and business professor at the University of South Carolina. "With the gravity of the situation in the capital markets, while it's hard to imagine that confidence could be any lower, it has (sunk) to a new low. ... It'll be the bravest of the brave who are willing to go out and buy a house right now."

Waiting has benefitted buyers so far.

Prices across Charleston have fallen fairly consistently in recent months. Last month, the average Charleston-area home sold at about $193,000, a 4.2 percent drop from the same month last year.

"Why would you buy a house now that's $350,000 when, if you waited another week, you might be able to buy it for $335,000?" said consumer behavior expert Britt Beemer, founder and chairman of America's Research Group Inc. "From the viewpoint of consumers wanting to buy homes, I'm sure they put that on hold as much as they can because they're waiting to see how much more they can get."

Adding to the indecision, buyers also have lots of properties to choose from.

Based on the number of homes for sale and last month's 654 property purchases, the Charleston area has a 16-month supply of inventory. That's about five months more than the national supply level.

The tough economic news hasn't stopped sellers from trying to lure buyers in with deals.

The developer of the Tides luxury condominiums in Mount Pleasant has lopped hundreds of thousands of dollars off some units in an attempt to unload its remaining inventory.

Coldwell Banker United launched a 10-day sale Friday through which homeowners agreed to reduce their sales price by 5 percent. A total of 42 homes in Charleston are participating.

"It really is a good time to buy," said real estate agent Lindsay Dukes of Copper Roof Properties. "It would help the economy and the market, and there are good deals to be had."

Good news was supposed to come in the form of a $700 billion bailout, meant to restore investors' faith in the markets, but the plan didn't seem to do much good. The Dow Jones industrial average — though not exclusively based on consumer confidence — has plummeted 1,874 points, or 18 percent of its worth, since the bill's passage.

"The smart investor sees through it," said Ernie Csiszar, a finance professor at USC. "The problem that we're facing has to do with our companies being solvent. Our financial institutions owe more than what they're worth. ... Banks are holding onto cash that's stuffed into the pipeline."

Some financial experts speculated that bailout funds could trickle down to cash-strapped lenders, possibly making them more receptive to fixing troubled mortgages.

Dukes has been trying to renegotiate mortgages for several local homeowners, sometimes with the hope of orchestrating a short sale in which a lender accepts a sale price that's less than what is owed on the mortgage. Working out a deal, though, hasn't been easy. "I called just last week about one of my clients — they had an adjustable rate that went up to 9 percent," she said. "They could afford if it they lowered (payments) by about $200, and the bank wouldn't even talk to us."

Dukes said she's hopeful that once the financial markets stabilize and the bailout takes effect, banks will be more flexible.

That could happen if banks decide to lend bailout funds instead of hoarding the cash, Harrison said. The process of allocating that bailout money, though, hasn't begun.

"I'm sure one of the things that the Feds and (Treasury Secretary Henry) Paulson and (Federal Reserve Chairman Ben) Bernanke hoped for was a boost in confidence in the capital markets. That didn't happen," Harrison said. "But the real guts and the intended purpose of the $700 billion rescue or bailout plan hasn't even begun yet. It won't begin for weeks."

Reach Katy Stech at kstech@postandcourier.com or 937-5549.