Real Estate Market Not Ready for a Fire Sale Yet

Betty Darby
TBR Staff

It's taking longer to sell a home in Savannah today than it did two years ago, and the pace of sales has slowed. But as agents from throughout the real estate industry in Georgia and South Carolina gathered in Savannah to hear Coldwell Banker's top national executive's take on the current situation, they heard a message intended to convey calm and confidence.

Jim Gillespie, president and CEO of Coldwell Banker, was here to offer analysis and sales advice to some 300 real estate agents Thursday in a corporate business conference hosted by Savannah's Coldwell Banker Platinum Partners.

"Every industry goes into a cycle. This may - and I say 'may' - be the first year that we might have a slight decrease in prices, and if so it will be less than 1 percent," Gillespie predicted.

"It's not the gloom and doom you hear in the national press," he said. Much of the publicity about bad times in real estate has focused on the crisis in the sub-prime mortgage market - a small segment of the market and one, he said, where 85 percent of those higher-risk loans are working out well for homeowners and lenders.

What Gillespie and his colleagues clearly fear is that grim predictions in the real estate market will become a self-fulfilling prophecy. He stressed repeatedly that the setbacks in the real estate industry have been in volume, not value. The big hits, and the damage to the numbers, come in part from people who overextended trying to "flip" properties by buying them and expecting to reap great increases by reselling them in renovated form a short time later, he said.

Locally, according to Connie Farmer Ray, owner of Coldwell Banker Platinum Partners, the downturn showed up first and hardest in Beaufort County, where people who had bought speculative land saw a price drop that she calls "more a correction than a decrease in value."

In Savannah today, the average home is on the market 104 days instead of the average of 80 days back in 2005, Ray said. Sales are stalling out in the mid-range prices, she said - homes priced $300,000 to $500,000 are sitting longer, while those above and below that range are moving better.

Gillespie kept coming back to the fact that this is a solid year for real estate - not as hot as in the recent past, but still profitable. In 2005, the industry passed 7.1 million resales - its first over 7 million year. This year, he expects that figure to be just under 5.9 million. "That would be our sixth-best year in history," he said.

The concern is that home buyers will stall and wait for prices to fall before they buy - a tactic Gillespie predicts won't work. "You can't time the market," he said.

In fact, he said, take five states out of the statistical picture, and the real estate market looks good. The five dogs, at the moment? Florida, Nevada, Michigan, Indiana and Ohio.

And what were the sales tips shared by one of the nation's top real estate executives? Things you've likely heard before: Price property right, drawing on comparable and recent home sales; spend the money to do things like repaint pink or purple rooms in neutral colors; offer a home warranty; pay attention to curb appeal; get a home inspection and repair what needs repairing, and make sure you document those actions for potential buyers to see. Some agents are getting creative, offering financial incentives in catchy ways, like offering to pay dues to a homeowners' association for a year or paying a year's worth of property taxes, he said.

Gillespie has held his current post since 2004 and was the firm's COO for the three years before that. He has more than 32 years of real estate experience.