High-priced homes continue their drag on real estate market

July 12, 2009 

In better economic times, Lottie Woodward specialized in selling high-dollar real estate on Hilton Head Island.

These days, she's happy to sell anything.

The part-owner of Carolina Realty Group said she is selling more properties than in the past at a lower average price, and overall, the volume of sales is down.

Homes sold by her firm once had an average sales price of $1.8 million. Now it might be less than $1 million, she said.

As with many colleagues, Woodward is frustrated by the slow pace of high-end home sales.

"It's just a vicious cycle," said Woodward, who has been in real estate business on Hilton Head for 30 years.

Despite some signs of life in lower price ranges, high-priced homes are languishing on the market in Beaufort County and nationally.

Woodward said that so far this year she's sold as many homes in the $2-million-and-up range as she sold in a single month during the real estate boom.

She could recall only one oceanfront home that sold in Sea Pines this year.

One major problem, she said, is that buyers interested in high-dollar properties often can't sell their current homes to make the move.

In some cases, that has forced sellers to drop their asking prices every few months, Woodward said.

There is demand, she said, but problems with financing and appraisals have made it difficult to clinch deals.

Buyers paying cash have their pick of the litter.

"They've got too much to choose from right now," she said. "It's just a case of too much inventory."

For many buyers, bargain hunting has become the norm as the recession drags on, said Andy Twisdale of Charter I Realty & Marketing on Hilton Head.

"There's a lot more people looking, but they're only looking for the deals, and they expect to get a deal," Twisdale said.

All that shopping around has weighed on the market's statistical indicators.

In the past six months, 238 homes were sold on Hilton Head at an average price of about $677,000, he said.

During the same period last year, 291 sold at an average price of about $869,000.

In northern Beaufort County, 110 homes priced over $750,000 are listed for sale, said Matt Trumps, president of the Beaufort County Association of Realtors.

He wasn't sure how long the inventory would last, but he said 12 homes have sold in that range in the past 12 months north of the Broad River.

Nationally, at the current sales pace, the supply of homes on the market for $750,000 or more could last 40 months, according to the National Association of Realtors. That's more than double the stock in mid-2007 before the credit crunch.

By contrast, there is now less than a 10-month supply for all homes.

Sales of existing homes priced at more than $750,000 made up 2.3 percent of all sales in the first three months of this year, the national Realtors' group said. That's down from 4.4 percent of homes sold in 2007, before high-priced mortgages dried up.

"The high end is the worst performing sector of the residential real estate market, unquestionably," said Bernard Baumohl, chief global economist of the Princeton, N.J.-based Economic Outlook Group.

Trumps, the Realtor in northern Beaufort County, said he is most disappointed in federal policymakers' lack of attention to the market's upper echelon.

"It is the single biggest factor that is squelching the return of the local real estate market," he said.

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