The Real Deal

By Sharman Egan Lagniappe columnist

Ah, spring is in the air. For many of you that means it’s time to dive into the real estate market by buying or selling a home. So lets go diving into the real estate market.

Assuming you pay any attention to the doom-and-gloom of the national media, you know what you’re up against. If you’re buying, the meltdown in the mortgage market means you’ll have a hard time qualifying for a loan and you’ll have to put a lot of money down. If you’re selling, you’ll have to let your house go at a rock-bottom price or be prepared for it to sit on the market for a long time. Right?

Well, not exactly. Statistics on the local market indicate that it all depends on which side of Mobile Bay we’re talking about.

Back in February, the University of South Alabama sponsored the Gulf Coast Commercial Real Estate Summit at the convention center. That name was a bit misleading since the conference covered all aspects of the local real estate market. Reid Cummings, a residential real estate developer and president of The Cummings Company, gave a presentation that included in-depth statistics on the residential market in Mobile and Baldwin Counties. His data were from the Gulf Coast Multiple Listing Service so they didn’t include any FSBO (for sale by owner) homes.

Cumming’s stats indicated that the local market is actually two very different markets, a healthy one in Mobile County and a struggling one in Baldwin County.

The Mobile market is bucking the national trend. The average sales price in 2007 was up almost 10 percent over 2005. That’s an average of over $16,000 in Mobile sellers’ pockets when they walked away from the closing table. My next column will give detailed stats on this market.

Baldwin County, on the other hand, looks like much of the rest of the U.S. Both the volume of houses sold and average sales prices have been on a downward trend. At the same time, the inventory on the market has been increasing.

• 3262 homes were sold in 2007, down almost 52 percent over 2005.

• 6022 homes were listed for sale as of 4/30/08, up 11 percent since the end of 2007.

• The number of homes for sale at the end of April represented over 22 months of inventory.

• The average sales price in 2007 was $283,961, down almost 11 percent over 2006.

So what’s going on here? Why is the Mobile market outperforming Baldwin County so significantly? One of the most obvious reasons is the difference in prices. Baldwin’s average sales price in 2007 was 79 percent higher than Mobile’s ($283,962 vs. $158,661). At the same time, Baldwin’s average income is only 20 percent higher ($32,839 vs. $27,360; these are 2006 figures, the latest available from the U.S. Bureau of Economic Analysis). Simply put, Baldwin buyers are finding it difficult to afford homes that are almost 80 percent more expensive on incomes that are just 20 percent higher.

But let’s face it – something is selling in Baldwin County. After all, Bob Shallow, owner of REMAX Paradise in Orange Beach, was recently named the number one REMAX agent in the U.S. for the third year in a row. Shallow sold $77 million of property in 2007 and that was in the slowest segment of the Baldwin market, along the Gulf.

So what is selling in Baldwin County? Is it only lower-priced homes? Not so says Laura Reeves, a Realtor with Coldwell Banker Reehl Properties in Daphne.

“In any price point, the cream of the crop is selling,” said Reeves. “But it’s like a beauty contest. There’s only one buyer for every 50 houses and only one house can win. It has to be updated, clean, decorated well and the sellers must be willing to show it. They have to be realistic with comps, and they have to look at true comps, ones from the last three to five months. They have to compare everything, not just location and square footage.”

Reeves gave the example of one of her recent Baldwin listings. She explained the sellers were willing to look at the condition of their home compared to other homes on the market. They spent several thousand dollars to refinish their hardwood floors and then priced their home realistically. “The house sold in just 30 days,” said Reeves.

Speaking of buying and selling a home, what’s up with Sherrie Quander? If you read my column regularly, you know Sherrie’s in the process of selling her home in LA (epicenter of the real estate market meltdown) and moving to Mobile. The Real Deal has been following her progress.

When we last checked in with Sherrie in March, it looked like she would escape the hardships of the West Coast market. Another agent had told Sherrie’s agent that she had clients who were planning to make an offer, and Sherrie expected to be in escrow within a few days.

The bad news: the offer fell through and her house is still on the market.

The good news: a couple of weeks ago, the intrepid Sherrie packed as many of her belongings as would fit into her Camry, put the rest into storage, and drove the 1,900 miles to Mobile. She’s living with friends here until her house sells and she can buy a new home.

Sharman Egan is Lagniappe lagniappe columnist. Contact her at Sharman@SharmanEgan.com.

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