GALVESTON — Island home sales last year rose 9.1 percent, nudged largely by an era of cheap loans and the city’s proximity to Houston, hardly touched by recession, industry trackers said.
Islandwide, 573 single-family homes and condominiums sold in 2012, compared with 525 the year before, according to Galveston Association of Realtors Multiple Listing Service data compiled by Sand ‘N Sea Properties. But many more island properties sold last year than reflected in the data, which doesn’t include sales by real estate agents or developers not posting in the Galveston Multiple Listing Service.
Buyers, many from the Houston area, where the unemployment rate was at 5.8 percent last month compared to the national rate of 7.8 percent, are expressing more confidence in the island housing market, said Pamela Gabriel, past president of Galveston Association of Realtors and one of the 2012 Top 10 Realtors on the island.
Gabriel, an agent with Sand ‘N Sea Properties, lists record-low interest rates among the biggest drivers of home sales, but also the sense some consumers have that days are numbered for those record low rates.
“Interest rates are still low, but the general feeling is they’re going to go back up, and they have been already this year,” Gabriel said. “Buyers are finally taking advantage of the current rates.”
The average rate on a 30-year, fixed mortgage was 3.4 percent last week, according to McLean, Virginia-based Freddie Mac.
Previously, the Fed said it expected to keep interest rates at record lows at least through mid-2015. Now, it expects rates to stay low at least until unemployment drops below 6.5 percent — “a threshold the bank believes may not be crossed until the end of 2015,” The Associated Press reported last month. Some observers predict rates will inch up earlier as the U.S. economy heals.
With low interest rates — and not a lot of money to be made leaving cash in the bank — consumers again are buying real estate, observers said. Most Realtors interviewed for this article said that despite low interest rates, many buyers are paying cash.
Despite a stubbornly difficult national economy and a long wait for federal recovery money pledged to the island after Hurricane Ike, much is conspiring to boost home sales. New island attractions, including the $60 million Galveston Island Historic Pleasure Pier, are luring families to visit, and some are deciding to buy getaways.
But it’s Houston’s robust economy that’s largely behind the island’s recovering housing market, observers said. Houstonians have always considered Galveston their playground. And last year, they began changing playground parameters, with more looking in town for second homes. Among interesting 2012 trends was a sizable surge of sales of houses and condominiums in town, including among second-home buyers who tend to flock to the popular West End, where sales last year rose a modest 3.2 percent.
“We capitalized on Houston,” said Island Realtor V.J. Tramonte of Joe Tramonte Realty. “Because of attractions like the Pleasure Pier, we’re selling these little homes south of Broadway as vacation rentals.”
A healthy jump in sales
Meanwhile, sales of houses, condominiums and lofts downtown and near the University of Texas Medical Branch jumped 68 percent, from 72 in 2011 to 121 last year.
Condominium units downtown and near the medical branch are selling for much less than they were in the boom times before Hurricane Ike in 2008, Gabriel said.
Medical students and their parents are finding buying some units cheaper than renting, Gabriel said. More people are renting in the area and those renters are turning into buyers, Tramonte said.
Sales of historic homes also saw a healthy jump in 2012, rising 30.4 percent in the Lost Bayou, Silk Stocking, San Jacinto and East End districts.
Kelly Kelley, a broker/owner of RE/MAX Leading Edge on the island, also notes that in-town properties are selling well, even among second-home buyers.
The big sellers
Affordable homes — in the $200,000 to $300,000 range — were strong sellers last year, Kelley said. When some buyers calculated the cost of insurance into the price of a West End property, they started looking in town, Kelley said.
But the biggest sellers were homes priced in the $120,000 to $160,000 range, Kelley said.
Consumers are buying now before prices edge up, she said. And edge up they will, she said.
Inventory is down, and lot sales last year on the West End rose dramatically, along with a rise in new home starts — all indicators the market is ready to appreciate, Kelley said.
As The Daily News reported Thursday, even one of the hardest hit sectors during the Great Recession — condominiums — is showing signs of improvement.
Sales in the beach, beach front and seawall segment rose to 133 units in 2012 compared with 119 the year before, marking a 12 percent increase, according to the Galveston Association of Realtors Multiple Listing Service data. But again, the data don’t include island condominiums sold last year by developers or agents who don’t post in the Galveston Multiple Listing Service. That number includes about 70 sold at three prominent properties — Palisade Palms, Emerald and Diamond Beach. A dearth of new development since Hurricane Ike has helped the island absorb inventory.
“The traffic we’re seeing and the excitement with people, it just hasn’t stopped,” Gabriel said. “I think next year, with all the indicators, is even going to get better.”