Originally created 01/21/05

Increase in sales is linked to rates

Nationwide, sales of new and existing homes were up in 2004 as more people took advantage of low mortgage rates. But analysts say 2005 doesn't look as rosy.

Through November, the most recent data available, U.S. home sales were up 13.2 percent from November 2003, according the National Association of Realtors. The average home sold for $188,200, a 10.2 percent increase from the prior year.

According to the Greater Augusta Association of Realtors, which tracks home sales and price information in Richmond, Columbia and parts of Aiken counties, 6,012 homes were sold in 2004, a 10 percent increase from 2003. The average home price was up 9 percent to $140,244 from $129,103 in 2003.

Sales growth during the year was fueled by low mortgage rates that stayed below 6 percent for most of the year.

"A lot of the growth in the business we had in 2004 came from people who moved up and a number of first-time home buyers in the marketplace," said Bill Boatman, the president of the Greater Augusta Association of Realtors.

Mr. Boatman said his company, Meybohm Realtors, saw about a 15 percent increase in its business.

Eulalie Salley & Co. in Aiken reported an 8 percent increase in sales volume but a 11.7 percent increase in the value of properties sold.

"There was a bit of an appreciation in the market," said Stephen Ranzer, a Eulalie Salley agent and immediate past president of the Aiken Board of Realtors. Mr. Ranzer said home prices increased about 3.3 percent during 2004.

The sales increase came as a surprise to some in the industry as economists had predicted mortgage rates would rise in 2004, slowing home sales.

"We were fearful last year that we would see rate increases and the business would be flat or down in 2004, but that didn't happen," Mr. Boatman said.

Mortgage rates may still increase, making homes less affordable.

"As interest rates go up, it will affect the ability of some to get a loan and meet their monthly payments," Mr. Ranzer said.

Higher rates would also push home prices down. Jeff Schenker, an economist for Wachovia Corp., said during the recent 2005 Georgia Economic Outlook luncheon that home prices in Augusta likely won't fall as much as other cities.

"Augusta had a slower rate of increase in the price of homes," he said. "But that means prices will fall less."

Reach James Gallagher at (706) 823-3227 or james.gallagher@augustachronicle.com.


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