The home was in Holly Trace, a leafy Simpsonville suburb full of residences built from the late 1980s to the early 1990s, and in some cases showing their age. It went on sale with a list price of $549,000, high for the neighborhood but not crazy given the current state of the Greenville market. The crazy, though, would soon begin—Kathy Rogoff’s clients were among nine suitors who submitted offers, theirs written for $20,000 more than the list price. They lost out to a buyer who claimed the home for nearly $600,000.
“That’s the market we are in right now,” said Rogoff, an agent with Allen Tate Realtors. “Can it last? I hope not. It is a rough and tough market.”
And that instance is indicative of an issue that prospective buyers, particularly those from outside of Greenville, are facing when they relocate to the Upstate. Transplants prefer ideally new construction, or at the least newer and move-in ready existing homes, preferring not to take on renovation projects in a city where they don’t have any experience with contractors or remodelers. But a bidding war over a 25-year-old home that sells for $50,000 over list price shows that visions of a move-in-ready Greenville dream home can crash up against the reality of what’s actually available, and what it costs.
“I have a lot of clients who are from out of town, and we have such low inventory. I mean, we are down 36 percent from last year,” said Elizabeth Chambers, an agent with Wilson Associates Real Estate. “And so my job as an agent is to prepare my clients on the front end for what they’re facing with the Greenville market. The misconception is we’re a quaint little town where you can get a really great house for not a lot of money, which is not the truth anymore. Buyers are driving up the prices, and we’re hearing about houses that are getting 10, 20, 25 offers in 48 hours. So I’m just trying to prepare my clients on the front end for every possible scenario.”
Locals, Millennials lead the way
In Greenville and elsewhere, the effects of the coronavirus pandemic set off a nationwide trend of home renovation as Americans reevaluated what they wanted out of their living spaces. According to the National Association of Realtors’ 2022 Remodeling Impact Report released Wednesday, Americans spent $420 billion in 2020 on remodeling their homes. Ninety percent of members in the National Association of the Remodeling Industry experienced greater demand for their work during the pandemic, and 60 percent said that their clients’ projects got larger or expanded to additional rooms as a result of the pandemic.
In Greenville, the homebuyer most likely to be willing to undertake a renovation project is a local resident who’s moving up to a larger home, agents say. Chambers said Millennial buyers are also more open to renovations, because they’re not expecting to get a home that’s turnkey. “They have specific wants,” Chambers added. “They might have children, or a different style, or additional things they’d like to add to the home. And they typically have two incomes, so it’s easier for them to do it because of their financial situation.”
According to the NAR report—which assumed a 2,495-square-foot-home, the average size in the U.S. according to Census data—refinishing hardwood floors led all interior renovation categories in cost recovery, with the project costing an estimated $3,400 while adding an estimated $5,000 recovered cost to the value of the home. New wood floors brought a similar benefit, with an estimated cost of $5,500 against an estimated cost recovery of $6,500. Ranking third among interior projects was upgrading insulation, which broke even at a $2,500 estimated cost and $2,500 estimated cost recovery.
Among upgrades spurred by the pandemic, adding a home office led the way with a 40 percent increase in demand according to the NAR. Despite their contrasting price tags, roofing ($12,000 cost estimate) and installing a new garage door ($2,000) led exterior projects, with both undertakings recovering 100 percent of their estimated costs, the NAR found. The addition of fiber cement siding ($18,600) recovered 86 percent of the cost spent, while adding vinyl siding ($18,300) recovered 82 percent. New roofing was also the top exterior upgrade that Realtors recommended before selling, at 33 percent, according to the NAR.
The NAR reported that 35 percent of owners hired a professional for the whole job, while 13 percent contributed some work and 22 percent did it all themselves. Those latter numbers help explain why some of the Greenville home buyers most open to renovation are investors looking to “flip” an older or outdated house for profit. The key: many investors are also contractors themselves.
“You have people who are doing nothing but flipping houses, and they’re making great money on these properties right now,” Rogoff said. “But most of your flippers, they do their own work, which most of us can’t do. They can, because that’s all they do. And they’re doing great. They’re absolutely, positively doing great.”
Renovation by wrecking ball
Of course, not everyone is an investor able to tackle a renovation on their own. Not everyone is a Millennial with dual incomes who can foot the bill for a renovation project. Some buyers are just trying to find a home in one of Greenville’s more established neighborhoods that’s in livable condition—maybe not turnkey, but also not with shag carpet, floral wallpaper, or some sort of structural issue that has to be addressed right away. The good news is that taking on an unplanned renovation project might also bring a buyer a price break on the house, if they can fight past all the others trying to get it.
“I think a lot of sellers know that they need to get their house somewhat in a situation where it’s not a turnoff when people walk in,” Chambers said. “If it is, that needs to be priced appropriately. If the kitchen and the bathrooms are not updated, it need to be price appropriately, because you’re not going to get what you would normally get for an updated house.”
Greenville’s low inventory numbers, combined with lumber price fluctuations and supply chain hiccups, mean that there simply isn’t the amount of new construction to accommodate everyone who wants it. “You’re going to have to wait for it,” Rogoff said. Some builders are offering only models that are barely customizable, if at all. And it can be months between signing a contract and the start of construction, not to mention the end. That leads many buyers to existing resale homes, and the inevitable renovations that accompany so many of them.
And then there’s the other kind of renovation that happens to some older homes in Greenville, the kind that begins with the wrecking ball. “In a lot of these neighborhoods now, if the house is too old, they smash it to the ground and build a new one on top,” Rogoff said. “People who have the money, they don’t care what it costs to renovate.”