The final numbers for 2006 are in and first I'll give you the statistics, then an analysis of the market trends in Charleston real estate. A quick preview, the 4th quarter was quite dismal, unit sales off 30% and available inventory up 67%.
Month 2005 Inventory (Months) 2006 Inventory (Months) Change Yr/Yr
January 4224 4.10 5199 4.48 +23.1%
February 4232 3.87 5906 5.14 +39.6%
March 4211 2.42 6271 3.91 +48.9%
April 4173 2.76 6600 4.64 +58.2%
May 4111 2.46 6908 4.21 +68.0%
June 3988 2.15 7302 4.30 +83.1%
July 4282 2.77 7736 5.50 +80.7%
August 4346 2.58 7884 5.70 +81.4%
September 4505 2.97 7997 5.73 +77.5%
October 4745 3.42 8252 7.70 +73.9%
November 5015 3.57 8484 9.35 +69.2%
December 5167 3.28 8250 7.75 +59.7%
Total Sales 05 $5,011,101,113 Total Sales 06 $4,692,949,795
Units Sold 05 18,022 Units Sold 06 15,899 -11.7%%
Avg Sales Price $278,054 Avg Sales Price $295,173 +6.16%
As you can clearly see, the 4th quarter was nothing short of dismal for Charleston real estate. Like most of the country, homes continued to come to market and buyers stopped shopping for homes. Whether families were too busy eating Halloween candy, couldn't get off the couch after the big Thanksgiving feast or were trying to pull Santa out of their fireplace, activity slowed dramatically. I know my phone rang less, listings had less showings and I had fewer inquiries for additional information on my website. No sugarcoating these numbers.
On the other hand, mortgage rates hit their yearly low in early December and buyers have been able to buy low. While the average price did increase a modest 6% for the year, price increases were tempered by abundant inventory. Buyers without a house to sell will find the best buyer's market in years. A seller has to be realistic about market conditions when pricing their home for sale. There was not 12, 15, 20 or 25% appreciation in the past year and the competition for buyers is fierce. A home has to be available to show easily, look good for a first impression and be priced realistically. Those who do this are selling, those who don't aren't.
It is almost certain that as long as available inventory is so large and with unit sales declining, prices will come down before the housing market reaches bottom. Buy a house because you want to live in it, don't think of it as an ATM machine. While the value of your home may decline this year (or even until next year in the most pessimistic prognosis), over the long term, housing has been a good investment and will continue to be so in the future as long as you are buying for the right reasons. The Charleston real estate market should still hold up quite nicely since job growth in Charleston continues to be strong and the continued demographic shift of retirees and others from the Northeast and Midwest relocating to the South.
As 2007 opens, my personal experience has been a significant pickup in activity. I don't know when the market trends will reflect this in the monthly sales statistics but I feel a positive change. I've been too busy with clients to write a blog post every day and this weekend I have 3 clients looking at property. A very nice listing I took to start the year is well priced and shows very well.
Here is a quite lengthy article on the current housing market, Homeland Insecurity by Brian Pretti, a must read.