Charleston real estate and the media perspective
From the front page of today's Charleston Post and Courier, the headline reads:
For Sale signs on every corner
We enjoyed the boom; now we have to deal with the slump. The real estate market is in its biggest decline since 1989. Here's how it affects you.
The article includes some perspectives from sellers, lenders, renters, buyers and real estate agents, then:
THE NUMBERS
Homes for sale in the Charleston market
On Tuesday 10,145
Last Year 7,047
Two Years Ago 4,168
The real story behind the numbers and what the numbers don't tell you:
While inventory is high and I have been talking about that since beginning my blog almost 6 months ago, you have to analyze the numbers. First of all, condos and townhome inventory is very high due to many condo conversions and new projects under construction. A second and very important part of inventory is new construction. When sales for Centex, Beazer, DR Horton and other national builders was strong and there was basically a waiting list to purchase a new home, listings weren't entered into the MLS until closing.
The real estate agents knew that builders would "co-broker" and it wasn't necessary to find the listings of the new homes in the MLS. Representatives would visit the real estate offices, bring food and tell us a little about the community they represented and leave brochures with floor plans. We would bring our clients to the neighborhood and represent them in the purchase of their new home. The MLS showed all sales as being on the market for 1 day and no inventory ever appeared.
With the slowdown in new construction sales, the builders are now entering all the new homes into the MLS hoping that out of town buyers who are shopping the internet in their search for homes will find them. They are even adding a few pictures (which they never bothered with before) to even make the listings look good.
Those listings add up and taken together with the glut of condos, where does that leave inventory on preowned single family homes. From the original inventory number of 10,145, the real inventory of single family preowned homes is just about half at 5176.
WOW! So as I've pointed out the past several days since I first saw this little morsel of wisdom from Nationally syndicated columnist, Lew Sichelman, "Don't pay too much attention to what my colleagues and I write concerning housing prices."
Yes, we had some boom times in real estate, yes prices went up significantly, yes, it is slowing, yes, there is a lot of inventory available, yes, it is a buyers market.
No, housing prices have not declined in Charleston as yet by any measure of either average price or median price.
No, there is no housing bubble, real estate is local, Charleston is a good market with good job growth and there has been a long term migrational shift of people from the North moving to desirable Southern cities including Charleston.
No, the real estate market and the world we know is not ending.
While prices have gone down a little in other cities around the country and by a little, I'm referring to a 5% to 10% range, to compare this slowdown to the stock market bubble in 2000 when prices declined by over 50% to 75% to 99% for many stocks that have never recovered is "folly" for the media. While the Dow Jones is hitting an all time record high today breaking 13,000 as I write this, the Nasdaq is still off by more than 50% from its peak. Cisco has done very well and its long term business prognosis is excellent. From its all time high of 80, it got down to almost 10 and has recovered to about 27, that is still down 66% from its peak.
I'll grant the housing bubblistas this, if homes drop in value by better than 50%, they were right but I'd fear for the economic health of the country at that point. A correction from the excess of the past 5 years is exactly what we are experiencing, nothing more, nothing less.
Once again, pay attention to Lew, "Don't pay too much attention to what my colleagues and I write concerning housing prices."