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Charleston real estate headlines

I'm not sure which was worse, the headlines in the newspaper or the wind blowing too hard to be able to turn the pages of the paper as my wife and I tried to read the newspaper yesterday on the outdoor patio of Margarita's, a Mexican restaurant in Summerville.

Foreclosures double. Charleston real estate prices decline.

I've mentioned foreclosures previously and doubling from very low levels makes for a great headline but I'm not so sure it is statistically as relevant. But newspapers are having trouble getting anyone to read the paper these days (just about the only day I actually read a newspaper is over breakfast or lunch with my wife on a Saturday if I'm not busy with a client).

Basically, the Charleston real estate market is facing the same issues as elsewhere in the country, the difference being that market conditions in Charleston are not as dire. There are people who bought homes they couldn't afford. Some used financing that should not have been made available. Since some can't afford the monthly payment, they'll likely lose their home to foreclosure. It's a sad situation and all the talk by politicians isn't likely to fix the problem. The solution is taking personal responsibility and time and the real estate market will eventually sort out the excesses and correct.

With a high inventory of homes for sale and fewer buyers looking to buy (especially with headlines like today's), prices should decline and we are finally seeing some small price declines in the Charleston real estate market. Part of it is due to the increase in foreclosures and the bargain prices available in lender owned (REO) properties and from the truly motivated sellers who have put their homes in no apology, top condition and priced their home to sell.

As to prices, once again, statistics can be manipulated. I used to present the median price every month and compare it to the median price a year earlier. One month prices were up sharply, another month prices declined just as sharply. I attribute that to the different mix of home sales in any given month. Did your home increase in value by 10% one month and lose 6% of its value the next month. I just think it's hard to figure on that basis and I think the better measure is the most recent 12 months of sales prices compared to the previous 12 months.

But then again, I just sell Charleston real estate and not newspapers. By the way, we both had chicken burritos, the food was excellent and the portions were large. 

Published Sunday, April 13, 2008 5:12 AM by Howard Arnoff

Comments

# re: Charleston real estate headlines

Forclosers are up and prices are finally dropping...which is a good thing for the market and should create more buying and selling activity.  Activity breeds activity and the greater the drop in price the more activity we'll see.

The delta between what buyers are willing to pay and sellers are willing to sell is too great and somebody is going to have to flinch first...it looks like that someone is going to be the sellers (first the homebuilders, national/regional/local and then the individual sellers of lower $$$ houses trickling up to expensive houses). My guess is that downward pressure will continue on prices for the next year or two and then stagnate for a few more years.  

Sunday, April 13, 2008 8:43 AM by Claude Daigle

# re: Charleston real estate headlines

Claude, you're a bit dour on such a beautiful spring day with The Masters coming up in a few hours.

While prices have finally edged down a bit, don't confuse the Charleston real estate market with Florida, California or Nevada.

The number of foreclosures here is still only a couple of percent so doubling a few hundred is still only several hundred.

I would guess prices slightly down for this year, slightly down to flat next year but I don't forsee stagnation in real estate values for several years in this area though I might expect it to continue to stagnate in the above mentioned states.

I think even Arizona will start improving sooner for the same reason as Charleston and that simple reason is inbound migration due to job growth and retirement.

Sunday, April 13, 2008 10:57 AM by Howard Arnoff

# re: Charleston real estate headlines

Don't get me wrong...I'm not predicting a melt down just a decrease in prices from previous years. Heck...I'd buy a house today if I could figure out what I wanted :)

However, credit is harder to come by today than it was a year ago and certain loans are more expensive. That in itself can shrink the eligible buyer pool and make prices go down.  Add a cup of "fear", 3 tablespoons of "rescission" and mix with high inventories and you've got yourself declining prices.  Charleston is unique but we are not immune.

Monday, April 14, 2008 7:57 AM by Claude Daigle

# re: Charleston real estate headlines

Claude, you are absolutely correct that credit is no longer available to those who are not credit worthy, thus less demand. There is still too high a premium for jumbo loans causing difficulties in the luxury market.

Take a look at the statistics on 600k+ and the inventory levels are not measured in months but rather in years. Amazing.

Since the luxury market is about 10% of all Charleston real estate sales and when sales slow at the high end, the median will naturally decline.

I'm not suggesting that Charleston is immune, simply in a whole lot better shape than the media would otherwise have you think. But to the real estate consumer, a little fear goes a long way.

Monday, April 14, 2008 11:07 AM by Howard Arnoff

# re: Charleston real estate headlines

Credit being harder to come by may be the understatement of the year so far. Banks DO NOT want to lend and they are eliminating programs at an alarming rate still to this day.

You will be hard pressed to find a lender willing to take a Stated deal this day even if the income being stated makes perfect sense.

I currently have a client putting 40% down on a home & just about every single bank has passed on the deal. Only one bank, an equity lender, is willing to do the transaction...for a steep rate!

This is only going to get worse before it gets better...but it will get better!

Monday, April 14, 2008 2:38 PM by MikeG

# re: Charleston real estate headlines

Mike, things are different in New York of course. And while it is true that lenders are no longer offering some or many programs, a buyer who is putting money down, has good credit, debt to income ratio to support the loan and can actually document all this will get a loan in a New York Minute.

I like stated loans and they do make sense for some buyers but they were abused by wild income claims that nobody bothered to question. Imagine a house painter in California stating he makes $220,000 per year, no offense to a house painter but I don't think so. The lender didn't care, the loan was made, sold and somebody is holding the toxic waste that remains.

Right now, the biggest problem that I see is the penalty rate being offered for non conforming. It is certainly hurting the luxury home market.

And Mike, I'll agree with you, things will get worse before they get better and they will get better.

And despite all that, thankfully, my business is running ahead of last year so that's a good thing. Not quite 05 but at least my head is well above water. Not so for a large number of real estate agents.

Monday, April 14, 2008 4:11 PM by Howard Arnoff

# re: Charleston real estate headlines

The Frightening thing about NY....a Painter whom is employed by any one of the many State Agencies here (Police, MTA, Port Authority etc.)

IS Pulling down almost 200 grand a year.

And school Administrators do the same income without breaking a sweat....

As I always say...I am counting my days Howard

Monday, April 14, 2008 4:30 PM by MikeG

# re: Charleston real estate headlines

Mike, that is amazing but then, it's a government agency and they don't care, the taxpayers will foot the bill.

But that painter should be able to get a mortgage by providing 3 years of income tax records if there is a nice home for less than a few million.

How much is a slice of pizza these days.

Monday, April 14, 2008 4:42 PM by Howard Arnoff

# re: Charleston real estate headlines

LOL...The price of a slice varies wildly...some places get as much as $2.50 a slice and up to 20 bucks a pie but the average seems to be about 2 bucks.

A bagel with butter almost 2 bucks

A bacon egg and cheese sandwich SPK with a small coffee...another NY staple...cost me 5 bucks last week. I could have sworn they had a special (the deli) but when I got back outside I had noticed the sign that advertised the breakfast special was whited out.

To date one of the best Bacon and Egg sandwiches I ever had was last year from a small deli in Charleston right near the  out door "Market Place"....the sandwich was made from biscuits that were sitting in the baking tray cooling off....MMMMMMMMMMMM....Take a guess where the woman who owns the deli is from......NY!

But things are certainly getting pricey these days.

Monday, April 14, 2008 8:31 PM by MikeG

# re: Charleston real estate headlines

$2.50 still isn't that bad for a slice but all food seems to be sharply higher. I remember when bagels were 50 cents not too long ago and somehow they are over a dollar.

But the government reports exclude food and energy because they're too volatile so we don't have any inflation as long as you don't count anything that goes up in price.

Tuesday, April 15, 2008 4:36 AM by Howard Arnoff
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