Charleston South Carolina real estate market report, March 2008 analysis
The Charleston real estate market seems to defy gravity when it comes to home prices. With too much supply and lower demand, you would think that prices should have declined much more than they have. While the median price declined by about 5% from March 2007 to March 2008 on a year over year basis for all sales in the Charleston area, when you analyze the most recent 12 month period and compare it to the previous 12 month period and when you break the housing market into classifications by price and type of property, the picture is not as gloomy as the media might make you think.
The left axis represents unit sales and the right axis represents inventory.
Don't misunderstand for a moment that the Charleston South Carolina real estate market is soaring and doesn't have a problem in the world because obviously, that just isn't the case. Inventory started to increase about two years ago and unit sales started to decline at about the same time. While inventory has stabilized with the possible exception of Charleston luxury real estate, unit sales continue to decline from previously lower levels.
An Inman News article by Glenn Roberts Jr., When the Median is Low, discussed current market conditions in California with sharply lower prices and declining unit sales. One of the problems with the currently popular Case-Shiller index is that much of the doom and gloom data is heavily weighted from seriously troubled real estate markets in California and Florida.
It's probably a combination of fear of buying because of the doom and gloom reported by the media, a fear of paying too much because you think your home might be worth less tomorrow and the unavailability of previously offered mortgage products to those who can no longer qualify for a loan. At the luxury level, two forces seem to be occurring simultaneously, first, many luxury Charleston real estate buyers traditionally have relocated to Charleston from more expensive markets in the Northeast and Midwest and with tougher market conditions there, they can no longer sell their homes as easily as before. A second factor is the wider spread and and higher interest rate for non conforming loans despite the higher loan limits for jumbo loans passed by Congress which thus far hasn't made much of a difference at increasing demand for higher priced properties.
Anecdotal evidence seems to point to sellers finally understanding that their home is no longer worth what it might have been at the peak of the market in 2005 and early 2006. Some sellers have decided to take their home off the market and stay put, others are renting their home rather than sell for less than they think it might be worth. There are some foreclosures available at good prices, although condition is generally poor at best. There are some homeowners in trouble as evidenced by a bunch of "short sales", unfortunately the sale can't be negotiated with the approval of the lender or lenders and thus far, the banks have generally been unresponsive to offers. Some of the listing prices for short sales being offered in the Charleston MLS are deceptively low since the bank has not necessarily agreed to accept an offer at that price. But on a positive note for buyers, there are some very real, motivated sellers who understand current market conditions and have priced their homes accordingly, have put their homes in no apology, mint condition and good deals are available.
Analyzing and understanding the real value of the property you might be interested in and crafting an offer that will not be considered insulting yet not paying the asking price is the key to the buyers market we currently find ourselves in. If the property is well priced, while you shouldn't have to pay full price, you are not going to be able to buy it at a big discount. The most important thing to a buyer in today's market should be how much below today's real value is obtainable rather than how much below list price you can buy it at. Actually, if a home for sale is very overpriced, more than likely you won't bother to even view it.
Well priced homes in good condition are still selling, homebuyers are still searching for homes to buy and they are writing contracts and mortgages are still available.
Click here for Charleston home prices
Click here for Inventory and Absorption rates
Click here for Unit sales