Has the Charleston real estate market reached the bottom yet
I'm sure that many Charleston real estate buyers are sitting on the sidelines waiting for the bottom to be reached before buying a home. One popular phrase is that no one wants to catch a falling knife.
One week ago, I wrote about Wall Street's dollar menu.
And while this is not investment advice, I'm starting to think about taking some GE along with a double cheeseburger, fries and a chocolate shake.
Well, I should have bought but I didn't. GE closed at $6.79 that day and is now up 41% this week to $9.57. The low for the year is $5.87.
The stock market has gone up sharply this week so did we see the bottom. Hindsight is always 20/20. But they don't ring a bell to announce the bottom of the stock market, just to start and end the day. So how will you know when we've reached the bottom of the Charleston real estate market.
Rather than sounding like David Lereah with NAR's "it's a great time to buy" campaign, I'll suggest that the combination of low mortgage rates, abundant inventory, motivated sellers and lower prices plus the tax credit for first time home buyers are all very good reasons to consider housing more affordable than before.
But are you sitting on the sidelines waiting to be sure that the market has turned. And when it does, how will you be able to buy at that exact moment that the market turns. One thing you should consider is that mortgage rates play a bigger role in housing affordability than you might think. Check out the spreadsheet below and notice how each quarter point increase in your mortgage rate corresponds to a corresponding decline in home values.
As you can see, if mortgage rates go up just a quarter percent, it is the same as home prices declining by another 2.79%. Should rates go to 6% (which used to be considered a great rate), it's the same thing as a price decline of almost 12%.
This is my personal opinion only but I think we'll look back at the past 6 months and call it the bottom. After a serious slowdown during the 4th quarter which spilled into the January and February statistics, activity has been very brisk so far this year so I'm hopeful we'll see a positive turn in the market in the months ahead.
Hey, I was right about GE but I didn't pull the trigger. 