Charleston Real Estate Blog

Summer starts tomorrow

... unofficially since the summer solstice isn't for another month. But Memorial Day weekend is the unofficial kickoff to summer in the Lowcountry and any excuse for a long holiday weekend must include Friday as well.

Photo courtesy of Flickr by Paco CT

You'll know it's really summer though when the weather forecast doesn't change, mostly sunny with highs in the 90's, overnight lows in the 70's and a chance for pop up thunderstorms every afternoon. Hurricane season begins June 1 and we'll pay particular attention during the Cape Verde season, middle end of August to the middle end of September. Let's hope and pray that for the third year in a row, we have no major landfalls anywhere in the country.

With a hat tip to Jay T, I found FrugalDad with some good tips to prepare your home for summer energy savings. (By the way, my ceiling fan was repaired (it was just a loose wire) and once again, it's much more comfortable in my office - it does make a difference.)  

Do you plan ahead

It's been said that over 80% of all real estate consumers begin their search on the Internet. But when do most people begin their search.

I've been told by several buyers that they were making plans to move to Charleston in a year, others were considering relocation within a few months and I have subscribers who have been receiving listing alerts for over two years. Plans and planning varies.

But I was somewhat surprised by several phone calls and emails this week from buyers who just suddenly planned to look at Charleston homes for sale.

One buyer was sitting in the parking lot of a condo when she called me to show her several properties for sale right then. Now even more surprising was that she told me that she was a real estate agent from out of town who just "popped" into Charleston and wanted to look at condos for sale.

Aside from the fact that I was busy when she called, one of the units she wanted to see was tenant occupied which means that an appointment is required and tenant's rights allow for 24 hours notice before you can view the property.

Another buyer just sent me an email and wanted to view homes for sale this weekend. While I wish I could have, it's difficult to be in two places at the same time since another out of town client had already made plans to search for homes with me this weekend.

My best suggestion, plan ahead whether you want to work with me or any other Charleston real estate agent. And because Charleston has a very busy tourism industry, it's also important to make sure you can get hotel reservations.

By the way, we will be on vacation at the beach over the 4th of July holiday and I will be unavailable to help you from Saturday June 28th through Sunday July 6th. 

The solution for suburban sprawl

The Charleston South Carolina area has been growing rapidly during this decade. Charleston has benefited from the overall trend towards migration from the Northeast and Midwest to the South and West. Job creation has been excellent, the quality of life is wonderful, we have great weather and still have 4 distinct seasons but winter is short and mild and Charleston is located half way back (many Florida transplants have decided the Carolina coast is better located to return home for a visit and they have been referred to as "half backs").

To accommodate the growing population and build new homes for the many people who have been and will continue to relocate to Charleston, builders have purchased inexpensive land and built subdivision far from the center of the city. Commuters get in their cars, trucks and SUV's and face longer commutes to work as the road construction and road widening haven't kept up with the growing population. When busy people who are late for work try to text message or apply their makeup while driving, the inevitable result, a car accident will back up traffic even more.

Local politicians have attempted to control growth with building moratoriums and other measures. Their focus should be on planning and managing growth since people will continue to want to move to Charleston.

But a solution is for suburban sprawl is now in sight.

High gas prices.

And I think high gas prices will have a significant effect on the Charleston real estate market. I believe that more and more people will want to live both closer to their jobs and to the city in the coming years. When you analyze how much someone might pay in gas to live 20 miles from their job vs. living 2 miles from their job and multiply it by the $4 or $5 price per gallon which is seemingly inevitable, they may think about living closer to where the jobs are and more of the jobs are in the city, not the suburbs.

When put in this perspective, Charleston real estate buyers might consider spending a little more on their home with the savings they'll gain from spending less on gas. I think real estate values will hold up better and appreciate faster in areas that are closer to the city and the job centers.

Find a home that looks too good to be true

... it may be.

One of my long time subscribers just called me the other day inquiring about a home for sale in one of the nicest neighborhoods in the Charleston real estate market and wondered what I could find out about it.

The home for sale caught his attention because it was priced about $200,000 below market value for that neighborhood. There was a mention in the listing the home was priced below market value because of repairs required by the Architectural Review Board of the Homeowners Association. And of course, the home is bank owned and being sold as is.

So what repairs might be required.

A little landscaping, new cement walk, a little work on the back deck and upgrade the front entry to the status quo of the neighborhood. And...

brickwork and flashing.

Architectural review boards and homeowners associations are sometimes misunderstood by buyers from other areas of the country who are looking to relocate to Charleston. Most Charleston neighborhoods have a homeowners association formed to take care of the common areas and put covenants and restrictions in place to maintain the integrity and property values in the neighborhood. Some neighborhoods are highly restrictive with lots of rules and regulations, others have common sense rules that are easy to abide by. (When you are looking to buy in a neighborhood that has covenants and restrictions, obtain a copy and review it before writing a contract so that you would feel comfortable living there.)

But back to what may (or may not) be wrong with this home.

The ARB did not inspect the home for structural deficiencies but noted that 2 different color bricks were used on one side of the home, the brick work at the lower part of the home is badly stained and discolored and considerable variation in mortar color and quality. Several noted gaps between the flashing and the bricks could lead to water flowing behind the bricks.

Uh, oh. That might be bad and very expensive to fix.

Of course, you are going to have to bring in several home inspectors and if you choose not to go forward with the purchase, you still have to pay for the inspections. Since you don't own the home but are simply looking to analyze what potential repairs might have to be made, you can't tear up the house to find hidden damage that may or may not be lurking.

Does this look too good to be true or is there real value here.  

I've also seen several instances of homes for sale in the Charleston real estate market where the builder ran out of funds and a to be completed home was being offered for sale subject to the buyer finishing construction. As you review listings, the low listing price will generally jump out at you and catch your attention until you notice that you may have to spend serious money for flooring, cabinets and countertops, appliances, fixtures, etc., etc. You may be able to pick up a bargain. Maybe not.

The question you have to ask yourself is whether the low purchase price plus the cost of repairs or finishing a home will still be a bargain at the end of the day. Remember the old saying before you jump in, if it looks too good to be true, it may be. 

Not everyone wants to buy a foreclosure

There are foreclosed homes in just about every neighborhood in the Charleston real estate market and my neighborhood is no exception. It's unfortunate and it's especially sad when you actually know someone who lost their home. And many buyers are seeking to buy distressed properties and purchase the most home possible for the least amount of money.

But apparently, not everyone wants to buy a foreclosure.

I have listing alerts set up for every property in my neighborhood so that I know about all new listings, which homes went under contract and which homes sold and for how much. When I clicked through this morning, I was somewhat surprised to see a home go under contract for considerably more money than the list price of an identical home that I know is a foreclosed property.

This specific home also went under contract in just 5 weeks, I won't know the sales price until it closes but I'm guessing it is just 1% or 2% below list price at most (compared to an average of 5% below list per Charleston MLS market statistics). The home has great curb appeal and the listing indicated nice upgrades throughout.

The lesson here for any sellers thinking about putting their home on the market is that if you put your home in no apology, mint condition and price it correctly, it does not have to languish on the market for months and months and you won't have to consistently take price reductions in order to sell.

If you are looking to buy, there are many nice homes available to choose from at attractive prices that are not foreclosures. Or if you are so inclined, I can help you purchase a foreclosed home. It's a buyers market and either way you decide is best for you, it's great to have choices.    

Redesigning my website

I've been spending some time redesigning and updating my website. I've added additional graphics and lots of new information to help you learn more about the Charleston real estate market and make it easier to search for Charleston homes for sale. Take a look.

The housing crisis is over

... according to an editorial opinion in the Wall Street Journal.

"The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now." Read more by Cyril Moulle-Berteaux. 

Remember the headline effect. By the time the media reports the top or the bottom, the trend has already shifted. Time Magazine is the best indicator. Home $weet Home was the cover in June 2005, give or take a month or two from the top.

While I was googling for the cover, I came across a brilliant article that forecast much of what we have seen over the past few years. Written by Bill Fleckenstein in August 2005, he surmised the end of the housing boom and referred to the Time Magazine cover as well as making points about the death of the housing ATM, condo mania, liar loans and insane speculation. This is just fascinating reading. Click here for the story.

My suggestion is that you pay very close attention to inventory levels and absorption rates in the Charleston real estate market. Bottom line, it's always about supply and demand.

And I'm hearing anecdotal evidence from areas like Phoenix that inventory is now declining and sales are increasing. It makes sense, housing is once again more affordable.

Charleston foreclosure trends, May 14, 2008

If you read the newspaper or turn on the television or check your news via the Internet, rising foreclosures is certainly one of the top stories. With all the bad news you would think that everyone in the country should be packing their stuff in anticipation of a knock on the door by the Sheriff.

Katy Stech of the Post and Courier had the front page and inside spread of the big business section Monday on the rising popularity of short sales and to her credit, she painted a sobering picture that it was more easily said than done. The Tuesday newspaper was filled with 5 pages of announcements, the biggest ever and interestingly, I noticed a couple of real estate agents among those who are losing either homes or investments.

The courthouse steps in downtown Charleston are filled with hopeful buyers and curious onlookers on those days when foreclosed properties are auctioned off. Despite the numbers of available properties going through the Master in Equity's office, only a few bids are actually being accepted by the bank to be made available for sale at a later date. So much for those trying to "steal" a property.

Today, as always in mid month, is the release date for RealtyTrac's monthly foreclosure data and the headline just screams of blood in the streets. I kind of get the feeling that the folks at RealtyTrac are kind of like the people at the Weather Channel; hoping for bad news or bad weather because nobody really pays attention when it's sunny and nice out.

The sobering statistics. Foreclosures jump 65% from a year ago. No surprise there but they now have a nifty graphic to showcase the gory statistics.

The good news for Charleston and South Carolina real estate is that our ranking is now 41st, better than 35th last month. There were a total of 662 filings, actually down from last month and one home in 2984 was foreclosed upon last month. The bad news is that there will be more.

Click here for the complete report. No change among the leading states, it's Nevada, California, Florida, etc. continuing to have serious issues. But word from several of my friends in Arizona indicates that once the properties are actually being listed, activity has been brisk, inventory is declining, prices of course are declining as a result of the mix of properties being sold and the end hopefully appears to be in sight. South Carolina may be a little later in the process but don't expect anything as severe in the Charleston area as those hotbeds of rampant speculation.    

Going green, for money or for good

I noticed an interesting post by Seth Godin the other day and it got me thinking. Seth was talking about The Coming Backlash Over Green Marketing and apparently my favorite luggage manufacturer, Tumi, will plant trees if you buy their product.

"The easiest marketing promise to make is to say you'll do something green if people consume what you sell. That you'll support one green cause or another".  

Seth speculates about making green measurable and accountable with a number like the energy rating on a refrigerator or the EPA gas mileage on a car window.

At the beginning of the year, I said that green was going to become a major trend in housing. I also recently read that in every housing downturn, the homes that were built coming out of the downturn would be significantly different than the homes built prior to the downturn so could it be that green will become an even bigger trend.

We are certainly seeing it in the Charleston real estate market. Brentwood Homes was the first major builder in Charleston to build only Earthcraft homes and two neighborhoods near Park Circle, Mixson and Oak Terrace Preserve are being built as green neighborhoods. I just got an email from one of my favorite David Weekley site agents which said that David Weekley Homes was going totally green.

All of this is good news for the consumer who is looking to help save precious resources and enjoy a home built to higher standards.

But I wonder, are businesses doing it for a good cause or are they doing it to make some green.

Heck, the $20 bill isn't green anymore.

Searching for Charleston homes for sale

To get meaningful results when searching for Charleston homes for sale, it's best to narrow your search criteria. Above is a good example. There are currently 3371 properties for sale between $200,000 and $400,000 in the Charleston real estate market. While many buyers like to see as many homes as possible to insure that they make the best buying decision possible, it's unlikely they will be able to see all these homes and most of the homes won't really be what you're looking for.

And of course, very few real estate agents will go along for that ride.

Now, if you are really looking for a new or newer single family detached home priced between $289,900 and $330,000 with a minimum of 3 bedrooms with the master down and at least 1900 square feet and a 2 car garage or larger, you can narrow the results down to a more manageable 100 homes.

One of the funny things about search parameters is that a great house might be available but it could be 1890 square feet and it wouldn't have displayed in the above search results. If you want a home that is over 2000 square feet, start your range below your minimum. Similarly, many homes are priced with what I like to call Wal-Mart pricing so as to appear less expensive, $289,900 isn't really a lot less expensive than $290,000 but it appears to be so it's important to start the pricing search $100 less than the low end of your range or you'll miss quite a few nice homes.

Whether you are planning on moving to the Charleston area for a job relocation, just wanting to relocate to the Charleston area, wanting to retire to Charleston or buy a second home in the Charleston area, in order to get a sense of the Charleston real estate market, listing alerts sent by email of all new properties that come on the market are a great way to familiarize yourself with the Charleston housing market.

Click here to start receiving listing alerts for Charleston homes for sale. 

Happy Mothers Day

This is the 500th post

... to the Charleston real estate blog and a big thank you to the many readers who stop by and spend a few minutes a day with me.

I remember when I started to write the Charleston real estate blog about a year and a half ago and just a month later, I got a phone call from Katy Stech, the real estate writer at the Post and Courier, who was researching an article for the newspaper about Charleston real estate agents who were blogging.

She asked about why I started, what I was writing about and how many views and comments my posts were getting. I said that at that time some posts were getting as many as 60 or 80 views. Comments weren't all that frequent just yet. I told her I was trying to write a post just about every day about some aspect of the market including Charleston market statistics and trends and whatever seemed to be of interest to real estate consumers (and that is just about what I've done and you can continue to expect).

Imagine my surprise today as I now see that many posts have hundreds of views, some posts have over 1000 views and the most viewed post, Commission and Possibly a Bonus Too has over 2000 views. I'm very grateful to those of you who stop by and make a comment, there aren't really as many as I might have hoped for and I understand that is fairly common for a local real estate blog but I do wish that more of you might interact.

Once again, thanks for stopping by, it's been a lot of fun for me and I hope you continue to enjoy my perspectives on the Charleston South Carolina real estate market.    

What does a real estate agent really do

I'm not sure that many real estate consumers understand what real estate agents do to earn a commission and I'm not sure that many care if an agent gets paid, I think the only thing buyers really care about is buying a house. First of all, a real estate agent only gets paid if and when the sale closes. They aren't salaried, they pay their own expenses and they risk their time and effort in every real estate transaction. The seller has traditionally paid the commission to both the listing agent and the selling (buyer) agent so there really isn't any cost to using a buyers agent (other than the obvious fact that the seller does pay the commission out of the funds provided by the buyer).  

Now some people might think that if they could cut out the middleman (buyer agent) and deal directly with the listing agent (a concept called disintermediation), the seller will reduce the price of the house by the amount of commission due to the buyers agent but it generally doesn't work that way whether you are talking about new construction or a preowned home. In new construction, the site agent can be very helpful to you but the commission that was reserved for the buyer agent just gets saved by the builder. With a preowned home, the listing agent will just keep the commission for both sides of the transaction or actually reduce the commission the seller was scheduled to pay. It might result in a slightly lower sales price but the cost of no representation might be higher than the apparent savings. After all, do you have enough information to really evaluate the value of the home.

A lot of people might think that all a real estate agent does is stick a for sale sign in the yard and enter some stuff in the MLS and presto, the house is sold. On the buyer side, some may think the agent just drives people around, opens the door of a few houses, writes a contract and shows up at the closing and leaves with a big check. If only it were that easy.

Foreclosure at the courthouse steps

It was apparently a wild Tuesday at the Charleston County Courthouse for the weekly foreclosure sale with a couple of Habitat for Humanity homes selling and getting a lot of media coverage. The two homes actually sold for quite a bit more than owed and Habitat will have additional funds to buy more land and build more homes so that is good news.

Most interesting was the home in Mount Pleasant selling for a little more than $600,000 with only $350,000 owed. It seems the house has been listed for sale for about 2 years and the sellers wouldn't budge on their asking price and never dropped their list price below $900,000. For whatever reason, they were not able to make their mortgage payments, the house went into foreclosure, their credit is likely ruined for the foreseeable future and they don't get a penny from the sale of their house.

A lesson from the courthouse steps. Don't be a stubborn seller. If you're in trouble financially, figure out how to avoid losing your home and price it to sell for what the market value is and in this case, they might have left the closing with at least $250,000 and likely even more had the home been priced right from the start.

It's better than nothing.  

My first fifty

... dollar fill up was yesterday. And real estate agents tend to drive a lot so I'm not expecting it to get any better at the pump this summer as I drive clients around the Charleston area looking at homes for sale.

On a positive note, higher gasoline and food prices are not inflationary according to the government's core index.

But we know better, don't we.