Charleston, SC Real Estate Market Update

In looking at the MLS statistics for January through July of 2009, there are several apparent trends.  There is still a lot of inventory to get through before we see a complete turnaround in Charleston’s market.  (There are about 10,000 homes for sale right now!)  And, the overall absorption rate is about 11 months at the current rate of sales.  However, with the improvements we’re seeing for the first seven months of the year, the Charleston real estate market is showing good signs of growth.

Positive:

1)  Pending home sales have increased 5 months in a row.  As first time home buyers continue to take advantage of the $8K tax credit (which has a deadline of November 30), these home sales are expected to continue to increase over the next few months.

2)  Comparing January through July of this year with last year’s stats, the total number of closed sales are about 24 percent lower than last year’s.  However, at the increasing rate of homes going under contract everyday, Charleston is actually expected to have more contingent homes this year compared to last year.

3)  Home prices are about eleven percent lower this year compared to last year.  Charleston’s decrease in home prices is not nearly as severe as other cities in the country.  (Las Vegas and Miami are expecting about a forty percent decrease in home values.)  As we start approaching the bottom of the market (which is expected to hit Charleston in early 2010), prices should eventually level off as buyers continue to take advantage of “good deals” and drive up demand.

4)  As sellers are slowly becoming more realistic with the listing price for their homes, more buyers who were sitting on the fence are now ready to make offers.  Charleston’s real estate market is now seeing multiple offer situations as commonplace, which hasn’t been the case since the beginning of 2007.  This is bad news for some buyers, since they’re not able to get their first choice home.  But, it’s really good news for the market as a whole, as multiple offers are seen as healthy signs of demand from buyers. 

Negative:

1)  The most harmful factor for Charleston’s real estate market right now is perhaps short sales.  One in five homes going under contract right now are short sales, so they’re affecting a lot of the statistics.  Although short sales can be a great deal for home buyers, many of these contracts fall through.  In fact, there is a thirty percent chance that each short sale contract will be terminated before closing.  So, even though pending home sales have increased, this higher rate of contract terminations (due to short sales) is counter balancing much of the productivity. 

2)  Short sales are also negatively affecting the market because appraisers are now including the neighborhood statistics from short sales when determining a home’s value.  In neighborhoods with lots of short sales, this trend is hurting even those buyers and sellers who are not directly involved in a short sale.