Home sales plummet in JulyMedian price rises slightly; market not as saturated By Katy Stech (Contact)
The Post and Courier
Tuesday, August 12, 2008
Historically, the month of July has capped the end of the busiest sales period for the local real estate industry. But the end of that peak season this year didn't provide the bump in business that agents had hoped for. A total of 760 residential properties in the Charleston area changed hands during July, down 30.8 percent from 1,099 in the same month last year, according to the latest figures from the Charleston Trident Association of Realtors' Multiple Listing Service. The median price posted a slight 2.1 percent increase compared with last July, rising to $215,000. The average number of days on the market for a home in the region was 121 last month. That's about the same as in June but up from an average of 92 days for July 2007. Locally, monthly housing sales tracked by the North Charleston-based association have been falling for more than two years. There are no clear indications of when the market will bottom out. One welcome indicator is that the number of homes for sale in the region is coming off the record-high inventory levels reported in June, a possible sign that the market could start stabilizing in the slower months ahead. Many professionals in the industry have said a recovery in the market has been hampered by the high number of homes for sale in the greater Charleston area — currently 10,968 — not to mention the tighter lending standards. The inventory glut has given prospective buyers reason to hesitate while forcing sellers to compete more aggressively, putting downward pressure on values. "Buyers are looking and looking and looking and looking — they're very indecisive," said Jim Mills, an agent with Carolina One Real Estate in Goose Creek. "I don't believe they think this is the bottom of the market." Though buyers have been consistently hesitant, Mills said, more sellers seem to be willing to accept lower property values in recent weeks. Also, he said, more individual sellers have begun offering incentives, such as warranties, in an effort to compete against larger home builders that can cut prices on brand new homes. A market study Mills conducted earlier this year found that half of Berkeley County buyers opted for newly built homes over existing residences. Bill Anderson of Keller Williams Realty, like many other Charleston real estate agents, has been telling his buyers to have faith in the long-term value of local real estate. "Although the market is down, it's going to come back," he said. Anderson left a longtime career of selling industrial equipment one year ago to help people buy homes. Though many new agents have left the industry for other work as times got tougher, Anderson noted that he came into business after the housing market already had peaked, so he's been able to cope with the state of the industry. "I think that so many people ... have had trouble responding to the market," he said. "But we're finding buyers and we seem to be staying active." Reach Katy Stech at 937-5549 or kstech@postandcourier.com. |
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Comments
This article has 13 comment(s)
Posted by Neponset on August 12, 2008 at 6:22 a.m. (Suggest removal)
My question is: Do the figures for listings and properties sold include all properties in these categories, or have some been excluded, as we have been told in appraisal comparables. Specifically, have foreclosure properties been included in these figures?
Posted by willx45x on August 12, 2008 at 8:41 a.m. (Suggest removal)
The solution to the debacle that is the tri-county real estate market is simple - lower prices. Until sellers get a clue, we will continue to see record inventories, fewer and fewer sales and declining prices (the small uptick in prices is a misleading stat). When you look at areas like MP and DI, what you see is prices that are still completely out of touch with reality. Buyers are educated and they understand that these prices are not realistic. They will continue to wait until sellers get religion. My guess is that will happen sometime in 2009. Prices have 25-30% more to go on the downside before any sort of equilibrium is reached. Smart buyers will continue to wait until greedy sellers and developers wake up and realize it's not 2005 anymore and won't be again for a few decades (if ever).
Posted by HighDef on August 12, 2008 at 9:29 a.m. (Suggest removal)
lots of money was made the last 15 years in Chucktown, I got out of dodge as a agent/developer when my 3 bedroom 1200sq ft home in byrnes down sold in mid 300s. Too many people tried flipping due to the local celeb's ? Charleston still remains a great investment market, the national builders are taking it the worst which is perfect in my opinion.
It would be great to see the downtown commercial data if anyone has it available.
Posted by whome on August 12, 2008 at 9:30 a.m. (Suggest removal)
while the answer to housing is to establish a "floor", the path to get there is not that simple. It's easy to say that housing needs to correct 25-40% from the 2006 highs, but if that correction is to occur, then a large majority of the homes will be underwater. Unless there's a short sale or other workout, then the only options are to come up with the cash at closing or to foreclose. I'm not sure how many homeowners have that kind of cash for closing...
Posted by coolfreaknbeans on August 12, 2008 at 9:51 a.m. (Suggest removal)
HighDef-I know what you mean.Byrnes Down homes were going for CRAZY prices.My family had a home in there that they sold a couple of years back.It was only a 2bd 1bath and sold for nearly $300,000.No back yard or front yard to speak of either.When I lived in VA for a few years the housing market was absurd!They had a double wide trailer(although it was newer trailer with a brick "skirt"LOL)for sale for $211,000!(and no it wasnt on a huge amount of land or on the water)Houses in decent areas were selling for $300,000 plus!And these were not custom designer homes.These were average older homes in average naighborhoods.We knew we would never be able to buy there(not that we had intent on staying)but still.My friend lives there and said $180,000 will get you a 1200sq ft 2bd home in a questionable neighborhood at best.
Posted by flinsc on August 12, 2008 at 10:24 a.m. (Suggest removal)
Wait another 12 months, homes will be down another 20%, and people will start buying. I still see homes being bought in Mt P and Daniel Island for above 500K, which it is hard to understand why, but if you can afford that home, it doesnt matter. It is really the homes that were 120-175 for first time buyers that just aren't there in these areas. They are now 250-350K. Hopefully the correction will happen here like in other parts.
Posted by SCGirl0901 on August 12, 2008 at 11:57 a.m. (Suggest removal)
Another scenario to all of this is the fear/reluctance of lenders to even consider financing anyone without extremely high credit scores. The experience I had when I went to put my house on the market and also begin looking was not good. It became clear that it didn't matter that I had been in my home for 18 years (obviously no forclosure)and that yes - my credit took a hit after a divorce - but for two solid years everything has been no less perfect. The scores take alot of time to climb, and lenders are so fearful of anything questionable.
Houses aren't going to move with financing being so tight. I do understand a portion of the 'why' - but one thing that could've prevented alot of this was not doing a variable mortgage on a $500,000 home if the combined income was $100,000.. (don't bother critiquing my numbers - I just threw those out there. I think everyone gets the point).
Posted by justjerry on August 12, 2008 at 1:10 p.m. (Suggest removal)
SCgirl is correct. The housing market is not going to rebound until the mortgage companies start to lend money again to folks other than those with near perfect credit. The banks can bitch all they want but the housing market will continue to collapse in terms of sales until they figure out how to manage risk and lend money again.
I have two rental houses that the folks living there want to buy. In both cases they are paying more in rent than they would be if they purchased it from me for the price that I am asking. They do not have perfect credit but neither are huge credit risks and have credit scores in the mid 600s (one is recovering from a divorce and the other is a young couple.) One of the houses has nearly $4 thousand in property taxes built into the rent - thanks -Berkeley County!
The banks are saying that they cannot afford the payment but they are making the payment and then some already! Stupid on the banks part. I will continue to sit on them and take my tax deductions for rental property every year rather than give them away. This is another reason that homes are not selling as much, owners of rental property are sitting tight rather than take a bath.
Posted by whome on August 12, 2008 at 1:35 p.m. (Suggest removal)
"owners of rental property are sitting tight rather than take a bath..."
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I don't think this is your case, but the new foreclosure relief law has eliminated the 2/5 conforming use rule for capital gains exclusion. It's strictly pro-rata now.
Posted by justjerry on August 12, 2008 at 2:06 p.m. (Suggest removal)
whome - I will be shelling out capital gains when I eventually do sell these properties. I was hoping to unload one of them a couple of months ago but the tenant could not come up with the 10% downpayment that the mortgage company wanted. This was the one with the higher gain and I wouldn't mind unloading it given the prospect of BHO ruining the investment market for "rich people" like me if he gets in office.
Posted by Floger76 on August 12, 2008 at 4:03 p.m. (Suggest removal)
The lending industry is now making the same mistake that they made over the last several years. They are being too extreme. Until just recently, you could get a loan if you could fog a mirror. That led to the issues that we are having today. Now that pendulum has reversed, and FNMA and FHLMC have decided to go extreme in the other direction. I don't agree with earlier posts however: You don't need "near perfect credit" in order to get a mortgage loan.
Posted by willx45x on August 12, 2008 at 7:58 p.m. (Suggest removal)
No offense, but all of this talk is academic until prices come down to meet current demand. You can talk about supply and demand until you are blue in the face and I agree that this basic economic principle rules every free market. When I say "greedy" sellers, I mean those sellers (and there are many) who have not priced their homes realistically and are therefore losing more money daily than they can ever make up on the back-end. I'm a big believe in capitalism and capitalism is THE reason why homes are not selling. Smart buyers realize much of the appreciation of the past decade was "phantom" appreciation fueled by ridiculously lax lending "standards". This phantom appreciation simply must be eradicated for any normalcy to return to the market. When that happens, you will see lending standards relaxed somewhat and buyers will return to the market in healthy numbers. Until we see price capitulation, we will continue to have high inventories, few sales and a terrible housing market. As much as builders, developers and homeowners might want to turn back the clock, they cannot. The stubbornness of real estate investors and homeowners will continue to make this correction last much longer than it needs to last and at the end of the day prices will still fall as much (and possibly more) as they would have any way. In the meantime, money will be lost in the form of opportunity cost, carrying costs, etc...
Until prices return to reality, nothing else matters. MP and DI are nice places to live, but the demographics simply don't support the prices. The standard line from the Realtors is that the second home market would provide continued "lift" to prices in these areas. Well, guess what - that's not happening, as would-be second home buyers are finding their primary residences decreasing in value every day.
Also, you're wrong about where the worst of the market is - the worst market, price-range wise, is the $417k and up market. The low-end of the market is still doing fine in many areas. This is being felt primarily on the high-end of the market and primarily in areas that experienced ridiculous appreciation like MP, DI, etc...
Posted by whome on August 12, 2008 at 10:16 p.m. (Suggest removal)
"the worst market, price-range wise, is the $417k and up market."
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That is correct. The private jumbo market is dead; the only ones offering this amount are the GSEs (Freddie and Fannie), and now they've ratcheted up the lending standards. No more of the Alt-A, no doc, Interest only loans. BTW, Alt-A will be this year's version of subprime.