Brace Your Buyers for Higher Home Prices

Home prices throughout the Charleston, SC metro area are on the rise, some at the fastest pace ever. Home buyers need to move in quickly while there is still a decent supply of affordable homes and interest rates are still historically low.
West Ashley Avondale Point sign Jim Bobo
If buyers haven’t already purchased in the iconic Avondale District, they will definitely be paying more – a lot more. Prices in some of the District’s neighborhoods are above their 2007 peak average selling price. Yes, above the peak. And this is trending just about everywhere close-in to Downtown Charleston.  The closer to Downtown Charleston, the faster prices are trending upwards.

June 2013 median home sale prices on James Island are up only 6.4% year over year.  And there is still a supply of affordable homes.

June 2013 median home sale prices on James Island are up only 6.4% year over year. And there is still a supply of affordable homes.

James Island is beginning to see some solid recovery of prices, too, but not nearly as wild as in Avondale.  One home in Stiles Point is set to close and set a new record sales price for any home on the street since the neighborhood was originally built in the 60′s.  Looks like Stiles Point has been rediscovered. Road improvements following the new Stiles Point Elementary School building, plus the additional traffic while Harbor View Elementary occupies the old Stiles Point building, have certainly drawn more attention to this neighborhood where you can walk your children to one of the best elementary schools in the State and still get a good deal on a 3 bedroom, 2 bath ranch home on a 1/2 acre lot – if you’re willing to deal with the updating that many older homes need but that most buyers today simply don’t want to tackle themselves.

You can read the Charleston Trident Association of Realtor’s update by clicking here.

Below is a National report about home prices and affordability from DAILY REAL ESTATE NEWS | MONDAY, JULY 29, 2013

Home prices are rising across the country and the prices for new homes in particular may increase significantly in the near future. Economist Bradley Hunter with Metrostudy told The Chicago Tribune that he predicts newly-built homes could see a 9 percent increase in price by the end of the year.

“Here’s what’s happening: Land values are going up very fast right now in prime locations, what we call the ‘A’ locations,” Hunter explains. “In the best A (and B) markets, we expect prices to rise by 11 percent to 15 percent. Builders are desperate to buy lots, which in some cases are 30 percent to 50 percent higher than last year.” The “A” and “B” locations, as Hunter refers to them, tend to be closer to the center city—near jobs, retail, and services.

Hunter does see some relief for those looking to buy in the coming year, however.
“I think the builders are going to have to come to grips with a new affordability mentality,” Hunter says. “They’re going to have to reckon with these forces — rising mortgage interest rates, mainly — that are going to limit how much they can raise prices. That’s why 10 percent to 15 percent price increases will become 3 to 6 percent pretty soon — in six to 12 months. It depends on when mortgage rates move higher. If they go up, say, by 2 percent or 3 percent, it will have a noticeable impact on what people can afford and therefore on what builders are offering.”

Source: “Builders navigating complex housing market,” The Chicago Tribune (July 26, 2013)

Jim Bobo Real Estate can help you find that great deal – give us a call!

Jim Bobo, Jr., Realtor, BIC, ABR, RSPS, MBA

SC Land and Homes LLC
Call or text (843) 442-7275
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What affect will rising interest rates have on the Charleston, SC regional housing market?

What affect will rising interest rates have on the Charleston, SC regional housing market?
James Island Land and Homes-Charleston Harbor Deep Water

According to Freddie Mac’s Office of the Chief Economist  in its latest U.S. Economic and Housing Market Outlook, the interest rate for a 30-year, fixed-rate mortgage is expected to hover around 4% during the second half of 2013 after rising 0.5 percentage points in the past several weeks.

Also in the report, which can be accessed at the end of this post, most housing markets  remain affordable and it would take a much steeper interest rate hike for potential homeowners to feel the economic pinch of rising rates.  Note the use of “most housing markets” in the report.   Even at a 4% interest rate level, high-cost cities such as San Francisco, San Diego, Washington D.C. and Boston have already regained their historical “unaffordable” label.

Exempting the traditionally unaffordable housing markets, Freddie Mac researchers says at today’s home price and income levels, mortgage rates would have to rise closer to 7% before families with median incomes would find themselves unable to afford a median-priced home.  Of course the assumption that home prices will not rise is negated given the incredible and lightening fast increase in home prices through much of Charleston County.  Some neighborhoods’ average selling price for homes YTD 2013, like Byrnes Down in West Ashley, have actually eclipsed the peak experienced in 2007 (but the Byrnes Down average selling price per square foot YTD 2013 is still 10% below that of 2007).

Byrnes Down Avg Sell Price 2007 - YTD 2013

Byrnes Down Avg Sell Price 2007 – YTD 2013

And to make matters more worrisome for the Charleston, SC housing market, Freddie Mac economists predict that we will have the dubious honor of joining the “unaffordable housing market club” when interest rates hit 5%, not the national 7% doomsday figure.

Still, Frank Nothaft, vice president and chief economist with Freddie Mac, calls today’s fears about rising rates unwarranted in many respects.  “The recent upturn in interest rates is sparking fears among some that the nascent economic and housing recoveries will be choked off before they produce sustained growth,” said Nothaft.  “Nothing in the recent trends suggests that we need to fear a major slowdown. A gradual rise in interest rates will not derail the recovery, and are an indication that the overall economic situation is improving.”

Freddie Mac’s What Happens When Interest Rates Rise

Jim Bobo, Jr., Realtor, BIC, ABR, RSPS, MBA

SC Land and Homes LLC
Call or text (843) 442-7275
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South Carolina home sales rise 24% in October

South Carolina home sales rise 24% in October

Jim Bobo Real Estate

Sales of residential homes and condominiums rose 24% in October, South Carolina Realtor’s reported, describing 2012 as a “comeback year.” Prices were fairly stable, the association said, as the median sales price increased 0.1%. The price range for homes with the strongest sales statewide was $200,001 to $300,000, with a 19.5% sales gain in that category. The property type with the strongest sales gains was condos, up 18%.

Charleston-area sales rose 30.7%, to 894 from 684 a year earlier. Greenville had the strongest percentage gain, up 35% to 660 homes sold in October, compared with 489 a year earlier. Columbia posted 663 homes sold, up 29.7% from 511 in October 2011.

The association said 4,608 homes sold last month compared with 3,717 in October 2011. “Most markets have shed listings, resulting from strong sales and sluggish seller activity. There has been a general easing of foreclosures and short sales, meaning distressed listings are dragging prices down less than in recent years. So it’s both about market fundamentals and market composition,” the Realtors association said in releasing the data.

Compared with October 2011, State-wide new listings in South Carolina increased 10.1% to 7,888, while pending sales were up 26.7% to 4,676. Inventory levels shrank 13.4% to 46,776 units. Days on market was down 10.8% to 131 days. Absorption rates improved as months’ supply of inventory was down 24.7% to 10.2 months. These variables have continued to improve for over a year now, and they all contribute to a more stable housing market. This along with continued job growth is pushing prices up.

According to the association, the economy is growing with 2013 expected to outpace 2012′s growth, mortgage rates are expected to remain near historic lows through 2015, and rents are expected to rise due to low vacancy rates.

Jim Bobo, Jr., Realtor, BIC, ABR, RSPS, MBA

SC Land and Homes LLC
Call or text (843) 442-7275
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Charleston Housing Market Experiences Sustained Rebound

It’s looking more and more official with over a year of sustained improvements in the local Charleston, SC housing market.  Declining inventory, increased sales volume, reduced days on market and increased average sales prices are all strong indicators of improvements.  However, while many neighborhoods are seeing a stabilization or increase in values, there are many neighborhoods still experiencing a decline in values.

If you’ve been waiting on the market to improve, now might be the best time the Charleston market has seen in years. Posted by Jim Bobo Real Estate

You should realize this is only a snapshot of the “general trends” in the Charleston region, and should not be used to determine your home’s value.  Make sure to visit our Charleston Area Real Estate Trends Report page to learn more about the importance of a customized CART Report.

With that clarified, here’s a synopsis from our MLS Board released Friday August 10, 2012:

The Charleston area home sales and median prices have made steady and sustainable increases for the past nine months—since November 2011. Preliminary data released today by the Charleston Trident Association of REALTORS® (CTAR) states that 972 homes sold at a median price of $205,000 in July; compared to July 2011, when preliminary figures showed 829 homes sold at a median price of $180,000.

Year-to-date, sales volume is 10% higher and median price has increased 2.5% compared to this time last year. 5,940 homes have sold at a median price of $182,305 thus far in 2012. Through July 2011, 5,395 homes had sold at a median price of $177,837.

Inventory and Days on Market
Inventory has declined 26% from a year ago, with 6,328 homes currently listed as actively for sale in the MLS. Days on market dropped below 100 days for the first time since December 2008, to an average of 97 days in July.

National Economist to Speak at CTAR’s Residential Market Update

CTAR will host the Midyear Residential Market Update with nationally recognized economist Dr. Lawrence Yun on Wednesday, August 15 from 9:30-11:00 AM at the Charleston Marriott.

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Jim Bobo, Jr., Realtor, BIC, ABR, RSPS, MBA

SC Land and Homes LLC
PO Box 1182
Johns Island, SC 29457-1182
Call or text (843) 442-7275
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