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 www.SCLandandHomes.com
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
www.JimBoboRealEstate.com
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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
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5 Reasons the Housing Recovery Remains Wobbly

Some information from an article by Rick Newman published by US News
How will the current trends in the Charleston market affect real estate prices? In short, buyers that have been on the fence should consider stepping up to the plate and buy now – at least for your primary residence.  “Flippers” should remain cautious. Sellers who have been on the fence, too, might consider diving into this market head first and selling while demand is up and supply is low. In many ways Charleston’s real estate market is very healthy, almost a “perfect market storm” that benefits everyone.

If you’re a buyer or seller who’s been on the fence, your time to act may be at hand.

First, an interesting factoid: RealtyTrac just published a list of the “top 25 markets for flipping homes”.  No city in South Carolina made the list.    Still, this may be one offbeat indicator of a housing revival.  Why?

Because a few years ago, anybody buying a home to resell for a quick profit probably lost money instead, since home prices declined for six years straight, beginning in 2006-2007.  So if flippers are back, that’s at least one sign that buyers think prices will keep going up.  Sounds familiar, doesn’t it?

But some trends in the housing market justify such optimism: sales, like prices, are up after bottoming out in 2010. Foreclosures and mortgage delinquencies are dropping sharply. And housing affordability remains terrific, thanks largely to near-record-low interest rates engineered by the Federal Reserve.

But it’s still a troubled housing market in many ways, as several panelists explained during a discussion Mr. Newman moderated for the recent Milken Institute Global Conference in Beverly Hills, Calif. Here are 5 signs the housing market is still far from healthy:

The scarcity of good land for developers is crimping the new home construction market.

The scarcity of good land for developers is crimping the new home construction market.

1. Good land is scarce: This might seem hard to believe in a huge country, in the aftermath of a housing glut, but real-estate developers say it is hard to find desirable land for new projects, at fair prices. Part of the problem is that banks took control of a lot of land when they foreclosed on development projects, and the land is now worth less than its original price – which means banks would have to write off additional losses if they sold it.

And lenders remain leery about making loans for land purchases. “Land is a defining element right now,” said Emile Haddad, CEO of the real-estate management firm FivePoint Communities. “A lot of land is hidden in drawers right now.” That limits the supply of new homes for purchase and also restrains job growth in the construction industry.

2. Flippers are at risk: Mortgage rates as low as 3.5 percent make houses a good bargain right now, but the equation could shift abruptly if rates rise, as some business leaders think is inevitable. “Buyers should be very cautious,” said Jeff Greene, president of Florida Sunshine Investments.

“No doubt you can buy a house today and get a really good price and a low-interest loan. But if you want to sell that house to somebody two or three years later and rates go up to 5 or 6 percent, how much is he going to pay for that house?”

Low interest rates are making it possible for buyers to get a whole lot more house than they could during the peak.  But rates are predicted to rise, sometime.

Low interest rates are making it possible for buyers to get a whole lot more house than they could during the peak. But rates are predicted to rise, sometime.

If you end up living in the house for several years, however, rising rates could actually work in your favor, since they’re likely to be accompanied by higher inflation, which would boost nominal home values.

3. The recovery depends deeply on government aid: Virtually all mortgages written these days are backed by a government housing agency such as Fannie Mae or Freddie Mac. Beyond that, interest rates would probably be at least 2 or 3 points higher if the Fed weren’t pushing them down. “We’re in a financial repression,” says Jim Litinsky, founder of the hedge fund JHL Capital.

“Every asset is mispriced. But,” he adds, “of all assets out there, if you can lock in 30 year, 3.5 percent mortgage, that’s an incredible asset to own to ride the repression.”

4. Foreign buyers are helping boost prices: In top markets such as Miami, Los Angeles and New York, strong demand by foreign buyers has been one reason real estate prices have recovered. On one hand, that indicates faith in the U.S. market by buyers who could put their money anywhere. But it makes homes more expensive for Americans and could lead to another bubble, which could pop if interest rates rise rapidly.

Foreign buyers are pushing up prices in some markets.

Foreign buyers are pushing up prices in some markets.

5. It’s a very patchy recovery: Greene points out that while the Miami market is “on fire,” Palm Beach County, about 80 miles to the north, is still struggling with a “huge glut of housing.” And while home prices on average may be rising sharply, there are some regions – such as San Bernardino, west of Los Angeles – where the housing bust still hasn’t ended. Nobody will be flipping there.

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

SC Land and Homes LLC
Call or text (843) 442-7275
www.JimBoboRealEstate.com
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2012 Annual Report on the Charleston Trident Housing Market released

2012 Annual Report on the Charleston Trident Housing Market released
Charleston Trident Association of Realtors has released its 2012 Year in Review report on the Charleston, SC  area’s residential housing market. Highlights:
* Home values up and down in 2012, depending on your home’s address.
* Inventory of real estate available for sale continued its decline to less than 6,000 units, which was 44% below that of 2008 and 21% below 2011. In an expanding market, reduced inventory theoretically helps stabilize or increase prices by creating more competition among buyers who are ready to buy.
* If your home was a new listing in 2012, it  had a 54% chance of selling in 2012; inversely, 46% of homes in the MLS in 2012 did not sell.  3 main probable  reasons for weak results: prices perceived as too high by buyers, property condition, and property location.  Buyers want move-in ready homes that are energy rated.  Read the latest report “What Home Buyers Really Want in 2013“.

CTAR 2012 Median Sales Price

CTAR 2012 Median Sales Price

Up or down?
If your home is in  Rural West Ashley – Hollywood, Ravenel, Meggett and Adams Run – your property may  have experienced the largest gain in home values in the area – up 13.5% from 2011.  Rural Berkeley County, Daniel Island, Folly Beach and James Island rounded out the other top 5 hot spots.

However, if you live in Greater North Charleston, Wando/Cainhoy, Upper Mt. Pleasant, St. George/Rural Dorchester County, or on Kiawah or Seabrook Islands, you may have experienced a decline in your home’s value over 2012.

Access the report here.  Remember that this is only an aggregate trend report and does not indicate what your home might be worth on the market today.  To determine a likely sales price range for your home, you should obtain a more detailed analysis of pricing trends in your neighborhood or for your property type  and a custom CMA (Competitive Market Analysis).  It is also advisable to obtain an appraisal of your home.

How is your neighborhood  trending?
SC Land and Homes
produces the CART Report (Charleston Area Real Estate Trends Report) to help clients identify trends relevant to their property, and provides custom CMA’s to help clients price their home appropriately.  We generally do not request seller’s obtain an independently ordered appraisal  except in certain situations but recommend one if a seller has any doubts about their home’s value.  Below is a sample from a recent client report for a Summerville, SC neighborhood.  Remember that this report uses all MLS sales data compiled from multiple party sales, and only shows possible pricing trends – not necessarily values.  Please contact us for a more detailed explanation.

CART Average Selling Price graph example

CART Average Selling Price graph example
2012 Median price of 7 sold units was $280,000
Data obtained from multiple MLS parties and is deemed reliable but not guaranteed

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


SC Land and Homes LLC
Call or text (843) 442-7275
www.JimBoboRealEstate.com
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Charleston, SC January Residential Real Estate Sales Approach 2008 Levels

Charleston, SC January Residential Real Estate Sales Approach 2008 Levels
Charleston Trident Association of Realtors reports that increased market interest and consumer confidence help to fuel strong sales increases and sustainable price growth.

Charleston-area January sales see 5 year high

Charleston-area January sales see 5 year high

634 homes sold at a median price of $181,750 in the Charleston region in January, according to data released by the Charleston Trident Association of REALTORS® (CTAR). These figures represent the highest rate of January sales activity in the region since January 2008, when 648 homes sold. Activity and buyer interest were notably higher during the typically slow first month of the year as many REALTORS® reported a significant increase in calls from prospective buyers.

As sales volume continues to make consistent, sustainable progress, prices remain stable, approaching the $200,000 range, where local REALTORS® and expert economists looking at our region expect them to stay for the short-term future. “As was the case in 2012, we expect to see nominal, but sustainable, growth in prices this year”. “2012 closed out with a 4.4% increase in median price, which is an excellent rate of growth in a recovering market. It’s all about sustainability” said 2013 CTAR President Owen Tyler.
Comparing the beginning of 2012 to 2013, sales volume is up 16% and median price reflects 3% growth thus far in 2013. As the uptick of buyer interest in our market seems to be an enduring trend, inventory may become an issue in some areas. The number of available properties has consistently remained at a lower level than we’ve seen in the past five years, but will likely increase as the spring buying season draws closer. There were 5,520 homes actively for sale in the Charleston Trident Multiple Listing Service (CTMLS) as of January 31, 2013.
During the 2012 Year-In-Review residential market update hosted by CTAR in late January, expert economists Steve Slifer and Joey Von Nessen praised the real estate market activity in our region in 2012, but warned that uncertainty based on what’s going on in the government and Washington DC may have an effect on consumer confidence in 2013.
More detailed information about housing trends in Charleston, Dorchester, Berkeley and Colleton Counties are available from SC Land and Homes.
Please call, text or use the form below to let us know how we can assist you. We never share your personal information with anyone. Our Privacy Policy can be read here.

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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Charleston Area Real Estate Trends Report 2012

Charleston Area Real Estate Trends Report 2012.  The “CART Report” provides you customized Charleston Real Estate Market Conditions and Analysis.

The Charleston Region real estate industry saw some major improvements across the board in 2012.  While some areas fared better than others, declining inventory, increased demand and an improving consumer confidence and job market helped push prices higher.
CART REPORT sample 2012 results picture for postJim Bobo Real Estate filters specific data and analyzes multiple variables in our custom CART Reports relevant to your particular needs.  In addition to a property CMA, we focus on important indicators of trends in a given neighborhood, geographical area or a more specific type of property where finding comparable properties may not be immediately available (commercial buildings, deep water or waterfront  homes, and other “special” real estate).

For example, we took a look at a popular neighborhood in the Charleston area with traditionally little turn-over that peaked in 2007; from then on, like everywhere in the region, it was downhill.  This particular variable pictured above is “Average Selling Price Per Square Foot”, a good indicator of price movement trends within residential neighborhoods that are comprised of comparable homes and lots.  In 2007, this neighborhood’s average home sold for $217 per square foot, bottoming in 2011 at $145 per square foot – a 33% decline. However, when we looked at the same neighborhood in 2012, the average selling price per square foot jumped considerably to $167 – a 15% improvement over 2011.  While 2012 prices in this neighborhood were still 23% below 2007 prices, the signs of improvement are encouraging.

Invest In Charleston SC Land and Homes

Whether you are thinking about selling or buying, our CART Report will provide insight into the market that you can’t get anywhere else.  We don’t try to impress you with an overwhelming amount of statistics that, well, aren’t really relevant to your situation.  We simply provide the information that is relevant to your property that you need to see in both table and graph formats that help you make a more informed decision.

Please call, text or use the form below to let us know why you need a CART Report. We never share your personal information with anyone. Our Privacy Policy can be read here.

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
Fax (888) 456-6618

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
www.JimBoboRealEstate.com
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The 3.8% “Real Estate Tax”: Myth or Truth?

The 3.8% “Real Estate Tax”: Myth or Truth?

I recently received an email from a former client that claimed the Federal Government was going to tax every real estate transaction at 3.8% of the selling price.  This rumor has been circulating ever since health care reform was enacted into law more than two years ago. The National Association of Realtors released information explaining that the tax is actually a “capital gains tax” that will only affect high-income households that realize a substantial gain on an asset sale, including some real estate sales. NAR estimates 2-3 percent of home sellers will be affected.

The National Association of Realtors has prepared the following brochures to help explain how the 3.8% “real estate tax” will work.  In fact, Congress calls the tax the “New Medicare Tax on Unearned Net Investment Income”, and the tax will take effect January 1, 2013.  While NAR doesn’t support the tax (it was added into the health care law at the last minute and never considered in hearings), it’s not advocating for its repeal at this time.

NAR FAQs: New Medicare Tax on “Unearned” Net Investment Income

NAR Brochure: The 3.8 % Tax Scenarios

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

SC Land and Homes LLC
Call or text (843) 442-7275
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Mortgage Rates Reverse Course

Mortgage Rates Reverse Course

Daily Real Estate News | Friday, August 31, 2012

Mortgage rates fell across the board this week, after having inched higher the last few weeks from all-time lows, Freddie Mac reports in its weekly mortgage market survey.

Here’s a closer look at rates for the week ending Aug. 30.

  • 30-year fixed-rate mortgages: averaged 3.59 percent, with an average 0.6 point, dropping from last week’s 3.66 percent average. A year ago at this time, 30-year rates averaged 4.22 percent.
  • 15-year fixed-rate mortgages: averaged 2.86 percent, with an average 0.6 point, also down from last week’s 2.89 percent average. Last year at this time, 15-year rates averaged 3.39 percent.
  • 5-year adjustable-rate mortgages: averaged 2.78 percent, with an average 0.6 point, dropping from last week’s 2.80 percent average. Five-year ARMs averaged 2.96 percent a year ago at this time.
  • 1-year ARMs: averaged 2.63 percent, with an average 0.4 point, dropping from last week’s 2.66 percent average. A year ago, 1-year ARMs averaged 2.89 percent.

Source: Freddie Mac

Rates are still at historical lows. Home prices throughout the Charleston, SC area are still a bargain compared to the peaks during 2005-2007. It's a very good time to buy. Check out our Lowcountry Community Searches for predefined MLS searches that make home-buying simple: Residential or Commercial.

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

SC Land and Homes LLC
Call or text (843) 442-7275
www.JimBoboRealEstate.com
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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
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.

Please call, text or use the form below to let us know how we can assist you. We never share your personal information with anyone. Our Privacy Policy can be read here.

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
Fax (888) 456-6618