March 2021
Everyone we encounter these days is asking us about the Charleston Real Estate Market. The simple answer is, it’s “Great”! Pretty shallow I know…but the big question is, are we in another bubble? So, our goal here in our Charleston Real Estate Market Update is to help you answer that question. And hopefully, you’ll find the information helpful and will allow you to make better real estate decisions for you and your family.
When we dove into the dynamics of both the national and local economy, as well as the real estate statistics, we discovered some interesting facts and unique trends! Never has any real estate market in recorded history been like what we are experiencing today here in the Charleston area.
The Charleston Real Estate Market Update
Since the market bottom in 2010 the Charleston Real Estate Market has been steadily rising. We have seen increases in the number of sales and listings each year as well as increases in the average price of homes in the area. As of February 2021, the average sales price in the Charleston Real Estate Market has risen to $445,402.00 This is partly due to the unusually high number of luxury homes that have been selling recently.
What’s driving this as you can see below, is that the higher wage earners have been less affected by the current unemployment trends. As well as the low interest rates and migration trends that we will discuss below.
This chart below shows the historical annual home prices going back to 1989 in the US.
Want to know how much your home has gone up in value? We will be happy to provide you with a complete, full blown market analysis of your home and it’s value. Not a computer generated “guess-timate”!
What Impacts The Charleston Real Estate Market Today?
Migration
One of the contributing factors of our growth has been the migration habits of the population in the US. According to many sources, South Carolina has been one of the top 5 destinations for relocating folks for many years.
According a recent study by North American Moving Services, (North American Van Lines) the top 3 states people are leaving are: New York, California and Illinois. And the top 3 states they are moving to are: Idaho, Arizona and South Carolina.
Unprecedented Activity In Charleston Real Estate Market?
Currently we’re seeing record high prices and record low inventories of homes for sale in the Charleston Real Estate Market. When you look at the data, it’s not that people are not putting their homes on the market, homes are simply selling very fast!
Which brings us to a common concern most people have. People are often hesitant to put their home on the market because they are afraid it will sell fast! Not typically a problem, but in this market, finding the next home is the challenge! When homes are selling so fast, it makes the timing of finding and closing on your next home a little more difficult. However, we do have some ideas and solutions you should consider if you have to sell your home before you can buy your next home?
Low interest rates are helping to fuel the demad causing prices to increase.
The low interest rates are also instrumental in keeping housing in one of the more affordable ranges in history. Right now, households are surprisingly only spending 16% of their disposable income on their housing expenses due to the lower rates!
A Look Inside The Numbers
If you look at the chart below, you can see that the number of new listings has come up from a low in December of 1,464 to just under 2,000 in February. Also, if you look at the year over year number between February of 2020 and February 2021, there is only a difference of new listings coming on the market is 174 homes!
And on this chart, you can see that due to high demand, homes in the Charleston Real Estate Market are selling well under the mediam historical days on the market is down to 8 days!
In this real estate market update, what is happening, is that homes are hitting the market and due to extreme demand, they are selling fast. The speed of the sale is actually what is causing our inventory number to be at record lows. So if you are considering selling your home or rental property it doesn’t get much better than this!
Talk to us about our Multiple Offer Marketing Strategy, it’s the best way to play this market and maximize your gains! Discover how we can create an auction like environment for your home!
The chart below shows the number of Pending Sales in the Charleston Real Estate Market.
The chart below shows the number of homes in the Charleston Real Estate Market at the end of February is 1,670. Better hurry before they are all gone! (just kidding!)
Headwinds That Could Impact The Charleston Real Estate Market
As we move forward into 2021 the overall sentiment for our market is that we should have another strong year. With that said there are a few indicators that are worth watching. Even though inflation is still under 2% as of 2-28-21, there are some indicators that signal more inflationary pressures may be ahead.
Bond Yields
Recently Bond Yields have been rising, which typically move in the same direction as mortgage interest rates. The key indicator here is the 10 Year Treasury Bill. A rise in mortgage rates could affect the Charleston Real Estate Market by actually curbing the current buying frenzy. This would actually be good for the overall market! Slowing the pace of sales would ease some of the supply constraints we currently have. This would enable home buyers to buy homes without having to voraciously compete against each other!
A Stock Market Reversal
I am certainly not predicting this one, but it is something to keep an eye on. The stock market has been experiencing one of the longest bull runs in history and the experts agree that markets are cyclical. Some Wall Street experts are beginning to fear the “TINA” advantage may be ending. (There Is No Alternative)
So a downturn will eventually come. When? Your guess is as good as mine, but it is something to pay attention to as investor sentiment to have some impact on the Charleston Real Estate Market.
If investors in the stock market get spooked and begin to take profits it could have a psychological effect on investor sentiment. “The Wealth Effect” Which could lead to a more conservative mindset in the market and slow down real estate sales.
Hedge Funds and REIT’s in Real Estate
Right now, hedge funds are still buying real estate. The problem is they are winning bids with all cash contracts and beating out first time and move up buyers for homes in our local market. This has caused prices to go up. However, it’s something to pay attention to, when they start to sell and take their profits, it could signal a turn in the market. We will keep watch on this in future market updates.
For example, in our market, the California based real estate investment trust American Homes For Rent owns approximately 600 homes in the tri-county area. These are properties they have accumulated since the 2012.
Lumber Prices
Currently lumber prices are approximately 300% higher than they were a few years ago. Hopefully as the economy begins to reopen lumber prices will move back into a more normal range.
The Charleston Real Estate Market Update – Outlook
Could March be a turning point in our market, or will it continue to be business as usual? Well, in my opinion, I believe the future of the Charleston Real Estate Market looks pretty good. Who knows what the future may hold but I can tell that I’m confident in the future of Charleston Real Estate. Sure, at some point it’s going to change, but for now unless things change it looks pretty good!
So, what’s making me so confident? Charleston is!
Contributing Factors To A Positive Outlook
As the economy rebounds,we have fewer unemployed in Charleston. In fact, when the leisure and hospitality industries return, we should be pretty close to pre-covid employment numbers in the low country.
Here is a look at income and employment by sectors below.
The Reopening Begins!
Also, as of 2-27-21 the Governor of SC loosened the rules concerning hours for resturants and public gather restrictions. This should give a boost to the unemployed service sector that has been hit the hardest here in the low country.
Covid Case Going Down!
Yes, Covid cases are going down dramatically! And we now have a vaccine! Obviously, it’s not time to let our guards completely down but we are certainly moving in a positive direction.
Unfortunately, Covid-19 is most likely something we will have to live with for the rest of our lives. As we do with many other previous pandemics.
The Ports Are Rocking!
The Charleston Port ship container volume is back up to pre-covid levels. A new Wal Mart distribution center in the area is evidence that large businesses are looking at Charleston as a strategic destination for their businesses.
The Charleston Real Estate Market Update – Conclusion
We have a lot to be thankful for! Charleston is coming back and coming back strong. We have fewer unemployed. People have more disposable income and higher savings rates than before; interest rates are low and government stimulus is on the way!
We may have some housing supply constraints ahead. But, at the time of writing this Charleston Real Estate Market Update the trends point to another strong year ahead!
Are we in a bubble? I don’t think so, but time will tell. Just keep following the economic numbers and keep an eye out for our Charleston Real Estate Market Updates!
If you’d like more information on the current market or would like to discuss how we can help you, please feel free to reach out to Bill Byrd 843-972-7670 and Waverly Byrd 843-790-2675
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The Author…
Bill Byrd is a Husband, Father, Realtor, Educator, Musician and Athlete. A licensed Realtor since 1986 who loves helping his clients grow their personal wealth through real estate! Having helped hundred’s of families and individuals during his career you can feel comfortable that Bill’s and his Team’s experience and expertise are unparalleled in our market. Plus, Bill’s a great guy and one heck of a guitar player! More About Bill
