Positive Outlook on the Charleston, SC Real Estate Market

The following article by Kathleen Dayton entitled, “Real estate experts optimistic about 2007 housing market” was published in the November 13, 2006, Charleston Regional Business Journal. The aritcle is positive in regard to the future Charleston area housing market. Here is the article:

“Lowcountry housing industry experts are optimistic about the real estate market, pointing to a number of factors, including job growth and an influx of retirees, that have kept the area’s housing market from tanking as severely as others across the nation have in recent months.

“People get caught up in the national economic forecast and we need to look at that, but you have to look at the sub-market, and the forecast for Charleston long-term is great. The trend is still for the eastern United States to grow,” said Phillip Ford, president of the Charleston Trident Home Builders Association.

The worst of the national downturn in home sales is expected to end by mid-2007, economists predicted at the National Association of Home Builders 2006 Fall Construction Forecast, held Oct. 25 in Washington, D.C.

Some area home builders who announced development plans when the market was sizzling say they are sticking to their goals and not scaling back.

The Daniel Island Co. is moving ahead with its plans for 6,000 homes in a mixed-use community at Carnes Crossroads in Goose Creek.

“Development is going to start next year,” said company spokeswoman Julie Dombrowski. “We won’t offer property until 2008, and that’s pretty much in line with what we were planning all along.”

KB Home, the nation’s third largest home builder, expects Lowcountry home sales in 2007 to be flat as compared with this year.

“It’s going to be similar, which is great because there’s a lot of talk about the real estate market declining, but it’s still a real strong market. We’ve been averaging about 16 sales a week over the past eight weeks,” said Jeff Meyer, S.C. division president for KB Home.

Meyer’s company plans to build about 300 homes this year, he said. The company has 10 developments under construction and two more planned for Summerville, Moncks Corner and Hanahan.

There is still a lot of demand for homes, particularly those priced between $150,000 and $175,000. KB Home is averaging about two sales weekly at its Foxbank community off U.S. Highway 52 and just shy of that figure at Eagle Run off Dorchester Road, Meyer said.

“We’re not expecting to pull back right now with the communities we have online because they’re really on line with where we see the demand,” Meyer said. “Georgia and the Carolinas have been less affected by the pull back than places like Florida or Las Vegas. South Carolina is a great place to live, it’s got high quality of life, there’s industry and the port expansion coming, and people want to retire here. People love Charleston.”

Sandy Stone, president of the Charleston Trident Association of Realtors, said what we are seeing now is a stabilizing market.

“Appreciation continues to increase, while days on the market are relatively low,” Stone said. “With job growth being what it is in our area, there is little concern that home prices will decline.”

The median price of a home in Charleston has risen 9.2% since September 2005, while units sold are down 2.9% from last year, CTAR reported. Average days on the market is the second lowest it has been in five years.

The most recent home sales figures available from CTRA showed a total of 11,203 homes sold year-to-date through September. During the same time period in 2005, 11,910 homes were sold. Homes spent an average of 58 days on the market in September 2005, while homes spent an average of 66 days on the market in September of this year.

Real estate agents say they’ve seen a shift from speculative buying to a more traditional marketplace based on returns that will come over the mid- to long-term.

“I think the market is coming much more back into balance,” said Mike Cassidy, a real estate agent with Prudential Carolina Real Estate.

Sales had heated to a point in some instances where homes were appreciating from 20% to 40% in 12 months, Cassidy said.

“Clearly that’s not sustainable,” Cassidy said. “What we’ll find is that the market will revert over time to increases of about 10 percent annually. The situation has been compounded by the larger inventory that we now have and that will probably take a period of six to 12 months to run off.”

The fall and winter months are traditionally quieter for home sales, Cassidy said, with sales rebounding in spring. A strong economy, reasonable interest rates and rising share prices on the stock market are all good signs, he said.

“Here in the Lowcountry, there are so many projects up and coming,” Cassidy said. “Development is ongoing and clearly that is not a market that is in decline. We are very optimistic.”

Michael O’Shaughnessy, chairman of Prudential Carolina, said the company was concerned about a negative view of the current real estate market and felt the public needed a new perspective. The company ran a letter in the The Post and Courier describing the blazing sales of 2005 as an anomaly.

“The market for the last two or three years hasn’t been a normal market,” O’Shaughnessy said. “The number of buyers in the market versus the number of homes for sale has been very much skewed toward making it a seller’s market. That pendulum has swung now.”

Another thing that has caused sales to slip in South Carolina is that some people are not able to sell their homes in other markets. Places such as Las Vegas and Florida have even higher inventories of unsold homes, said Ford.

“I think some of the people who have cancelled their contracts because they can’t sell their homes in another market will eventually move here,” Ford said.

Looking ahead to 2007, Ford said he anticipates a fairly normal market.

“That’s the consensus from what I’m hearing,” Ford said. “One thing people don’t realize is it’s a great time to buy a house. Interest rates are very low. We may never see 4 percent again, but 6 percent is still a great rate. People are offering incentives and free upgrades and there’s a lot of competition going on between the building companies. People need to know this is a buyers’ market.”

Noah Pruitt, a loan officer with Raven Mortgage Bankers in Mount Pleasant, said he expects interest rates to creep up slowly and that rates are still very low in comparison to past markets.

“If you’re looking back to the 1980s, we’re at half of what interest rates were then,” Pruitt said. “I’m always leery of looking forward in trying to predict the market. If I could predict the market, I’d be a millionaire. We have a tendency to look back, and over the last year in particular, we’ve had a steady increase in interest rates, particularly short-term rates. If the trend we have seen continues, we’ll have a steady but very slow increase in the interest rates throughout the coming years.”

The Lowcountry’s growth trends and the amount of new residents coming to the area have Pruitt convinced the local real estate market will remain strong.

“I see no slowing down in the number of new homebuyers, but maybe the investing may not be as prevalent,” Pruitt said. “As far as buying is concerned, this is as good as it gets.”

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