The news at this year’s CTAR Residential Market Update was exciting for the real estate industry in Charleston! We wanted to share it with our followers because it will affect your real estate plans for the next 5 years.
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Home prices have been going up steadily for over four years now. This has a lot of people asking if we are in another housing bubble.READ MORE
In the wake of the election, there is a lot of uncertainty about mortgage interest rates. They have risen about 1%, but will they go up even further in the coming months?READ MORE
Brexit was a boon to not only our mortgage rates here in the U.S. but also to our real estate market in general. What does this mean for buyers and sellers?READ MORE
October ushered in Hurricane Matthew and a massive evacuation of South Carolina’s low-country. However, October’s home sales stayed steady and strong. Our region saw a higher number of homes sold, and a higher median sales price compared to October 2015. Sales volume is expected to quiet some heading into the holiday season, but price growth is expected to remain steady due to the limited inventory of homes, according to CTAR President Michael Sall.
Inventory has declined by 19% over the last 12-month period, with 5,285 homes listed as “active” for sale in the Charleston Trident Multiple Listing Service (CTMLS) as of October 31. We expect that inventory will remain low, as it traditionally does, through the winter.
According to data released by CTAR, 1,272 homes sold in October in the Charleston region at a median price of $240,000. Sales volume and median price declined slightly, as expected, heading into the Fall. In October 2015, 1,264 homes sold at a median price of $225,000.
Year-to-date figures show 14,963 homes sold at a median price of $240,000 in our area. Comparing year-to-date figures from 2015, sales volume has increased 9% and buyers are paying 6% more for homes in the region than they did last year.READ MORE
Charleston Trident Association of Realtors reports the year-to-date figures show 10,303 homes sold thus far in 2016 at a median price of $239,000. Compared to 2015 – year-to-date sales volume has increased 7% and median price has grown by 8.1 %.
Inventory has declined 22% over the last 12 month period, with 5,335 homes listed as “active” for sale in our region as of July 31.
The current lack of local inventory is causing homes to sell more quickly than in years past, and has led to fewer days on market. Over the last 3 years, sales have peaked in June – and this year was no exception. The year-to-date numbers remain solid, and represent a steady sign of growth. We hope to expect similar, sustainable numbers over the following months.READ MORE
While demand is healthy and home values are rising, economists and would-be homebuyers are asking themselves one question… Where have all the houses gone? Mortgage rates are near record lows, leading to cheaper loans. And owning a home is a better deal than renting. Nevertheless, inventory is limited and declining.
Economics would typically tell us that inventory should be rising with the prices of homes in today’s market, yet the exact opposite is happening. This is a major story this year within the real estate market, and it will continue to play out throughout the rest of 2016. According to Zillow, the month of May saw inventory of low- and middle-tier homes falling 8.9% and 9.7% respectively, compared to last year. Top-tier inventory only fell 0.5%.
At the halfway mark of 2016, here is some insight as to how the rest of 2016 may play out:
Mortgage rates may reach an all-time low. Fitch Ratings predicts U.S. mortgage rates to real all-time lows following the United Kingdom’s departure from the European Union. Brexit forced the Treasury rates that stand as a benchmark for mortgage rates to new lows. The 30-year fixed-rate hit a record low of 3.31% in 2012 and is currently sitting around 3.6%. Low rates could spike demand for homes, as well as lead to current loan refinancing.
Mortgages have been so cheap for so long that economists have stopped forecasting a rise. According to a Trulia survey this is in line with average consumers, who rank interest rates a distant third among their housing market concerns – behind finding a home they like and qualifying for a mortgage.
New construction remains slow. In May, new homes stood at an annual rate of 1.138 million, below the 1.5 million needed to get supply back in line with demand. Adding insult to injury, most of the homes that have been built in recent years have been for the luxury consumer, rather than lower price starter homes.
Frequently we ask ourselves, will Millennials ever buy homes? However, a better question may be will contractors ever build homes that Millennials can afford? Possibly. Price growth has slowed to about 4% at the top end of the market, but has risen to 8% on the lower end. Economic theory suggests rising starter home prices should lure new construction to that segment.
Homeowners aren’t selling. People are not moving as often as years past, which leads to fewer homes coming onto the market. Prices have risen so much that potential sellers cannot afford to buy their next level home in their current neighborhood – creating a gridlock of sorts.
Demand is still strong. Home values are currently appreciating at an annual rate of 5%. This is well above the historical average of around 3 - 3.5%. This is likely due to the low inventory, mortgage rates and strong labor market.
Also, buying remains more attractive than renting. Zillow found that the current breakeven point for homeownership (the time you would have to live in a house before buying would be financially advantageous over renting) is 1.8 years.
What this means for you.
Have your checkbook ready. Right now a typical home is selling in just 42 days nationwide. Many hot markets like Charleston have sales occurring in a week or less. This is the shortest time on market that Redfin has seen since it began tracking in 2009 – and is a full week faster than a year ago. The already blazing market is speeding up. With no clear supply increase on the horizon, this trend is likely to continue.
Be prepared to pay asking price. At 95.3% of asking price the average sale-to-list percentage is also the highest Redfin has seen. Some marketing are seeing the sale-to-list percentage over 100%. The faster the market – the more likely the buyer is to overpay, because people who need to act quickly do not have as much time to negotiate.
Other things to watch.
The Fed. The Federal Reserve is not expected to hike the short term rates more than once this year. This means monetary policy will have little sway on mortgage rates.
The Election. Brokers are noticing some resistance to list or buy a home given the uncertainty surrounding our Presidential election. However, a new person occupying the White House is not likely to have a major impact on the overall housing market.READ MORE
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