Realtors can provide many insights into neighborhoods, economic trends, and home pricing – all while taking your family’s well-being into consideration. The line of questions typically begins with: What are you looking for in a home? Are you approved for a loan? Are there any specific locations you are considering? How much are you looking to spend?

The answers to these questions will give the Realtor a baseline to make recommendations of homes to their clients and advice based on the dollar amount a buyer would like to spend.

When this happens, the question “What can you afford?” has taken the place of “What do you actually need?” as the starting point for most home buyers. This line of thinking has resulted in a deep over-housing problem. Over-housing is the concept of paying too much money for housings, in relation to one’s income.

For that reason – you should always start your home search focusing on one critical question that many Realtors may ever tell you:

Buy only the home you need, not the house you can afford.

Don’t let yourself fall into the mindset of “buy as much and as big as possible”. Too often, the dollar amount that a lender has approved for the home buyer becomes the starting price range that the buyer begins searching for.

For example, if a buyer is pre-approved for a $500,000 loan, many buyers begin searching for the biggest house they can afford for exactly $500,000. Often times, this is encouraged by the lender and/or Realtor. This is because the larger the sale, the greater their profit.

Buyers too often create a list of “wants” for their new home while “actual need” is disregarded completely.

Bigger and more is so frequently interpreted to mean better. This ideology has resulted in the average American home tripling in size in the last 50 years. With little regard for the negative consequences, buyers too often purchase bigger and bigger homes, whatever size their income allows.

This thinking has detrimental effects on our well-being. We typically use on 40% of our living space on a regular basis. Meanwhile, the increased debt can contribute to mental and emotional distress. All of this excess space carries additional financial cost – whether the square footage is being used or not.

More is not always better. There are benefits to living in a smaller home. It is easier to maintain, less expensive, assumes less financial risk, results in less environmental impact, and frees up our resources to pursue life’s other passions.

Buying a home is a personal decision that should never be taken lightly. Only you know all the variables that will come into play when making your decision. But too often, the most important piece of home buying advice is what you hear least: Buy only the home you need, not the house you can afford.

In our ongoing efforts to give back to our community, this year Matt O’Neill Real Estate is honored to sponsor 20 youth sports teams through the Mount Pleasant Recreation Department (MPRD). These teams will range across football, baseball, basketball, cross-country, kickball, lacrosse, soccer, softball, swimming, t-ball, track, volleyball and wrestling.

Our team member, Hamilton Horne, is currently coaching the Matt O’Neill Real Estate Red Devils this year in the 10 - 11 year old Mite League. Congratulations to Coach Horne and the Red Devils on their first victory over the 49’ers, 22 – 0! We look forward to continuing to give back to the community this football season and seeing our other teams compete throughout the year.

MPRD offers exceptional, comprehensive, sustainable and affordable recreation and leisure opportunities through a professional staff that is dedicated to providing the residents of Mount Pleasant with superior customer service, quality facilities and dynamic programming. MPRD engages over 11,000 participants each year through more than 500 programs, classes and camps across 14 sports and 26 facilities across town. Participants range in age from 1 – 90 and encompass the entire spectrum of race, gender and socio-economic backgrounds.

The financial support through sponsorship helps MPRD continue to provide the variety of sports and activities to our residents at an affordable rate. For more information on sponsorship opportunities please contact the Sponsorship Coordinator at 843-884-2528, RecSponsorship@tompsc.com.

Mount Pleasant Recreation Department

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.

Real estate in Charleston has been booming this year, and in order to get loans quickly, potential homebuyers must keep their finances and credit in line. 

Below, you will find 10 general tips that can help you improve your credit score, and obtain a home loan. 

1.      Always pay on time
No lender enjoys lending money to those who have a repeated record of missing payments. This shows a lack of discipline and poor financial management – which can make a bad impression on paper. Intentional or not, if you have a frequent history of missing your equated monthly installment (EMI), you will have a lower FICO score.

2.      Keep your credit owed within limits
A good ratio is keeping your unsecured credit outstanding above 50% of your annual salary. Try to keep your credit card balances within half of the allowed limit.

3.      Always pay your dues on time, in full
This is the most important tip. On-time payments can improve your credit score tremendously. It carries almost a 40 percent weight on your score. Try not to miss your due dates for monthly payments. Nobody likes a person who cannot keep their word – especially with banks. So pay in full and on time.

4.      Use two credit cards if you are a definite credit card spender
This is good and bad advice at the same time. FICO does not consider spending money on two credit cards as one, however, if you do have two credit cards, you can manage your usage percentage in control.

For example, if you have a credit card limit of $20,000 and you charge %15,000 on it –you have used 75% of your credit limit.

If you were to split that amount in two, and spend $7,500 each, then the percentage of usage will be around 37% - helping you with FICO.

5.      Maintain a good mix of good and bad loans – AKA, a healthy credit mix
Home loans and business loans are considered good loans. Credit cards and personal loans are considered bad loans.

This is why investing in a home loan can be a good decision. You will have a better credit mix and be building an asset.

6.      Pay high-interest loans and small loans first
It is wise to pay your home loans down over longer timespans. Pay off your personal loans, credit cards, and private loans first. They tend to have a higher interest rate and no asset creation.

Home loans on the other hand have lower interest rates, and also build an asset. This is an often underutilized, but logical tips to improve your credit score.

7.      Close your unwanted savings account
Many people tend to abandon their savings account without closing them. Many savings accounts also have a Minimum Average Balance – which if you dip below will begin to affect your credit score.

8.      Check your credit reports regularly
Credit reports are very inexpensive. You can obtain them from the official FICO site. Simply pay online and check your credit score at least yearly. If you have any discrepancies, you can seek clarification on any mistake and have it dealt with.

9.      Monitor your co-signed joint accounts properly
Be careful with dealing with anyone outside of your close family on joint accounts. You should carefully monitor your statements to make sure everything is in order. 

10.  Negotiate if you cannot pay on time People often know when they cannot pay a bill in advance, yet they take no action. If you know you are unable to pay on time, negotiate with your bank. They can be willing to extend loan periods and reduce the EMI if they see an honest customer.

Finding the right home in the Charleston area can be a challenging undertaking, especially as the economy gains strength. More and more people are moving to our area, the job market is saturated with those looking for jobs, people are holding onto their homes longer, and builders are resisting overbuilding.

Homes that come on the market are exiting just as quickly. The inventory has declined rapidly over the past 18 months, and it is becoming harder and harder to find more listings ready to sell. This could lead housing prices continuing to rise in our area – which could take its toll on the market. If home prices outpace income – then owning a home will not be affordable.

So far this year, 8,648 homes have sold in our Tri-County area at a median price of $239,000. That accounts for more than 1,400 units sold per month. Volume has increased 8.9 percent over last year, and the median prices has risen 8.3 percent, compared to the first six months of 2015.

If the second half of the year experiences as many as the first, home transactions will surpass last year’s total by more than 1,000 units.

Currently, MLS shows about 5,400 homes listed as actively for sale, and at the current rate, about 25 percent of those will be sold in July. Inventory is down 12.5 percent from a year ago.

Michael Sally, president of Charleston Trident Association of Realtors, things a healthier market would include about 6,500 units up for sale at any given time – providing more selection, and helping curb down the higher prices we are seeing.

Our area hasn’t seen this many houses on the market at one time for the past couple of years. It is predicted that around 35 new residents move to the Lowcountry each day – filling jobs in expanding industries such as Volvo, Boeing, and Mercedes-Benz. A potential building moratorium in Mount Pleasant only makes these housing concerns worse.

New home builders are remaining cautious for various reasons including: land prices, a shortage of labor, and concerns about risk because of the last housing market crash.  New construction has been consistent, but not nearly at the high levels seen before the crash.

Housing inventory is not only a problem in Charleston – but is being seen across the state. However, the new industries moving to Charleston paired with its’ global reputation amplifies these housing concerns. Jobs = Housing. Period. And unfortunately the new homes being built are falling more in line with luxury home buyers than being in the price range of first-time home buyers. 

Affordability will continue to be an issue here in Charleston, until we see a shift out of the low inventory numbers we have been seeing.

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.

Generation Progress, a national progressive advocacy and action network for young people, recently cited data from the Bureau of Labor Statistics which shed positive light on the Millennial labor market - especially for ages 25 - 34. Older Millennials have a much higher percentage of labor force participation than the national average.

Buying a first home could be a reality for many Millennials who are actively working and earning better salaries than years past. If you have already been planning on buying a first home - is it really time to take the plunge?

Buying a home is more complicated than it seems. The home you may be able to afford now, may not be your forever home. The most common type of home purchased remains the detached single-family home. The best approach is to weigh your options on whether to buy a starter home or keep saving for purchasing down the road.

Pros:

Mortgage rates are low - so it is a terrific time to buy. Sales are rising, supply is dropping, and prices have increased in many areas. Compared to next year, today's market may be a bargain. If you choose strategically - you may be making a wise investment that will build future value.

Cons:

Do the math. You may have enough money stashed away for a down payment, but that does not include closing costs, property taxes, maintenance, homeowner’s insurance, utilities, landscaping, etc. It is estimated that maintenance and repairs can total 1 - 2% of your annual mortgage costs.

So how does a Millennial move forward? Take a deep breath and compare your budget with your expectations. Consider things like your potential family size and your job/income flow. Compare the total amount of money you will be spending over time, and subtract the potential value you may receive if you someday sell the property.

Most starter homes are only intended to be lived in for 5 years. Many young buyers are looking for close proximity to urban areas. There are so many factors to consider when buying a starter home, and the decisions are not easy. We believe in homeownership, but realize that loans bring stress and responsibility. However, you may look back over your decisions in life and be disappointed by the opportunities that you passed on. Get out there and explore, dream, and discover. Don't be afraid to take chances when the timing is right.

Earlier this week Travel + Leisure named Charleston, SC the top city to visit in the world. Readers also named Charleston as the No. 1 city in the U.S. and Canada for the fourth consecutive year. Charleston took top marks in the categories of sights/landmarks, culture/arts, restaurants/food, people/friendliness, shopping and value, scoring 91.66 overall. The magazine said on its website, “In addition to historic battlegrounds and jasmine-scented streets, Charleston is home to award-winning hotels ... and restaurants. Antebellum charm, excellent boutiques, and the beautiful waterfronts at Sullivan’s Island and Folly Beach make this city one of the most beloved in the U.S. — and now, the world.” This award will no doubt continue to draw visitors to Charleston – a beautiful costal city with a growing port, cruise ships, and major industries such as Mercedes-Benz, Volvo, and Boeing. As residents of the Tri-County area, we must continue to maintain the quality of life in our area by working together. Change is inevitable, but we must continually adapt to that change to keep the city of Charleston as beautiful and charming as it has been for centuries.