Local experts say supply of homes for sale needs to even out

Industry experts and local real estate agents agree: For the Charleston market to get back on an upswing, the number of homes for sale has to return to a more normal level.

Though sales began slowing in February 2006, buyers continued to list their homes, creating a massive buildup in available properties.

Locally, that number has climbed to more than 10,000 homes, giving the region an 11.6-month supply of inventory based on the number of sales made last year through the Charleston Trident Association of Realtors' Multiple Listing Service.

The process of absorbing all the available inventory is expected to take a while, some local agents say it could take until 2009, as cautious buyers wait for better deals. At the same time, the pool of people who can afford a home right now has shrunk significantly.

Mortgage lenders, for instance, have tightened their credit standards, cutting out a segment of buyers who just a year or two ago would have been able to buy a home.

Another set of normally reliable buyers, people moving to Charleston for new jobs or change in a lifestyle, in some cases are choosing to rent while waiting for their homes elsewhere to sell.

"A lot of buyers have got a house to sell, so they aren't taking advantage of the reduced prices," said Ralph Wetherell, broker-in-charge of AgentOwned Premier Group Inc.

That's the case for Caroline Fernandez of Asheville, N.C. Her husband recently took a job at the Medical University of South Carolina, but the two won't be able to afford another mortgage until their North Carolina home sells.

"We'd like to buy in Charleston, but we can't do much now," she said.

Another factor that should help the market readjust is for builders of new homes to put the brakes on their expansion plans.

"If you stop building and (homes) come off the market, it will re-establish equilibrium, even at what would seem a very high price," said economist Karl Case at Wellesley College in Massachusetts.

Home construction already has slowed across the country. The U.S. Commerce Department said this month that housing starts fell 30.8 percent in September compared with a year earlier.

Locally, many builders also have pulled back, said Phillip Ford, executive vice president of the Charleston Trident Homebuilders Association.

Don McDonough, president of Ryland Homes' Charleston division, said he and other builders are much more cautious about building speculative homes and entering contracts that are contingent on the sale of another home.

"The public and media have a perception that we're building homes left and right. ... That's not so much our strategy anymore," McDonough said.