Home prices take a tumble

LocalHero (anonymous) says...

They're no different than anyone else; some good, some bad.
But it reminds me of my favorite saying about politicians:
90% of the politicians make the other 10% look bad.

September 11, 2008 at 6:59 a.m. ( permalink | suggest removal )

willx45x (anonymous) says...

Realtors simply do not want to tell the truth. The trust is very simple Mr. Remoll - home prices (particularly in MP) are still ridiculously overvalued. This is the crux of the problem. While mortgage reforms are having a huge impact, they are not having the impact that unrealistic sellers are. I'm a well-qualified buyer who will wait out this market as long as I have to. These delusional Realtors and their clients will get religion soon enough. By not lowering their prices to reasonable levels, they are only costing themselves more money in the long run. The tri-county area is a LONG WAY from a bottom in home prices. If these Realtors want to return some semblance of health to the market, they should advise their sellers to slash prices by 30%. That's where prices are headed anyway, so why not get out in front of the trend. All the wishing in the world won't change the fact that real estate in this area experienced gains during the first half of this decade that were nothing more than phantom appreciation created by poor lending decisions. Whatever you think your home is worth, it is probably worth 30% less (at least). Deal with it.

MP is the most overpriced area (along with DI) in the entire region. There will be blood on the street in places like I'on before this thing is done.

September 11, 2008 at 7:16 a.m. ( permalink | suggest removal )

Oceanlover (anonymous) says...

Hey Katy, how about a citation of proof for Wil Riley's assertion that the luxo home market will pick up in the fall. I mean, Riley's a scientist right? He should be able to back up such a statement. The association of realtors has always been utterly incorrect in their forecasts for the last couple of years. Maybe they need to start injecting a does of honesty. If you had pressed him and he'd replied with a meaningful quote,then your last passage whould have read:
Wil Riley, president of the Charleston Trident Association of Realtors, said the luxury second-home market along the barrier islands also could pick up steam this fall IF SELLERS REDUCE THEIR PRICES BY AT LEAST 30 TO EVEN BETTER THAN 60 PERCENT - TO REFLECT PRICING LEVELS BEFORE THE HISTORIC HOUSING BUBBLE PONZI SCHEME EXPLOSION. This he said, WOULD GET POTENTIAL BUYERS BACK INTO THE MARKET BY GIVING THEM PAYMENTS THEY COULD AFFORD AND MAKING IT POSSIBLE FOR THEM TO GET LOANS FROM RELUCTANT LENDERS. "THIS IS THE ONLY WAY TO BREAK THE TRADITIONAL PATTERN OF slower sales during autumn and around the holidays." HE SAID "BUT THEN OF COURSE, MONKEYS MIGHT ALSO DECIDE TO FLY OUT OF MY REAR."

September 11, 2008 at 9:08 a.m. ( permalink | suggest removal )

mkris (anonymous) says...

It depends when the seller puchased the real estate in Charleston. People that bought beofre 2003 have little trouble with appreciation. Those that bought after are hurting.

September 11, 2008 at 10:23 a.m. ( permalink | suggest removal )

wharrison (anonymous) says...

You guys are good ! I think some of you may be a bit over the top with certain characterizations but you are thinking more clearly than many of our market participants (read : Sellers). But "denial" in the face of another housing crisis is nothing new : particularly if have a house you've "got to" sell.
Prices in both Charleston and South Carolina are most assuredly down from their peaks in late 2006 / early 2007. The problem is that there is an acute shortage of reliable data to back such a statement up, and even the data that we do have is subject to interpretation. But whatever information sets you care to opine from, Charleston (and South Carolina in general) have NOT seen the magnitude of price collapse seen in many other markets around the country : and we're not likely to. Why? See the article in today's P&C regarding the stability and growth of Charleston's job market.
Having said that, our situation is probably not as relatively stable as some / many might wish to believe : nor can the perceived state of the housing market be blamed on fear mongering by the local and national medias. There are three nationally publicized data sets from which one might try to draw some realistic conclusions as to what has (and is) happening to existing home values in our region.
The first set is promoted by, and published by, the state / local / national Realtor organizations based upon multiple listing service (MLS) data in hundreds of markets representing millions of sales. Their concept draws upon changes in "median prices" : often reported monthly. Its popularity stems largely from the fact that the information is readily available and nationally comprehensive. But particularly in volatile times such as these, the "median price" concept is fatally flawed. Remember "median" is nothing more than the data point in the middle. In March of this year Charleston's median sales price was approximately $197,000 : in July $215,000, up 9% : and August was $202,000, back down 7%. From August 2007 to August 2008 this median price index fell 6% and it makes headlines. The truth is that Charleston saw the exact same mid-Summer monthly drop last year : and the year before : and the year before that. The only difference this year is that Charleston peaked one month early.

(continued in next post)

September 11, 2008 at 8:08 p.m. ( permalink | suggest removal )

wharrison (anonymous) says...

(continued from above) ...

Note also that the median sale in March could have been in Moncks Corner, the July sale in Awendaw, and the August sale in Mt. Pleasant. But even these variables don't begin to touch "median price's" biggest flaw. As the credit crunch began in earnest last fall, the 1st time homebuyer and the lower income buyers were disproportionately disenfranchised from the sales market by tougher credit standards. This tended to push the "median sales price" upwards, even as the NUMBER of home sales was dropping dramatically (remember Econ 101 : falling demand does not trigger higher prices !). Regionally, we've seen the sales rates fall by almost 50% since their peak, inventory rates double, and days on the market double. So, this upward bias in "median price" has undoubtedly masked an underlying deterioration in existing home values. How much? Well, let's look at data set # 2.
The national OFHEO Housing Price Index is published by an agency of the federal government ( 'nuff said ? ). Its underlying theory is sound as it relies on a "repeat sales" concept that most economists consider the most accurate (side note : they don't think much of the National Association of Realtors (NAR) median price approach). However, the OFHEO index itself is fatally flawed in that it only gathers sales data from CONFORMING LOANS : the cream of the mortgage crop. It ignores sales associated with subprime loans and most ALT-A loans ("liars loans"), and it also includes appraisal data from home refinances where values are notoriously overstated. In other words, OFHEO skews values heavily toward the high side. Last week's index showed Charleston having a year-over-year price gain of about 1.5%. If you tend to want to believe that, they also show Myrtle Beach as being down only 3% !

(continued below)...

September 11, 2008 at 8:11 p.m. ( permalink | suggest removal )

wharrison (anonymous) says...

The 3rd and most respected index is published by Standard & Poor's (: I know, I know) and is known as the Case-Schiller Index. And while NAR likes to throw rocks at it, most economists consider it the standard. Wall Street in fact uses it as an investment index in the futures market. The problem with the Case-Schiller Index is not accuracy, as it is highly sophisticated and precise. The problem is that the model requires enormous data sets and is available for only 20 of the largest metros. And those metros are disproportionately represented by the disaster zones in California, the desert Southwest, and Florida. The most recent index released in August shows national prices down 18% over the past year : and still headed south rapidly. While this national rate doesn't reflect much of what's happening in South Carolina or Charleston, it does give us data on our two closest big regional metros : Atlanta (which has only passing economic similarity) and Charlotte, which while certainly is no "match", does have strong financial and demographic relationships with the Upstate, Columbia, and the Lowcountry. Atlanta is now down about 8% over the past year and Charlotte is down 1%. We're not likely doing as well as Charlotte, but we're also probably better off than Atlanta. Note that OFHEO pegs Charlotte at a 5% gain which when compared to Case-Schiller's 1% drop would tend to indicate a 6-7% overstatement by OFHEO. If we applied that same bias to Charleston (stretching) then perhaps we've experienced a drop this past year on the order of 5% or so.

So in terms of workable data, what we have is a "median price" of highly questionable functionality showing our Charleston regional values to be down about 6% over August of last year. The OFHEO index which is heavily skewed upwards pegs us at a 1.5% increase in values over the same period, and Case-Schiller (judging from events in Atlanta and Charlotte) might indicate declines of 4 -7%. If I were asked to make an educated guess (thank you for asking) ... I'd venture that our overall market values are now down 6-8% since they peaked (most likely in late 2006). Remember, this is a very general statement. Some areas (perhaps single family homes downtown Charleston) may not have lost any appreciable value. Others (like condos in Mt. Pleasant) may be double that rate. New projects in financial trouble : well, the basement's the limit.

(continued below)

September 11, 2008 at 8:15 p.m. ( permalink | suggest removal )