Manicured new developments dot the Lowcountry, expecting to yield thousands of homes for families, empty nesters and active adults. More just-built and mature houses are selling, and at higher median prices, than anytime since the late 2000s Great Recession.
All the while, Charleston draws rave reviews in visitor magazines and financial guides for its leisure attractions and appealing climate, enticing tourists and retirees to move here. Major employers such as Boeing, Volvo, Blackbaud and Mercedes-Benz Vans put down stakes in the region generating investments of more than $1 billion and reeling in hundreds of executives, office staff and factory workers.
Yet house hunters in at least the past four years find the task of landing their dream home — or any home, for that matter — to be frustrating as the number of residences they can realistically consider purchasing tumbles.
Since 2011, this “inventory” of homes for sale fell steeply every year and overall sank more than one-third from 7,651 houses in stock at the start of 2012 to 4,985 at the beginning of this year, according to Charleston Trident Association of Realtors numbers. Put another way, it’s equivalent to all the houses in Moncks Corner disappearing from the market over a 48-month period.
This year started as more of the same until a mild breather in June. Still, totals dropped 15 percent from a year earlier.
“Funny enough, I think it’s been holding steady this year,” says Michael Sally, owner of Pathway Real Estate Group and this year’s association president. The inventory figure today is around 5,000 units. “It’s kind of like it’s holding at a lower level than it should be,” says the Realtor, a frequent commentator on the inventory shortfall.
Authorities cite a few factors contributing to the limited total of homes for sale, a trend that’s showing up nationwide. The housing slump in late 2007 to early 2012 left many former homeowners with properties in foreclosure. Home values plummeted, and only recently are values surpassing the 2007 peak numbers. As a result, scores of owners have been reluctant to put their homes up for sale. That’s lead to a secondary problem; property holders willing to market their homes can’t find places to purchase, so they reconsider their listings. Buyers decide, “Hey, I’m comfortable here,” says Will Jenkinson, broker-in-charge of Carolina One New Homes.
The inventory crunch crosses nearly all geographical haunts of the Charleston area, but a few communities are hardest hit. Sally cites Hanahan, Mount Pleasant and James Island. “I think probably the impact (is greatest) close to downtown. All those are highly desirable places to live,” he says.
According to association totals, the deepest drops in the volume of homes on the market last year from 2014 were Hanahan, off 44.6 percent; upper Charleston peninsula, down 43.7 percent; Wando-Cainhoy, falling 41.6 percent; Folly Beach, sliding 38.7 percent; and West Ashley, dipping 29.6 percent.
With supply low and demand high, homeowners are in a solid position to fetch higher prices. Median home rates in the Lowcountry are up by double digits this year.
“It’s much more a sellers’ market,” says Elaine Worzala, director of the Carter Real Estate Center at the College of Charleston. “I got here four years ago, at that point, it got tighter and tighter.”
The dearth of homes for sale is easing somewhat, Worzala says. “It’s kind of stabilizing a bit. The boom is not going to keep going. However, there’s still a lot of (people who) come into Charleston. There’s still room, certainly.”
Jenkinson believes the region’s economic and residential growth will continue for years.
“The population is booming here, no matter what kind of housing, (you) can’t supply it fast enough.” Including retirees moving to the area, “You are seeing 60 percent sales from outside the area,” he says. It was half or less 10 years ago. South Carolina stands as the second ranked inbound moving state by Allied Van Lines the past two years, he says. “Nobody’s moving out.”
The new homes market, which had lagged in the early 2010s, has taken off. Jenkinson says, “2016 started to see results.” On Johns Island, almost 60 percent of the real estate market are new homes. “That’s really on the rise,” he says. Another home-buying nudge comes from attractive mortgage rates, which fell to a near all-time low of 4.3 percent for a 30-year fixed home loan, Jenkinson says.
“If you look at sales pending — under contract but not closed — new homes are 34 percent (of the total). New homes frankly are bringing back that supply,” he says.
Sally sees 2016 as a pivotal year in terms of inventory.
“We are in the (midst) of our selling season,” he says, suspecting that additional homeowners will put their residences on the market and further boost inventories. August and September are key months, he says. If inventory rises, the lift in units will be most pronounced in Berkeley County near Summerville because of all the construction at master-planned communities such as Nexton, Cane Bay and Carnes Crossroads.
Even if the market heats up more, Sally disagrees with officials who want to place a moratorium or other curbs on home construction, ostensively to reduce automotive logjams. “We’ve got to get away from that attitude, ‘Oh my gosh, traffic is so bad, we need to stop building homes.’ That’s not going to solve problems.” He favors a comprehensive look at transportation projects, as well as, in some cases, designing denser neighborhoods, encapsulating the population and potentially shortening drive times to and from large employers. “We continue to commute,” Sally says. Without housing and roads changes, “People are still going to travel all those places to work.”
Worzala concurs. “People (are) stuck in cars in traffic (going) home. If we could figure out ways to build closer in (to Charleston) ...,” she ponders. The exception would be Summerville and lower Berkeley County. Big manufacturers are “creating a new employment base out there, she says. “That’s where people are going, like Nexton.” But infrastructure needs to branch out, “so people don’t feel in the middle of nowhere.”
As a rule, shoppers tend to peruse homes in neighborhoods they desire, not necessarily because it’s proximate to work.
“To me, it’s not location, it’s related to where housing needs to go. If housing isn’t close to linkages, you hit the road,” she says.
Jenkinson expects the Lowcountry market to pick up steam before leveling off.
“We haven’t seen our stride yet. What we’ve accomplished (is) 20,000 (new) jobs before Volvo gets cranked up,” he says. “The supply is coming, the question is can it keep up with demand.”
Reach Jim Parker at 843-937-5542 or email@example.com.