Lowcountry prices buck trend, remain firm
Homes sales in the Charleston area were off significantly again last month, weighed down by too much supply and not enough demand. But prices did not follow suit.
The Charleston Trident Association of Realtors said Wednesday that 885 homes changed hands in the three-county region in September, a 28 percent drop compared with the same month in 2006.
It was the second-steepest decline in monthly sales since the local housing slump took hold early last year.
Prices are another story, as they have not fallen in step with the slowdown. Instead, the median home price, or the midpoint between the highest and lowest sale prices, rose slightly to $202,178 last month.
"Housing is worse than gasoline. The price goes up and doesn't go down," said Frank Hefner, an economist with the College of Charleston.
Hefner said one explanation for the staying power of home prices is that owners who aren't in a hurry to sell are waiting for the right offer. Also, builders are trying to keep their prices stable, but to do so they are offering upgrades and more-attractive financing packages to bring buyers in the door, Hefner said.
Nearly every zone that the Realtors association tracks saw sales volume drop off last month. The declines were mild in some areas and eye-opening in others.
For example, buyers closed on nearly the same number of homes on Daniel Island, the Wando area and the section of the peninsula south of the Crosstown as they did in September 2006.
Other areas, including parts of Summerville and West Ashley, weren't so lucky. In Hanahan, sales plummeted to 10 last month, compared to 84 a year earlier.
The competition for buyers is especially tough in developing suburban residential areas where sellers of existing homes are going up against deep-pocketed national companies that are offering incentives on newly built models, said Tenia Cattles, a real estate agent with Century 21 Properties Plus.
"They get very frustrated because they can't give away the farm like builders can afford to do," she said.
Frank Finlaw, the local president of Atlanta-based Beazer Homes, said September sales for his division were healthy compared to the first half of the year, thanks to reduced prices and more-attractive incentive packages.
"We're much more willing to negotiate," he said.
These days, many local home buyers are either relocating from other areas or are making their first purchase, Finlaw said.
"Someone who has to sell their house — those folks have come to the realization that it would be very difficult to sell right now," he said.
Experts agreed that the local inventory will have to fall back to a more-manageable level before the market trends will change course. As of Wednesday, 10,887 residences were listed for sale in the Charleston region, more than double the average number of properties on the market in 2004 and 2005, according to association data.
Finlaw noted that the local supply of new homes is falling, a good sign for the industry. Once that happens, demand for existing homes will go up, bringing the overall market back into balance.
"This has been a cyclical business since the housing industry started," Finlaw said.
The rental side of the housing industry also is providing some relief, said Bonnie Miller, owner of Mount Pleasant-based Old Dominion Realtors. She said some owners who bought a new home before selling their first are having to seek tenants to help them cover both mortgages. As a result, demand for property management services from Miller's company have taken off, she said.
Miller said the rental trend "helps the market, too, because it gets some of that influx of supply off."
Nationally, the broader outlook for housing dimmed a bit Wednesday, when the National Association of Realtors revised its 2007 sales prediction.
It now expects sales to be off nearly 11 percent compared to 2006. A month ago the group called for an 8.6 percent year-over-year decline.
The association has said it expects a rebound to start in the middle of 2008.