In March, the Charleston region saw the highest monthly number of pending home sales in 10 years.
This is the peak time of year for both new listings and sales, and if you’re shopping for a home in the Charleston area, there are some important things you should know.
That’s particularly true for first-time buyers and for those moving from other states where the costs and concerns associated with homeownership can be quite different.
Home shoppers hopefully already understand the financial basics of getting a mortgage and buying a home.
Here are some things that are less commonly known, some of them particular to South Carolina or Greater Charleston.
Insurance vs. taxes. Lots of people move to South Carolina from northeastern states, where property taxes are very high and home insurance generally costs less than in coastal areas. In South Carolina, property taxes are quite low for owner-occupied homes, but home insurance can be very expensive due to hurricane and flood risks. Investigate those costs as you compare homes, by checking with an insurance agent, because the difference between two homes could be thousands of dollars yearly.
Property taxes typically rise when a home is sold, because the home’s taxable value will be adjusted to reflect current market values. That’s been the rule since the state’s property tax system was changed in 2006. So don’t bank on the “annual tax” amount you might see in a real estate listing. And when you buy a home, make sure to file the paperwork with your county to get the owner-occupied tax rate.
Shifting schools. The Charleston area’s population is growing fast, and one result is more school construction and shifting school attendance zones. Want to make sure your kid goes to the new elementary school, not the one where half the classrooms are in trailers? Buyers who are shopping with schools in mind need to check school district plans if they hope to send their kids to a particular school.
Incentives for buyers: In most counties, just about everyone counts as a “first-time homebuyer.” South Carolina has a number of generous incentives to help first-time buyers, but all that’s required in most counties, including Berkeley and Dorchester, is that they buyer doesn’t own another primary residence at the time they close on a home purchase. In other counties, including Charleston, you’re a first-time buyer if you haven’t owned a home in three years.
Why is that important? Because first-time buyer incentives can put some serious money in your pocket, if you qualify. There are income and home-price limits, but they are pretty generous. For example, a single person or couple with an income as high as $75,480 could purchase a home for up to $295,000 in Berkeley County or Dorchester County and qualify for incentives from the state Housing Finance & Development Authority (visit SCHousing.com or call 803-896-2211).
The best of these incentives is the “mortgage credit certificate,” which allows you to claim an annual federal tax credit equal to 30 percent of the interest paid on a mortgage loan, worth up to $2,000 each year. It’s a federal tax credit, but you can only get it by obtaining one of these certificates during the home loan process.
Second, the state authority offers loan programs and downpayment assistance for buyers. The Palmetto Heroes program, for example, offers up to $8,000 in downpayment assistance and loans with 3 percent interest rates to “first-time” buyers who are law enforcement or corrections officers, teacher, nurses and certified nursing assistants, veterans, firefighters, emergency medical services personnel, and active members of the S.C. National Guard.
Some cities and nonprofits occasionally offer homes for sale directly to “first-time” buyers, though it can be difficult to learn about availability. Charleston, for example, has developed and sold a number of new or renovated homes on the peninsula in recent years at discounted prices. Those homes are sold subject to income limits, and come with restrictions on resales.
Be prepared to act quickly: Buying a home is a big decision, but in a seller’s market, taking time to make a decision about a particular house means taking a risk that someone else will snap it up. I bought my house during the second half of 2004 when the market was booming, and was able to buy it because I made the highest of three offers the day the house went on the market. I wouldn’t have been comfortable making that offer if I had not already researched the market, the schools and the financing.
Supply and demand in the Charleston area varies by neighborhood and price range, but across the three counties the supply of homes for sale has dropped to levels last seen in 2006. The homes are selling, on average, in half the time (73 days) that it took just three years ago. And the average seller is getting about 95 percent of their asking price, compared to 90 percent during the down years.