Despite a crushing shutdown of the economy last spring, Charleston-area home sales skyrocketed to a new record in 2020, propelled by low interest rates, job seekers and an influx of new residents moving to the region from dense urban areas to escape the coronavirus.
Strong demand is expected to continue in the new year.
Residential transactions rose more than 31 percent in December with 2,058 homes changing hands, according to preliminary data released Tuesday by the Charleston Trident Association of Realtors.
The median sales price last month was $314,500, up 14.4 percent from a year earlier.
Housing sales last year eclipsed those for all of 2019 in 11 months in November. The final month's tally pushed total sales for all of 2020 to 21,826, soaring 17.2 percent over 2019.
For the year, the median price climbed 8 percent to $300,000, up $22,235 from 2019.
Looking ahead, low mortgage rates and high housing demand are expected to sustain a healthy pace of home buying into the new year.
"2021 is likely to be another good year for the housing market in Charleston," said Joey Von Nessen, an economist at the University of South Carolina.
Other factors driving sales last year and into the new year, he said, include in-migration of new residents, more disposable income and savings from federal stimulus measures and fewer employment losses among potential homebuyers.
Leisure and hospitality workers, the hardest-hit segment of the workforce during the pandemic, generally rent and are not in the housing hunt, Von Nessen said.
Their jobless rate was 16.5 percent in November while the rest of the sectors of the economy were down 1.5 percent from pre-COVID levels.
While the region will be hard-pressed to beat the record sales from last year, he believes it could happen, but sales are more likely to flatten or decline slightly by the latter part of the year.
He cautioned that will not be because of a downturn in the economy but because supply issues could come into play as sales from the latter months of the year are compared to the unusually high volume of transactions in the second half of 2020.
The supply of housing has steadily declined since 2010, when nearly 9,100 homes were for sale as the region's real estate market was still recovering from the Great Recession.
For December, that figure plummeted 56 percent from the same month in 2019 to less than 2,500 as "active" for sale listings, according the CHS Regional MLS.
To keep up with the region's population growth, about 7,500 new housing units each year are needed, a benchmark that hasn't been met since 2006, according to housing officials.
Strong demand and low supply will continue to put pressure on prices in the new year.
Property information service CoreLogic predicts home prices nationally will rise 2.5 percent through November.
"While we can expect to see lingering effects of COVID-19 resurgences and subsequent shutdowns in the early months of 2021, vaccine distributions and stimulus actions should revitalize economic activity and keep home purchase demand and home price growth strong," said Frank Martell, CoreLogic president and CEO.
Looking forward, interest rates area expected to remain low for the near future.
Last week, the rate on a 30-year mortgage ticked up slightly to 2.79 percent in the latest report from home loan financial firm Freddie Mac. That's still well below last year's figure at this time of 3.65 percent.
The rate on a 15-year loan edged up slightly last week to 2.23 percent, but still down from 3.09 percent one year ago.
"While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity," said Sam Khater, Freddie Mac’s chief economist. "Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result."
Von Nessen, too, said interest rates are likely to remain near historically low levels throughout 2021 and maybe into 2022.
The Fed (Federal Reserve Board) is still in stimulus mode," he said. "There is broad consensus the economy still needs some help."
Broadly speaking, Von Nessen believes South Carolina's full recovery hinges on widespread inoculations against the coronavirus. Full recovery could begin as early as August and as late as November 2022, he said.
Most sectors of the state's economy have nearly bounced back from the deep dip during the government-ordered lockdown last spring, but hotel, restaurant and entertainment jobs are still far below pre-pandemic levels.
"A full recovery in South Carolina means recovery of leisure and hospitality," Von Nessen said.
As for Charleston's housing market over the next few years, he said demand will continue to be strong, citing a report that the Southeast is predicted to see the strongest percentage of in-migration over the next 20 years than any other part of the U.S.
That, Von Nessen said, will bring more companies, especially distribution centers similar to Walmart's recent announcement of a 3 million-square-foot facility near Ridgeville, to the region to be closer to their population base.
With the State Ports Authority deepening the Charleston Harbor and opening a new terminal in North Charleston, the region will continue to grow as more firms create more jobs and people move to the area for work, he said.
"When you have a port nearby, companies are looking to locate in a market where goods can be delivered to their growing customer base," Von Nessen said.