Toni Conover knew the real estate market was hot but she didn't expect nearly two dozen potential buyers to descend upon her house the first day it was for sale.
“I was getting texts like — ding, ding, ding, ding — nonstop," said Conover, a divorced empty-nester in her 50s who's downsizing.
“That first evening I think I had one offer, and by the next morning, I had three."
In almost no time her 1,508-square-foot house in Mount Pleasant's Longpoint subdivision was under contract, as is, for $390,000.
That was $10,000 more than her asking price, which was already higher than her real estate agent recommended.
“A month before, I would have been happy with $360,000," said Conover, who sold the house in February. "The inventory was so incredibly low, I realized I could ask for more."
At the time, in the southern half of South Carolina's fourth-largest city, there were fewer than a dozen single-family homes for sale below $400,000. By May, some local real estate brokers were calling any such house a "unicorn" because their existence seemed the stuff of legend.
The ongoing, scorching-hot residential real estate market has been reminiscent of the peak years of the housing bubble, 2005-07, and by some measures it's even less affordable. Prices have soared, buyers are scrambling to find homes for sale and bidding wars have become commonplace as houses from the coast to the mountains sell within days or hours of being listed.
“It’s across the state, the United States and Canada," said Rob Woodul, broker-in-charge at Carolina One's West Ashley office and treasurer of the S.C. Realtors Association.
“I’ve been telling my agents: List price is the starting point," he added.
In the Myrtle Beach area, "it’s crazy," said Travis Muir, a Realtor with the Hoffman Group. "We’re not even getting a chance to view the properties before they’re under contract.”
A dearth of homes for sale is one reason prices have increased, but soaring demand is the key reason there are so few on the market. Home sales increased sharply in 2020, eventually leaving few houses to buy.
“The low inventory is not a cause of high demand, but a result of it," said Joseph Von Nessen, a research economist at the University of South Carolina's Darla Moore School of Business who presents market analysis at Realtor association conferences.
'People freaked out'
Real estate professionals measure supply and demand by calculating how many months it would take to sell all the homes listed for sale given current demand. Six months of inventory is considered a balanced market, with no advantage to buyers or sellers. By April, the inventory in parts of South Carolina was as low as three weeks.
Greenville Realtor Jacob Mann said the market all but ground to a halt in early 2020 before rocketing to new heights.
“People freaked out,” Mann said. "Some people took their house off the market. They didn’t want anybody walking through their house with COVID germs.
“And then all of a sudden people were like, ‘I’m getting the heck out of California. I’m leaving New York. I’m leaving Florida,' " he said. “Now you've got wham, bam craziness.”
A $500,000 home Mann listed in March in Simpsonville, a bedroom community south of Greenville, got a dozen offers in one weekend and sold for $50,000 above the asking price.
Nationwide, the median home price — the point where half cost more and half less — hit an all-time high of $341,600 after increasing more than 19 percent in a year, according to the National Association of Realtors.
Some buyers are waiving home inspections, as in Conover's sale, to make their offers more attractive. Surprising numbers of buyers are paying in cash, avoiding the need for appraisal-based loans, to the disadvantage of buyers who need a mortgage.
Purchases of second homes have skyrocketed, particularly in places such as Myrtle Beach. In the Charleston area, sales of homes costing more than $1 million have doubled, according to Rusty Hughes at Carolina One, who is president of the Charleston Trident Association of Realtors.
Hughes has been in the business 23 years and said he's never seen it like this, even during the housing bubble. Other longtime professionals, particularly in the Charleston area, said the same.
“I’ve been in this for 20 years and it just blows my mind," said Owen Tyler, broker-in-charge at Cassina Group and immediate past president of the S.C. Association of Realtors. "Our company put a listing on the Isle of Palms for $4.2 million, and we put it on the market at 10 a.m. and it was under contract by 6 p.m. with multiple offers."
Von Nessen said low interest rates and affluent buyers flush with cash — from a year of foregone vacations and restaurant meals, a soaring stock market and stimulus checks — are playing a role. He said that while hospitality workers suffered stunning job losses in 2020, people in the demographics more likely to be homebuyers did not.
Easy to sell, hard to buy
It's a great time to sell a home but a hard time to be a buyer. People like Conover, who are downsizing or relocating, are experiencing both sides at once.
“Every time I went to put in an offer, it was too late," said Conover. “Honestly, I feel like it aged me a little bit."
While preparing her house for sale, she was looking for a less-expensive condo or townhouse to buy. At night she would look at listings and plan to visit the next day, only to wake up in the morning and learn they were already under contract.
After looking around Mount Pleasant, James Island, Johns Island and on the Cainhoy peninsula across the river from Mount Pleasant, she found a townhouse in Beresford Commons on the Cainhoy peninsula and quickly bought it, paying the full asking price.
“I did feel completely under pressure at that point to make a decision," Conover said. “I think it’s gotten even harder since I bought mine."
Harder? For sure, and that's going on around the country.
On May 25, Glenn Kelman, CEO of national brokerage Redfin, recounted on Twitter this stunning example of a bidding war: "A Bethesda, Maryland homebuyer working with Redfin included in her written offer a pledge to name her firstborn child after the seller. She lost."
Kelman also wrote that in a Redfin survey of nearly 2,000 homebuyers, nearly two-thirds said they had placed bids on homes they hadn't seen in person.
In Myrtle Beach, Muir had a buyer who wanted to see a property that was listed at 10 p.m. one night this spring. He scheduled a showing for 11 a.m. the following morning, at which point it would have been on the market for 13 hours, mostly in the dead of night.
“By the time we had actually viewed the property, they already had multiple offers,” Muir said. "With our inventory being so low, as soon as something comes up it’s immediate."
First-time buyers suffer
In a normal sort of year, record-low mortgage interest rates plus stimulus checks from the federal government should be a great help to first-time homebuyers. Soaring prices and tremendous competition for homes have swamped that lifeboat, however, and the need for appraisal-supported mortgage loans has put first-time buyers at a disadvantage as all-cash sales increase.
“People are moving down here and buying businesses and buying property," said Herb Sass, a Charleston-area appraiser and county councilman. “A lot of the deals that are going through are not contingent on financing."
When a sale is contingent on financing, it can fall through if the appraisal of the property's value comes in too low, or if there's some other snag with the mortgage loan. Cash buyers don't need an appraisal or a mortgage, and that makes their offers more attractive even if they're for the same amount of money.
“The first-time buyers are really getting squeezed," said Woodul.
Appraisers rely on comparable real estate sales to determine what properties are worth, but if those “comps” are even months old, they likely don’t reflect current prices people are willing to pay.
“The comps aren’t there yet, so that’s why the appraisals are coming in lower,” said Muir. “That’s just how fast this market has changed.”
Renny Diedrich, broker-in-charge at RE/MAX Southern Shores & RE/MAX Professionals, with offices from Myrtle Beach to Florence, said she has seen some properties not appraising for as much as buyers are willing to pay because things are moving so quickly.
“You just don’t have enough comps to justify that last one sold for $250 (thousand) and how could this one be $260 (thousand)?” Diedrich said. “I feel bad for the first-time homebuyer, the one who’s getting a loan versus the one who is paying cash."
A home for sale might be under contract within hours or days of being listed, but it usually takes weeks, if not longer, for the sale to close when legal documents are signed and money changes hands. And it takes more time for the deed to be recorded.
Muir said the delay — from the initial contract to attorneys to title abstractors and the courthouse — contributes to the lag time for having up-to-date comps.
“All these properties are selling well and above, but they just haven’t recorded yet,” he said.
Builders struggle to keep up
Newly built homes are selling about as fast as they can be constructed — and often well before they've been completed — but builders have faced unusual challenges in delivering them.
Manufacturing slowdowns and supply chain issues caused by the coronavirus pandemic made many building materials harder to get and much more expensive, and the pandemic also disrupted the workforce. Meanwhile, demand and prices shot higher, and the turnaround happened at breakneck speed.
“A year ago, I could go on a tour of every new home construction site in Charleston and walk away with Yeti coolers and Apple watches and gift cards," said Brian Beatty, who leads a team at Keller Williams Realty and hosts the The Brian Beatty Real Estate Show on local radio station WTMA. "Now, you are seeing builders offering one percent commissions and build in (price) escalation clauses."
Tom Chumney, who owns Southern Traditional Homes based in Lexington, said he is now ordering trusses, which support the roof in a new home, before he has received a building permit.
With kitchen cabinets, he is ordering them before he even has prepared a home site for construction.
“That way I will have them when I need them,” Chumney said.
But if a new-home buyer wants different cabinets, they might be out of luck.
Lumber, an essential material for building houses, is perhaps the best-known of many examples of thin supplies and high prices. Lumber prices rose 300 percent between April 2020 and May 2021, according to the National Association of Home Builders.
The association said in April that lumber prices were adding nearly $36,000 to the price of new single-family homes, and $119 to the monthly rent in newly-built apartments.
Lumber prices have since retreated from their peak but continue to jump around wildly.
"Businesses are just not set up to deal with wild swings in demand," said Von Nessen. “This is a unique market and one that we’ve never seen. It’s uncharted territory."
Mungo Homes, a large builder headquartered in Irmo, used to agree on contracts lasting three months to buy its lumber, CEO Steven Mungo said. Now, because prices are changing so quickly, those contracts are only one week long.
“I have never seen price volatility like this,” he said.
Even with high demand driving home prices up, builders can face problems passing along the higher costs for materials. For buyers to qualify for loans, the homes still need to appraise for the prices at which they are being sold.
Chumney said that’s particularly a concern with smaller homes that could be attractive to first-time buyers because profit margins are thinner on smaller homes. Chumney said he is shying away from building some smaller homes for that reason.
First-time buyers looking for affordable homes in South Carolina are struggling, but housing costs in some of the state's most popular cities can seem like a bargain to people relocating from places like New York.
Remote workers moving in
Greenville Realtor Jacob Mann said he's had clients arriving by car from other states, ready to pay cash. That may be one reason the Greenville area has been among the hottest in the nation for all-cash deals, which accounted for 40 percent of sales there in January and February.
Mann said potential homebuyers arriving from the New York City area were “on Cloud Nine” when they saw what their money could buy.
His clients Luisa and Michael Arcieri, for example, used to live in a 900-square-foot apartment in Jersey City, N.J., across the river from Manhattan. Now they spend less each month to live in a four-bedroom, 3,200-square-foot house they bought in Greenville's Augusta Road area in the fall of 2020.
“We just kind of always felt like in New York, with taxes and the cost of the types of places that we would want to live, it would just always be a struggle no matter how well we're doing,” Michael said.
The Arcieris both now work remotely in the international recycled commodities business.
Luisa, 31, and Michael, 36, had been living in Jersey City with their dog, Madi, for four years when the coronavirus pandemic slammed their city with a vengeance in March 2020. Luisa was seven months pregnant with their first baby, and the couple feared their high-rise building with its daily elevator rides was no longer safe.
“COVID kind of expedited everything and forced us to kind of rethink our living situation a little sooner than we had wanted to,” Michael said.
They packed their suitcases for what they thought would be a visit of a few weeks with Luisa’s parents in Mauldin. They had been visiting there for years and had noticed Greenville growing and thriving.
"I mean, whether it’s the cleanliness of the streets, the new buildings that have gone up, the hotels, the restaurants, the Swamp Rabbit Trail, the park; I mean, the events, all the events for young families,” Michael said. “You go anywhere in Greenville and you see a ton of young families — active families riding bikes, walking, running.”
Their baby, Elena, was born May 25, 2020, and their apartment lease in Jersey City expired at the end of August.
After months of scouting the Greenville area and learning the real estate market, they made an offer — and lost in the bidding. Then they found a home under construction that hadn't yet been offered for sale, and sealed a deal with the builder at the end of November.
Among the things they don't miss are paying hundreds of dollars each month for parking and bridge and tunnel tolls.
In Greenville, as they moved into their new home, Michael was struggling to get a dresser into the house and a man passing by offered to help. Michael paused for a beat.
“I mean, that doesn't happen all that often in New York,” Michael said. “I mean, people are just …”
“You know something’s wrong,” his wife, Luisa, finished. “You’re not gonna let them in your house.”
Michael accepted the offer and the man helped get the dresser into his house. And everything was fine.
The best, and worst, time for Realtors
For real estate agents, selling a home these days is the easy part. The number of Realtors in South Carolina — more than 26,000 — is now far greater than the number of homes for sale, and finding a home to sell is the challenge.
“You pretty much know if you get the listing you're pretty much hopefully going to get the money,” said Mann, top agent with Coldwell Banker Caine in Greenville.
He said agents are helping home sellers deal with multiple showings and multiple offers at a frenzied pace.
“I mean, it’s 24-7 right now,” Mann said. “And you’ve got to, you know, you’ve got to win. It’s like a, it’s like a fist fight."
Just 14 months ago, when the economy plunged as COVID-19 hit, Tyler said real estate agents had no expectation business would come roaring back. Second-quarter home sales plunged 15.1 percent statewide.
“People thought they wouldn’t have careers," said Tyler, who was president of the S.C. Association of Realtors at the time. “People were unable to look at properties. We had weeks with no showings."
There were shutdowns, restrictions and, at one point, some states required people to quarantine if they had been in South Carolina.
"By June the (sales) numbers were surging, and continued nonstop," Tyler said. “2020 was our best year in 15 years, even with being shut down for a month and a half. At the same time, the first five months of 2021 have been the best five months we’ve ever had."
But real estate agents are struggling to find homes to sell. Mailboxes are filling with solicitations from agents — "Find out what your home is worth," they say, and "Consider selling your home."
Charleston-area buyer’s agent David Kent took the unusual step of purchasing a newspaper advertisement urging homeowners in two particular Mount Pleasant neighborhoods to “Sell Now!” because he had buyers waiting.
“What I’m trying to do is find inventory for my clients,” said Kent, who only works with buyers. “I’m just trying any way I can.”
So, is it a bubble?
Record-low mortgage interest rates have made it possible for buyers to afford more costly homes because low rates mean more affordable monthly mortgage payments. Buyers are already stretched by high prices, and when interest rates rise, that will add to the pressure.
"Ultimately, price surges and supply constraints will increasingly price prospective buyers out of the market," the National Association of Home Builders said in a May report. "Moreover, the issue is disproportionately harming middle- and low-income households."
Homes are even less affordable now in some areas, including Charleston, than at the very peak of the housing bubble in mid-2007.
At the end of 2019, the median household income for the Charleston area — $70,505 — was enough to afford a median-priced home, costing $275,000. By April 2021, a middle-income household earned just 82 percent of the amount needed to buy a mid-priced home because the price had increased to $343,796, according to the Charleston Trident Realtors Association.
Greater supply, lower demand or a combination of both should bring prices down. The questions are: when, how fast and by how much?
“I don’t think we’re going to build our way out of this any time soon," said Woodul. "I think we’re going to continue through this year and into the first part of 2022."
Beatty said there are plenty of people who are long overdue on mortgage payments but still occupying their homes due to forbearance relief programs that will end at some point. As of May, 2.1 million homeowners nationwide were in forbearance according to the Mortgage Bankers Association.
Beatty said many of them will eventually need to sell, putting more supply on the market and downward pressure on prices.
“We don’t actually have a supply issue, but a very accelerated demand curve," said Beatty. "There are just so many people who want to buy right now. When the music stops — and it’s going to happen, no matter what, because markets ebb and flow — what’s going to cause it to go down?"
Home prices don't normally rise 19 percent in a single year, and a pullback would not be surprising. That's not necessarily a problem for homeowners with fixed mortgage payments or no payments at all, as long as they don't plan to sell.
For others, a substantial drop in prices could mean they owe more than their home is worth, and selling under such circumstances is financially perilous.
“I think if people are going to buy right now, it needs to be understood that they need to be there for a few years," said Beatty.
At some point, rising prices alone could be enough to reduce demand, which in turn, should reduce prices.
“There’s a point that will come when buyers say, ‘hold on, time out, enough is enough,’ " said Hughes.
So far, nearly halfway into 2021, that point has not been reached.