Prospective home buyers awaiting a sign that prices are on the way down in Charleston could be in luck.
Local home prices took their biggest monthly slide in recent memory in November, suggesting that more sellers are willing to offer discounts to close deals amid a sluggish market.
Sales volume also fell last month, dropping nearly 19 percent compared to November 2006, according to figures from the Charleston Trident Association of Realtors.
The group's Multiple Listing Service, which primarily tracks existing home sales, recorded 806 residential transactions last month, or 18.6 percent fewer than for the same period a year ago.
The decline extended a downturn that started in Charleston nearly two years ago.
But area home prices, for the most part, had held up on a year-over-year basis, even as the number of sales have dropped off. That changed in May, when median price fell by 1 percent. The figure remained almost unchanged in the months leading up to November, when it slipped by 2.3 percent, to $200,000.
"Reality is setting in that prices were somewhat inflated in some areas," said Bruce Mullen, an agent with Prudential Carolina Real Estate.
He said in many cases sellers have been basing their asking prices on values established while the market was still climbing.
"People were riding on the wave of the boom from a few years ago," Mullen said.
The November decline was not enough to pull into negative territory the median price for all 2007 sales, which for the Charleston region is still 1.9 percent higher than last year.
It also did not play out evenly across the region. In fact, prices rose in areas close to the Charleston peninsula.
On James Island, the median price was 5 percent higher than November 2006. The areas of West Ashley and Mount Pleasant that are closest to the peninsula also saw prices rise by 7 percent each.
But the farther away a home is from downtown Charleston, the more likely the seller is competing with new-home builders who are offering discounts and upgrades.
Beyond S.C. Highway 41 in Mount Pleasant, for example, the median price for November fell by 35 percent. And in other areas, like the outskirts of West Ashley and Summerville, nearby new construction has pushed resale values down.
In North Charleston, Jamie Herman and her husband have decided to reduce the asking price of their three-bedroom home in Wescott Plantation by more than $20,000 to $224,500.
"It's frustrating because there are so many new houses going up, and they're practically being given away," said Herman, whose husband is being transferred to an Air Force base in Oklahoma.
William Harrison, a Charleston-based consultant and real estate lecturer at the University of South Carolina's Moore School of Business, doesn't think that 2.3 percent one-month drop will be enough to get buyers off the fence.
"It's going to contribute to the uncertainty," said Harrison, who expects prices to fall further in coming months.
He predicted buyers will have to see several months of declines, followed by a sudden increase in prices, before they are convinced sales have bottomed out.
But for buyers who can't or don't want to wait, it's an ideal time to be in the market, said David Kent, president of the Charleston Trident Association of Realtors. He noted that low interest rates and the large selection of homes give buyers the upper hand in the current market.
"Timing the market is difficult," said Kent, owner of The Real Buyer's Agent. "No one knows when the top is. No one knows when the bottom is. So now's as good a time as any."
At the national level, the industry's main trade group offered a glimmer of potentially upbeat news Monday, saying the battered housing market is on the verge of stabilizing. The National Association of Realtors also inched up its outlook for 2007 and 2008 home sales.
The revised monthly forecast, which followed nine straight months of downward revisions, calls for U.S. existing home sales to fall 12.5 percent this year to 5.67 million — the lowest level since 2002. Last month, the association predicted 5.66 million existing homes would be sold this year. The group also forecast sales will rise slightly in 2008 to 5.7 million, up from last month's prediction of 5.69 million, which works out to 0.17 percent.
Numerous other economists are far less optimistic. They predict weak sales and falling prices through next year and beyond and emphasize that those problems could worsen if the economy sinks into a recession.