Market Update – Charleston SC Real Estate-8/23

1) Written sales market wide finished -7% in July of ’23 versus July of ’22.

• July finishing at -7% to last July is an excellent outcome

(2) Early August showed a relatively strong 314 properties go under contract. Sales (green line) have remained remarkably close to the 15 year average (blue line) for about two and a half months.

The orange line represents ratified contracts by week last year…the green line is this year…and the blue line is the 15 year average for each week.

Green line=2023 Orange Line=2022 Blue Line=15-year average

(3)  Mortgage rates remain elevated, and this is obviously holding back sales levels.

• 6.5% may be the “magic number”
• When 30 year mortgage rates trend below that number and stay there for a reasonable period of time, buyers will come off of the sidelines and resale listing inventory will start to come back online at a higher rate than what we are seeing currently

(4)  The Median sale price in the Charleston market continues to stay in a tight band between $400k and $420k where it has been for most of the last 15 months, sitting at $405k in June.

(5) Active Inventory stands at 2,412 listings. We haven’t seen much inventory growth this summer and inventory typically starts a slow seasonal decline in September or October. This will also likely put upward pressure on prices, or at the very least hold prices steady.

While this level of inventory is a significant increase over the 1,035 listing “floor” that we set in February of 2022:

• We need roughly 4,600 additional listings market wide to achieve a balanced market (5 months of inventory)
• The gap between the number of listings available for sale and the number of listings needed to maintain a balanced market is substantial. The chart below is an attempt to express this visually.

(6) There continues to be a reluctance of owners to list their property; new listings taken were down 17% in July of ’23 versus July of ’22.

7) The Charleston market has about six or seven weeks of inventory as a whole, still solidly a seller’s market (this can vary by price range and specific location, of course). The most active areas have inventory levels in the 3-5 week range.

(8) New construction represents 46% of all pending contracts in the MLS and new construction comprises about 32% of the closings.

• New Homes “pendings” will always be higher than new homes closings as new construction typically sits in pending status for far longer than a resale, and the new homes tend to “pile up” in pending status, so new homes actually represent about 32% of the sales market currently
• New homes represent 33% of the available inventory currently
• New construction does not appear to be poised to ride to the rescue of our inventory problem; the last 12 months of permits issued in the tri-county sits at almost exactly the midpoint (5,354 single family permits) between the historical high point (8,084 permits) and the historical low point (2,732 permits)
• To meet demand in a low resale inventory environment, it is projected that we need approximately 7,000-8,000 new single-family builds in Charleston annually.

(9) Foreclosures and Short Sales continue to hold at a combined .6% of all available listings currently. This is down from 1.8% of all available listings on 1/1/2020. This market has been and continues to be basically nonexistent and there are very few “newly distressed” properties in the pipeline.

• “Serious delinquencies fell to the lowest level since August 2006; June delinquency rate was the third lowest on record.” – Black Knight Mortgage Monitor Headline from last week
• Record home equity is driving the low delinquency rate along with high levels of employment. Many homeowners do not want to walk away from their equity.

(10) We are at roughly double the monthly pre-pandemic sales levels of $1MM+ properties. This market segment remains surprisingly robust.

f you have considered buying or selling a home in The Tri-County area, I would love to help!

Gena Glaze

843-343-8239

gena@genaglaze.com