September 2022 Market Update
You’ve probably seen these headlines this summer - “Real Estate Bubble About to Burst,” “Home Values Crashing,” “Listing Inventory Skyrocketing!” We know, we are hearing it too, but there’s more to the story. Asking prices do not equal home values, and this is NOT 2008.
Starting June 2020, the Charleston market took off on a trajectory no one predicted. We saw prices climb faster than ever (20%) while listing inventory plummeted to an all-time low (<1,000 homes for sale). Water cooler talk was of listings with 50+ showings in 24 hours… Multiple offers (Vanessa holds our team’s record with 32 offers on a listing in 2021)... Buyers making offers site unseen… Buyers striking inspection contingencies, repairs and appraisal contingencies… and buyers getting very creative (we had a buyer offer the sellers a week-long stay at their oceanfront condo). It was the best of times for sellers, and the worst of times for buyers and their agents.
We knew the frenzy was not sustainable, and the reality started sinking in this summer when the Feds began raising interest rates. At first, rates jumped from 3% to almost 7% for a conventional loan. Now they have settled to around 5.5%. The rate hike was a shock to the system. Inventory started to rise, and list prices started to level off, but we are still a long way away from a market decline.
We consider 2019 to be the last “normal” year in our market before COVID. In September 2019, there were 6,304 homes for sale. Inventory hit an all-time low in February 2022. There were a few days when our MLS had fewer than 1,000 homes for sale. Inventory slowly began climbing this summer, and we are now at 2,700, still well below where we were in 2019 and well below the estimated 10,000 listings needed for a balanced market based on current demand.
Demand for our area remains sky high. Until supply meets demand, values will hold. In September 2019, the median sales price was $285k. As inventory dropped, prices jumped to a peak of $425k in May 2022. We have seen a slight dip, but we see it as the market’s initial reaction to higher rates that will gradually level off. We are starting to see price reductions on listings that are priced as if the rates are still 3.5% and there are only 1,000 homes for sale. After all, sellers are often the last to know when a market shifts against their favor. This is not a reflection of home values depreciating, just a sign that sellers need to be more realistic and competitive. We still got multiple offers on our team’s recent listings that were well priced based on recent sales and competition. There is still plenty of buyer activity and demand, but buyers are no longer willing to pay such wild premiums or buy without inspections. As inventory grows, so will buyers’ options forcing sellers to price more competitively. Days on market is slowly growing from a low of 3 days this spring to 7 days currently (still a far cry from “normal” 2019 when it took an average of 21 days for a home to go under contract).
So where do we see the marketing heading? Acknowledging we have no crystal ball but armed with the experience our team has spanning 80 total years of good & bad markets, here is what we see coming next….
Inventory will likely dip again after Halloween as we head into the holiday season - a reflection that seasonality has returned as a factor. Historically, our market has peaked in June, slowed after July 4th, and dropped off sharply from Halloween to New Years. More inventory is a welcome change! Our buyers will have more choices and room to breathe again.
Until inventory meets demand, Charleston will remain a sellers market. We believe our market needs at least another year to balance out. We see prices continuing to appreciate at 5-10% each year, not 15-20%. There will be more competition for our sellers, but our team’s listing/marketing strategies have consistently kept our sellers outperforming the market.
More predictability in the market will ultimately make consumers more likely to move. Upsize, downsize, move aging parents closer, or buy the vacation home they’ve always wanted. Our market offers solid investment opportunities in every climate. Charleston remains a top destination for retirees and those leaving major cities. Our market will always be protected by our quality of life, natural surroundings, economic opportunities, and enviable lowcountry lifestyle.
P.S. We love to deep dive into market statistics. If you’d like to nerd out with us, just reach out!
