Interest Rates

Interest rates are under 5.5% right now. Just had a buyer get a 95% loan on a $170k home with no PMI(private mortgage insurance). This caused their interest rate to be a little higher. Banks usually like to have you put at least 20% down to avoid PMI. Paying a higher interest rate is another way to avoid paying PMI if you don't have 20% to put down. But, they got a special type of loan where the lender paid most of their closing costs. Since we also had the seller paying their closing costs, we were able to use the closing costs money from the seller to buy down the interest rate. So, they ended up with a 5.75% interest rate with no PMI and all their closing costs and pre-paid items paid for by someone else! Having the right lender can make a hugh difference. A good realtor should have at least 3 lenders to recommend to you. Then it's up to you to get the best deal.

Fastest Growing Areas

In a recent report that showed several areas in Texas to be the fastest growing areas in the nation, the Myrtle Beach area ranked 6th in the nation for fastest growing metro area. Charlotte and Raleigh also made the top ten. Atlanta was in the top ten for biggest gain in population.

Listing Prices

Last year saw a median SALES PRICE for single family homes of $217k in the Charleston MLS. Now keep in mind that homes that actually sell, average selling for 95% of their LIST PRICE. This would seem to say that active listings should have a median LIST PRICE of $230k to support the $217k SALES PRICE from last year. Of course, that would be a perfectly priced market. Certainly, we never have a perfectly priced market. There are always sellers trying to get much more than their home is worth. If we are overly generous and pad the $230k figure by 20%, we might expect the median LIST PRICE of active listings to be aroung $276k.

Well, here's the shocker: The median LIST PRICE of active single family listings in the Charleston MLS is $319,900!

The good news is that the new listings that have been taken recently show a much better trend. The 1500 new single family listings taken over the last month have a median LIST PRICE of $270k. Still seems a little much, but it's better than $320k. Hopefully, we're moving in the right direction.

Home Ownership as an Investment in Your Future

The media has been pretty doom and gloom on real estate during this buyer's market. They should be telling buyer's what a great opportunity it is. Here are the facts:

1. For 43 years, real estate values have risen on average more than 6% annually. 2007 was the first year that we ever had a decline in the national median home price and that was just a little over 1%.

2. The average return on a 20% down payment is more than 28% per year.

3. The media has sensationalized the "bubble" idea. Actually, values have not exceeded their historical trend line. Values did rise quickly, but that was after 20 years of below average growth.

4. Mortgage Rates are near all time lows.

5. Inventory is higher than normal but nowhere near historical peaks.

6. The US population continues to rise and with it, so does the need and demand for housing.

7. Housing values have risen through all six recessions in the past 43 years.

8. Housing values have risen through wars, stock market crashes, terrorist attacks, corporate scandals, oil embargoes and even when mortgage rates peaked over 18%- rates are now below 5.5%.

The list goes on..

We live in a great country. What other investment can show such historical success for increasing one's net worth? And you get to live in it!!! If you don't own a home, you are missing out on the component that can most effectively increase your net worth.

Median Price of Charleston Homes Since 1991

Buying a home has got to be the best investment you can possibly make. Just look at these numbers. I could only check back as far as 1991, but I do know that nationally, 2007 was the first year ever that the median price of single family homes decreased since they starting keeping records in 1950. And that was only by around 1.5%.

yr median
1991 $82,755
1992 $85,900
1993 $92,500
1994 $93,500
1995 $96,500
1996 $98,000
1997 $109,650
1998 $123,500
1999 $135,000
2000 $144,900
2001 $154,244
2002 $161,000
2003 $169,900
2004 $183,066
2005 $202,000
2006 $214,010
2007 $217,000

That is incredible. Nothing more needs to be said. If you don't own a home, you are missing out on probably the biggest opportunity to increase your net worth that is available to you.

Lawn Care

If you haven't done so, it's time here in the south to weed and feed that lawn. There are several good companies that provide granular weed and feed and can be found at Lowes, Wal-Mart, etc. Best to buy a spreader for under $50 that you can push around the yard to dispense the granular. It will take about half an hour for a standard sized yard. The directions are on the back of the bag. It also tells you when to do it. Generally 3 to 4 times during the year from February to September in the south. There are 2 primary kinds of weed and feed; the kind for bermuda, centipede, etc and the kind for St. Augustine grass. Make sure you get the right kind.

A lawn is a work in progress. Each year you hope to kill a few more weeds and grow a little more grass. Eventually, the grass will choke out the weeds. It takes a while for the chemicals to accumulate. It's a year over year process.

Protect Your Home

Your home is likely the biggest investment you have. You should protect it in every way you can. One of the easiest and least expensive is to caulk the exterior. Water intrusion is a major problem. If you can prevent it, you will have a lot fewer headaches later. Really good caulk is fairly inexpensive and it's really easy to apply. If you're not that handy, hire a painter to do it for you. The 3 C's of real estate: caulk, caulk, caulk!

Are We at the Bottom?

In my last post, I noted that inventory was finally moving in the right direction to help the market correct. But, we have a ways to go. Our biggest problem is too much supply and a lot of it is overpriced. If we could just remove all the overpriced listings from the market, it would correct itself in a hurry. However, just because there are a lot of overpriced listings doesn't mean that buyers shouldn't be buying. There are also lots of well priced and undervalued listings. It's a tremendous time for buyers to get into the market. Buyers just need help from their realtor more than ever to sift through the chaff.

Here's the proof that there are still a lot of overpriced listings: The median price of single family solds in 2007 in Charleston was $217,000. Listings are always priced a little higher than they will sell for. Generally, we sell homes at an average of about 95% of their list price. Let's be generous and use 90%. This would mean that current listings should be priced at a median price of $241,000 so that 90% would be the $217,000 from last year. Well, here's the shocker. Our current median price of single family listings in Charleston is $315,000!! That's around 30% too high.

Having said that, the median price of new listings in February was only $269,000, so, we are moving in the right direction. We simply need to remove all of those overpriced listings from last year.