Nearing a Bottom?

There has been a big question among realtors around here as to when the buyers are going to jump back into the market and gobble up all these bargins. The following data may hold the answer. They may be waiting for 20% price reductions from the highs in 2004/5.

Several specific markets experiencing a substantial rise in sales - to the tune of 20 percent or better on a year-over-year basis. The notables include Detroit, Ft. Myers, Las Vegas, Orange County, Riverside, San Diego, and Sacramento. These are also markets that have experienced substantial price declines - to the tune of 20 percent of more. Improved affordability conditions have enticed buyers to pick up properties on the cheap.

Measurable sales declines were in the regions where things were holding up well just last year. Seattle and Portland in the Pacific Northwest, Charlotte and Raleigh in the Carolinas, Salt Lake City, and the Texas markets have seen sales decline. Home prices in these regions are still moving up. So, buyers have slowed their buying.

Here in Charleston, single family homes sales prices are down about 5.1% from this same period last year. Some buyers are taking advantage of this and finding some healthy bargains. Many others continue to wait for more price declines. They may get it. And they may not. Trying to guess the bottom is a difficult and dangerous task. Ever see a really nice shirt on sale and decide to think about it for a couple of days and go back to find that it's no longer there?

Appreciation Rates for Charleston Homes

Looking at the median sales price of single family homes each year since 2000, the following are the rates of appreciation depending on what year you purchased.

Yr
Purchased Total apreciation up to June 2008.

2000 46%
2001 37%
2002 32%
2003 25%
2004 16%
2005 5%
2006 -1%
2007 -2%

Using these numbers you should be able to tell what your appreciation is since you bought the home. For example, if you bought a home for $160k in 2000 and have seen a total appreciation of 46%, it should now be worth $160k x 1.46 = $233,600. This of course would not include any upgrading you may have done to the home. If you have spent $60k on upgrading this home, then it should now be worth $293,600.

Surprisingly, individual neighborhoods differ very little from these overall numbers.

Localized Stats

Here are the stats for certain local areas in the Charleston real estate market. These are for single family homes only. The volume of sales in down about 35% comparing the time frame of 1/1/07-6/17/07 to the same period for 2008. Sales prices are off about 5.1%. Now lets look at some specific areas and see how they compare to these overall numbers. You'll see that there's not that much variation from area to area, with some slight exceptions. Notice the increase in sales price for North Charleston and the larger than normal decrease in number of units for Sullivan's Island, IOP, Wild Dunes. Keep in mind that the 2007 numbers are only from 1/1-6/17 in order to compare to the same time period of 2008.

West Ashley, James Island, Johns Island
2007 - 825 units w/median sales price of $260k
2008 - 551 units w/median sales price of $259,950
That's a 33.3% decrease in number of units with almost no change in sales price.

Summerville, Ladson, Goose Creek
2007 - 1862 units w/median sales price of $191k
2008 - 1257 units w/median sales price of $175k
That's a 32.5% decrease in number of units with an 8.4% decrease in sales price.

Mt. Pleasant
2007 - 593 units w/median sales price of $418,535
2008 - 438 units w/median sales price of $395k
That's a 26.1% decrease in number of units with a 5.6% decrease in sales price.

Sullivan's Island, IOP, Wild Dunes
2007 - 52 units w/median sales price of $1,450,000
2008 - 25 units w/median sales price of $1,380,000
That's a 52% decrease in number of units with a 4.8% decrease in sales price.

Downtown Charleston inside of the Crosstown
2007 - 79 units w/median sales price of $815k
2008 - 56 units w/median sales price of $745k
That's a 29.2% decrease in number of units with an 8.6% decrease in sales price.

Daniel Island
2007 - 68 units w/median sales price of $645k
2008 - 47 units w/median sales price of $655k
That's a 30.9% decrease in number of units with a 1.6% increase in sales price.

North Charleston
2007 - 375 units w/median sales price of $155,900
2008 - 273 units w/median sales price of $163,350
That's a 27.2% decrease in number of units with a 4.8% increase in sales price.

Finally, it should be noted that condo/townhome average sales prices have risen over the same period from $234,007 in 2007 to $336,672 which is a 44% increase!!! Number of sales has dropped from 1291 in 2007 to 871 in 2008, which represents a decrease of 32.5% in number of units. This dramatic increase in average sales price is due to the low end market in condos/townhomes not selling while high end units are selling and pulling up the average.

Media Mistakes

The Post and Courier has done it again. They reported this week that the sales price of homes has risen while the number of sales is off 30%. The mistake they continue to make is to look at all categories of items in the MLS at once instead of reporting on single family homes separately from condos, flats, boat slips, time shares, quadraplexes, etc. The median sales price of just single family homes was $222,900 for the period of 1/1/07-6/10/07 while it has dropped to $211,500 for the period of 1/1/08-6/10/08. This is a 5.1% drop in sales price, not an increase. They only got the increase in sales price by lumping in condos, flats, boat slips, duplexes, etc. For the last 12 months, condo sales prices are UP $106,000!!! That might skew the numbers. For those of you wondering why this is, the sales of lower priced condos is way off while higher priced condos continue to sell. It's not that the all condos have gone up, it's just that only the higher priced ones are selling. This huge aberration in sales price of condos has been lumped in with all the numbers and allows the Post and Courier to tell the story the way they want to. I've talked to Katy at the paper and tried to convince her that she needs to separate the numbers, but they have no interest in listening.