New Homes

Total housing starts increased 17% in May to an annual rate of 532,000, reversing a 13% April decline. Building permits, an indicator of future construction, also increased in May, by 4% to 518,000. Construction of new single-family homes rose 7.5% in May to a 401,000 annual rate, the third straight monthly gain for this series, while new work on multifamily units jumped 62% to 131,000.

Increasing inventory in this economy is not a good thing. There are lots of new home communities out there that already don't list all their inventory. They throw more on the market as they sell some. I call this the shadow inventory. There are too many homes for sale and there are actually more for sale than we actually see. This is a problem. Supply and demand still works. There's way too much supply for the current level of demand and that's why it's a buyer's market. And it's unhealthy. A more balanced market is healthier and better for everyone.

2 Amazing Numbers

The real estate market here in Charleston is seeing a great increase in activity. I do a lot of statistics for my company, Carolina One Real Estate, and I keep an eye on the number of properties going under contract on the MLS each week. We bottomed out in late February at 120/week. Then we slowly increased into the 160's by late March and early April. Then in the 3rd week of April, we saw an explosion to 186. Since then, the last 6 weeks have seen 194,182,196,180,199, and 197 this past week. These are very strong numbers. However, we are not yet seeing a reduction in inventory. We still have a little over 10k active listings in our MLS and have been at that number for well over a year now. Supply is still much higher than demand and that law still rules. 65% of what is going under contract right now has both list price and $/sqft price under the median for the subdivision. Another 28% has one of these 2 numbers under the median. Only 7% of homes that are going under contract have both numbers above the median. Pricing it right is still the most important thing you can do and the number one service we offer. We have sold 10 properties in the past year or so in less than 30 days for 98% of the list price.