Not many new listings (Charleston, Mount Pleasant: sale, 2009, to rent)

[charlottePA]

Originally Posted by USCJoe

The statistics go through November 2008. I am not quite sure why the % sold/list for each month in the charts seem to be incorrect, but I suspect that the annual 2008 percentage discount figure of about 8% is correct. In looking in our system month per month, the following figures are noted: August 2008 - 96.5% of list; September 2008- 94.3% list; October 2008- 91% of list; November 2008 - 93.1% list and so far during the month of December with one home sold at 92.6 of list price.

USCJoe, I like your logic. It's the old, those with money keep their money arguement. I would have thought that SOME in these neighborhoods bought more than they could afford and are now suffering....

So that begs the question, what is the % change year-to-year in neighborhoods like Ion (let's say 600K+ price range)? Let's compare the last 5 years sales in Ion as an exercise. I'm trying to find out the % gain in sales price during and now after the bubble? Are these homes appreciating or depreciating relative to the past years? I love statistics!

[USCJoe]

In order to get a feel for the percent change of sale prices in some of your higher priced neighborhoods in Mt. Pleasant over the past 5 years, I have set forth charts of home sales in two high priced Mt. Pleasant neighborhoods. The communities I have selected are I'On and Olde Park. It is difficult to easilly pull up statistics like I have below for subsections of a subdivision. I think that it is difficult to generalize with regards to whether higher priced home have held up better than lower priced ones, as so much depends on the characteristics and uniqueness of a particular home. A lower priced quality home with a great floor plan and on a great lot and with curb appeal will maintain it's value much better than a higher priced home with few attributes in a "challenging real estate market" like we have today. As you can see, it appears that home prices have held up rather well in both of the above high priced neighborhoods. Keep in mind that the homes that are reflected in the charts are those that sold and may have stood out among lesser homes still on the market in these communities. However, for the most part, the homes, particularly those in Olde Park are quite nice, although I have found fault with the general appeal of many of the floor plans particularly in I'On. I think what we need to remember is that those home that have a lot going for them will maintain their value much better than lesser homes on the market, regardless of price range. In the long run, a buyer may be better off purchasing a great home close to asking price rather than a mediocre home at a steep discount.

ION




Olde Park

[Flat2MT]

Originally Posted by charlottePA

I've a cousin who fancies herself a real-estate "expert" who tells me "you can get an Ion house for a 30% discount now". Somehow I just don't see the current numbers showing that...

They are out there in all the higher end neighborhoods. You just have to have patience, done your homework, lined up financing and be ready to execute.

[charlottePA]

USCJoe:

Taking a look at the yearly averages, it's at 296/sq now vs. 290 5 years preceeding. We can see the spike with the bubble up to 326/sq. So prices have leveled.

But I wonder if that's the bottom...One thing I do know for sure is that the folks that had the houses built could buy the land and build for a lot less than 296/sq, which may mean on paper they still have alot of equity....

[USCJoe]

I think that there are still a number of homes currently on the market in I'On that are unrealistically priced in today's market. Those that seem to sell are those with good floor plans and that are priced competitively to less desirable homes that are still on the market. I still think that we will see downward pressure on prices in I'on in the next 3-4 months or so and than have some stabilization in prices some time in 2009. However, so much depends on economic factors which no one can predict with any degreee of certainty, so I certainly don't have complete confidence in the direction of 2009 home prices. From looking at what many of the current home sellers in I'On paid for their homes, it would appear that many do have a good amount of equity in their homes, particularly those that purchased prior to 2005. This factor may give those sellers greater flexability in" holding out for their price" if they believe that the real estate market has seen it's worst days.

[Irwin75]

Most of the option ARM's won't reset until mid-2009, so it's not surprising that you're not seeing the kind of price declines that WILL come. The housing/credit situation in this country is unbelievably bad and while Mount Pleasant is lagging the national trends (as it always does), make no mistake that it is as captive to the current environment as anywhere else. In fact, probably more so. The demographics of Mount Pleasant do not support home prices anywhere near the current levels and in the past few months we've started to see significant price declines in Mount Pleasant. One home, in the Tennyson section of Park West, was listed for over $650k and sold for $477k. There are three homes for sale on the same street and it doesn't take a rocket scientist to figure out what's going to happen in the end. When the option ARM's start to readjust en masse, you will see blood on the street in many of these neighborhoods. I would guess prices in MP will fall another 30% (conservatively) and quite possibly more if this recession proves to be as long and deep as many believe it will be.

We drove through Hibben today - 25+ homes for sale and half the neighborhood still to be built out. It's going to get UGLY in neighborhoods like this, where many used short-term financing and cashed out equity at every opportunity. We will see price declines throughout 2009 and 2010, with a possible leveling in 2011. After that, be prepared for a decade of flat prices with little to no appreciation. We are re-adjusting from the biggest real estate bubble in modern times and it's going to be a very, very painful experience for many people.

Most sellers/homeowners out there still don't realize what is happening. But they will. And soon.

[USCJoe]

In evaluating the state of the future real estate market, I think it is important that we take a look at the current interest rates which are beginning to get down to historic lows. My daughter is in the process of refinancing a 6 1/2% 30 year fixed rate mortgage to a 4 7/8% 30 year fixed with one point loan origination fee. If interest rates stay in this range, I think that they will have a positive effect on the housing market in the months to come. The medium family income in Mt. Pleasant in 2007 was reported as $74,338. In fact, according to Moderator cut: link removed, linking to competitors sites is not allowedReport almost 50% of Mt. Pleasant households had an income over $75,000.The median home cost in Mount Pleasant reported as $549,800. With interest rates quite low and many home owners in Mt. Pleasant having descent equity in their current home and many with a relatively low mortgage, I question the assertion that "the demographics of Mount Pleasant do not support home prices anywhere near the current levels." There have been homes selling in Mt. Pleasant for substantially under their list price, but at the same time there have been just as many other homes selling relatively close to their list prices. In the past 3 months the single family homes in Mt. Pleasant sold for an average of 94.7% according to mls statistics, only about 2-3 % under the discount from list price that we saw in the 1994-2005 time frame. Certainly there are exceptions to the rule and it is certainly easy to point to instances when a home sold for substantially under list price.

[Irwin75]

All you have to do is look at your median income versus median home price numbers in MP to know that things are severely out of whack. Or, as CMR suggested, you can look at cost to rent versus cost to purchase. Again, totally out of whack with what a healthy, sustainable market looks like. If you think prices in MP have anywhere to go but down (and down big), you are simply delusional.

Low rates will help, but rates aren't what's keeping people out of the market - the fear of further depreciation and a lack of credit are. Rates will not cure either one of those problems. With inventories at historic levels in MP, smart buyers will sit tight and watch these prices continue to decline until equilibrium is reached. The problem with most Realtors is they don't understand supply and demand, much less any more complex economic concepts. Your post cements my belief that most, even inside the real estate market, don't truly understand the historic nature of the events we're witnessing.

30% more on the downside in MP easily and that's probably conservative.

[USCJoe]

I mentioned the current interest rates as a factor in softening the potential impact of the resetting of "arm" rates you mentioned in your post. With approximately 50% of Mt. Pleasant households reported/estimated as making over $75,000 a year and 31% over $100,000 a year I again question whether your average Mt. Pleasant resident is "in over their heads". Are their builders and speculators who over extended themselves, certainly. However, I believe the vast majority of Mt. Pleasant residents are able to afford their mortgage payments.From my experience, a large percentage of home buyers who have purchased a home since 1994 qualified for their current mortgage on the income of one family member. From my personal experience, the fear of further depreciation is keeping many potential buyers out of the market more so than the ability of credit, at least in the Mt. Pleasant area. Like the stock market, I think we probably both agree that a degree of optimism needs to return to the real estate market before we see a bottoming in prices. We disagree in the degree to which home prices will continue to fall.I agree that most Realtors, including myself, don't understand complex economic concepts, but I wonder why you would single out Realtors as I suspect this would be the case with any occupation other than experienced economists. I see nothing in my comments that would lead an objective observer to believe that I don't understand the historic nature of the events we are witnessing. All one needs to do is to read the newspaper or turn on the radio or tv to understand that we are going through a situation that the world has not encountered before. However, I don't think that your typical 1900 sqft. home in Park West which has recently sold for $280,000 will drop to $196,000 or less or your 1900 sqft. home in Park West that recently sold in a "short sale" for $240,000 will decline to $168,000 or less which you seem so confident that will happen. Could it happen, certainly. However, I don't feel that anyone, including a experienced economist, can say with any degree of confidence that it will.

[Flat2MT]

A 30% downward price adjustment to counter the same price appreciation this area experienced during the run up to the 'bubble' has not taken place yet. Once that happens, RE prices will adjust to where they should have been in an average marketplace.

Once this occurs, then take another downward price adjustment of at least 25% to reflect the current economic crisis. It is not far fetched to see those Park West homes drop another 30% in the next 18 months because of the huge supply we have now. This inventory will continue to grow over the next 18 months.

Even worse will be those homes >$750K range where the % drop will be more significant. Builders sitting on high end inventory would be wise to significantly reduce their prices now before it gets really ugly. If they hold out and refuse to accept reality, then the marketplace (or the banks holding their construction loans) will dictate a much significant negative price adjustment in 2009 and 2010.