Your thoughts on the current real estate market in Charleston (Mount Pleasant: wood floors, bank owned)

[c99]

I would love to hear the opinion of experts, buyers, sellers or anyone interested in the state of the real estate market in Charleston and surrounding communities. It would be great if you had facts and figures you could share (solds, actives, number of price reductions, list price vs. sold price, etc.)

I have been eagerly watching the market and noticed that home prices have dropped on some properties I have been watching, but it appears that the drop is not as substantial 'as it should be' for the current market conditions. I have noticed interesting practices by realtors ... a home sat on the market for a long time at $439,000, the realtor took the home off the market (I think briefly, if at all) then re-listed that same property for $475,000. Another home I saw was listed at $450,000. Again, it sat at that price for a long time. This realtor changed the price of the property to $479,000.

I also noted a 'realtor' on Craigslist list a home for $X dollars. When I called on the property the price was listed for $100K more than what they has advertised on Craigslist. The 'realtor' said their assistant made a mistake. Sounded shady to me - that's a pretty big 'mistake.'

Are buyers really biting these kind of tactics and purchasing in this market? I've been contemplating a purchase for some time now, but it seems to me that sellers have not 'right priced' their properties to reflect the gloomy economic conditions, especially those sellers in James Island and Mount Pleasant. Seems short sales or bank owned properties are moving pretty quickly, however. I would really love to see some facts on this assumption.

Here's a link to an article the P&C posted from the Associated Press, "Owners cling to false optimism about home values" - what are your thoughts about it?

Does anyone know of a legitimate source where non-realtors can find facts/figures about this real estate market.

Thanks much!

[stosh]

It's a classic buyers market. Sellers are in denial no doubt about it and they don't want to face reality. I wouldn't doubt that those who take their homes off the market and then relist at a higher listing is because they know in their hearts that their homes are never going to sell even close to their list price. So by listing it higher, it gives them a false 'warm and fuzzy' which just enforces their attempt to ignore ground truth. Those same homes are still unsold; it's the newest version of a shell game.

Do your due diligence and you will find a home at a realistic price, after all that artificial appreciation evaporates.

[RJ17015]

We've also been watching the market for a year, and totally agree with you. Coming from MI and seeing $800K homes selling for $400-$500K, our eyes are open to what the market warrants (at least in MI). In order to sell your house, you have to compete with the foreclosures. So in our subdivision alone, we have homes listed for $600K to $350K -- $350K is the bank-owned home -- the people listing for $600K are not getting any action -- so the offers we received were closer to the $350K -- a house we paid over $500K for in 2001. So IF you want to sell, you have to sell at a price people are willing to pay.

But from what I see here, it seems like homeowners are holding to their price regardless of time on the market. The "deals" we've seen have been short-sales, bank-owned, and that's the route we're having to migrate to, in order to buy right, here in SC. I think if you offered what you think the property is worth, you would just offend a homeowner - so we're avoiding that scenario.

A perfect example - 2 of my neighbors (we're renting) put their houses on the market - a potential buyer can build new the same house for less than they're trying to sell it for. They have not had one showing, but refuse to lower the price, regardless of how long it takes them to sell. I guess it just depends on how desperate you are to sell - and the advice you're getting from your real estate agent.

I'm not an expert, just what I've observed. It's a difficult time to be selling a house, and buyers want it ALL -- no more "fixer uppers" they want it move in condition, at a foreclosure price. We put $15K into our house to just prep it for the market. It's definitely a buyer's market, even here.

[le roi]

c99, I'm not in Charleston, but I'm a buyer in a nearby market (Wilmington, NC) that is similar. Your observations about Charleston are similar to mine in Wilmington.

Right now it is important to find a motivated seller. There is lots of "clutter" in the market; unmotivated sellers who are part of the "herd." These are easy to spot; they are priced according to comps from Spring & Summer 2008.

Where I am, you really have to wade through the tons of "herd" properties on the market, to find sellers who aren't just waiting for lightning to strike, who aren't hung up on last year's prices. Most neighborhoods have a price leader, and often it is a middle-of-the-range home for that neighborhood - that's been my experience. Sometimes you get lucky with multiple motivated sellers, other times you find a neighborhood that is stuck in time. It is interesting to see self-described "motivated sellers" who have been sitting on the market for months without a price drop.

Some neighborhoods are tricky - we have a newly trendy district of downtown where homes went from $125k-$150k in 2004 all the way to the $250k-$300k range now. (Motivated sellers at $205-$220k) Is that appreciation bubble-related, or does it reflect a legitimate change in the homes & neighborhood? Who knows..

I've found that the easiest way to find the bargains is to find a R/E site that maps the homes out for you. There's just too much out there to go plowing through a list of homes. Best of luck to you.

[The CMR]

C99,

I am a consultant here in Chas. for developers, investors, hedge funds and banks. I also run a website that tracks the local residential real estate market in Charleston. I used to appraise here as well.

IMO, generally the real estate market is overpriced. Again, it depends what type of property you are looking for and where. The majority of the properties here listed for sale do not have sales prices that are realistic. The easiest way to analyze a property is look at the Price versus rent. If you can buy (And have monthly Principal +interest+taxes+insurance) for cheaper than you can rent then you may have something. Unfortunately most properties in Chas. are "out of whack" when you compare price to rent.

The reason many people can not list their homes any lower is that the sellers have ZERO equity. So what they are attempting to do is get out of the home without coming to the closing table with cash they do not have. This scenario gets worse as the stock market worsens, unemployment rises, credit markets remain tight and fear persists. You also have your sellers that are stupid and are in denial.

The fact is that real estate is in a deflationary stage right now. There are deals to be made but I would not buy most properties at retail value right now. The problem is when you place an offer below list price many of these owners can not go lower because of the scenario i mentioned above.

In most areas of Charleston we are seeing higher inventory and prices are dropping. If you have money and want to buy make sure you get with a real estate agent who understands how to truly value properties so you do not pay to much. There is nothing wrong with being patient in this market right now because this vicious cycle we are in is going to take a while to smooth out.

Good luck!

[USCJoe]

I agree with CMR that there are many sellers who feel they have little flexibility in what they are willing or able to sell their home for because of the lack of equity in their home. Many are forced into a “short sale” situation or feel that is their best option. I agree that there are “deals to be had” in the market place, although I am not quite sure as what “retail value” is in terms of real estate, unless we are referring to list price. If so, I agree that rarely does a buyer need to pay full list price in today’s market. I do question the assertion that we are seeing higher inventory in most areas of Charleston, at least not substantially in the past 12 months in Mt. Pleasant and Summerville. However we are seeing a decrease in the average sales price. The two charts (Summerville area and Mt. Pleasant) below may be of interest to some forum members. The current inventory noted was as of the 16th of the particular month. The “current inventory” and “months inventory” have not changed substantially over the past year.
Mt. Pleasant Area

Summerville Area

Information on this report is not guaranteed. There is no express or implied warranty by MLS of the accuracy
of information which should be independently verified.

[stosh]

Originally Posted by RJ17015

....
I think if you offered what you think the property is worth, you would just offend a homeowner - so we're avoiding that scenario.

I wouldn't hesitate to offer what you consider to be a fair price. All they can do is reject it outright. It may take a couple of rejections but someone will blink....sooner than later. Just be persistent and stick to your plan.

USCJoe - Maybe it's because a lot of sellers have taking their homes off the marketplace because they realize that they have no chance of selling their homes anywhere close to what they think it's worth. The current inventory is a lot worse in homes listed over $750K to $2.0M. Add these to your numbers and the overall average inventory is the Charleston market very ugly.

The CMR is absolutely right. Recommend you subscribe to his market letter. It's a wealth of knowledge.

[USCJoe]

The inventory numbers in the charts above cover all price ranges. Keep in mind, that your average buyer in the Charleston area is not considering a home in the $750,000 to $2,000,000 range. Here is a chart of inventory statistics of homes on the market in the $750,000 to $2,000, 000 range in Mt. Pleasant over the past two years. As you can see, the inventory of such homes has increased slightly, but certainly not substantially over the past year. The months of inventory the last two months did increase a good bit, but not the total number of homes on the market. A slow down in buyers for these more expensive homes, but also a decrease of the number of luxury homes from which to choose.


Information on this report is not guaranteed. There is no express or implied warranty by MLS of the accuracy
of information which should be independently verified.

[evilnewbie]

I have seen realtors who claim it is a buyers market and then offer a sellers market price and not budge... I give them a six more months to rethink what a buyers market means... I can wait it out... otherwise I will just rent...

[RJ17015]

Originally Posted by stosh

I wouldn't hesitate to offer what you consider to be a fair price. All they can do is reject it outright. It may take a couple of rejections but someone will blink....sooner than later. Just be persistent and stick to your plan.

USCJoe - Maybe it's because a lot of sellers have taking their homes off the marketplace because they realize that they have no chance of selling their homes anywhere close to what they think it's worth. The current inventory is a lot worse in homes listed over $750K to $2.0M. Add these to your numbers and the overall average inventory is the Charleston market very ugly.

The CMR is absolutely right. Recommend you subscribe to his market letter. It's a wealth of knowledge.

We put an offer in on a foreclosure to a bank - what we felt the property was "worth" since the owner gutted it of ALL the appliances, 12 ceiling fans, 2 chandeliers, bathroom fixtures, wiring out of the walls, damaged wood floors, no landscaping... you get the idea. The bank came back $75K more than our offer but agreed to install the appliances. This would put the house at $35K more than a brand new comparable house that JUST sold, that was in PERFECT move in condition -- a new build, that was a short sale, and had landscape. Both subdivisions are comparable -- both loans were within $50K of each other (the loans that the owner's defaulted on) -- the other house having the higher loan.

So I'm not even sure the banks have a grip on what the fair market value is - I think we may continue to rent, which I truly don't want to do, but we really have to buy right, since we're having to take so much money to closing on our house in MI.