Charleston Real Estate: How Are We Doing Compared To Everyone Else?
For the last couple weeks I have been looking at 2014 stats for different areas of the Charleston real estate market. Today, I am looking at the latest data for the national real estate market and see how Charleston stacks up. First, here is a look at 2014 home sales from the National Association of Realtors (NAR):
This is a look at a year-to-year comparison of home sales, broken down by each month in 2014. The decline towards the end of the year is typical, as home sales usually dip in the winter months.
However, this winter isn’t shaping up like previous years. There was a decline in sales from October to November, but that is much better than last winter.
In 2013, which was an explosive year in growth of home sales, sales started to decline at the end of August, and that decline carried over into early 2014 (graph 2).
You can see the carryover of that decline on the left of the first graph.
This winter is shaping up to be the best winter for home sales in the last decade (more on that in a bit).
So, things are going well nationally, let’s take a look at how things are in Charleston. Here is a look at Home Sales for the entire Charleston MLS for 2014:
Although this graph is in a different format, you can see the Charleston mostly mirrors the National market. The decline in Home Sales in 2013 also began at the end of August. However, there was a little spike before the end of the year, and home sales began to increase earlier in 2014 than they did Nationally.
I mentioned earlier how this winter is shaping up to be the best winter in over a decade. There is a lot of data to support this. One key number is the Pending Sales. These are homes under contract and will be closing in the next 30-60 days.
Not all of these homes will close in that time frame, and some won’t close at all. However, this is still an important number because it tends to predict where home sales will be in the coming months. Here are the latest Pending Sales numbers from NAR:
Homes under contract remain at a high level heading into 2015.
Notice the big crater in Pending Sales at the beginning of the year, and also notice how close this graph resembles the first one for Home Sales in 2014.
This next graph better illustrates why there is optimism for this winter being one of the best in recent memory.It looks at Pending Sales in the winter months of 2013 and 2014:
It is important to note that NAR has a formula when determining Pending Sales as to what constitutes a healthy market.
I won’t go into the details (you can read more about it on their site), but 100 is considered a healthy market.
As you can see, despite the decline at years end in 2013, it was still a good market.
However, 2014 is nowhere near the dramatic drop we saw last year, and reason for optimism heading into 2015.
Many people would be and are skeptical of data from the National Association of Realtors. But these are real numbers from across the country. That said, here are some projections for home sales from different resources heading into 2015:
These projections are from NAR, Freddie Mac and the Mortgage Bankers Association. All are seeing an increase in home sales in 2015.
If you haven’t been paying attention, or simply reading the headlines regarding the real estate market, then you probably have a big misconception about what is really happening out there.
At times this year, home sales were down some months in 2014 when compared to the same month in 2013 (or year-over-year numbers). The media also reported the Appreciation was down.
However, while that is technically correct, it is misleading. Home appreciation rates slowed down this year, but the fact is homes were still appreciating. By the media headlines you would think that we were experiencing depreciation, but that is not the case:
This is a look at the year-over-year comparison of home values by each month in 2014. Homes still appreciated, but at a slower rate by year’s end than at the beginning.
But this is a good sign–it is clear that the real estate market is stabilizing to a more healthy rate of appreciation.
The 13% we saw at the beginning of 2014 is not a rate that can be maintained over a long period of time. That leads to a crash, much like what we saw a few years back with the housing bubble and subsequent crash.
Our national market is leveling off to a growth rate than can be maintained over a longer period of time.
So, how do these numbers look for the Charleston real estate market?
First, let’s look at the Pending Sales numbers for 2014:
Charleston shows the same decline in Pending Sales at the end of 2013. Pending Sales increased earlier in 2014, and that is reflected in the Closed Sales graph above.
But Charleston is showing a decline in Pending Sales towards the end of 2014–not as sharp as it was in 2013, but a downward trend nonetheless. Of course, Closed Sales increased in December to end the year on a good note, so what might be in store for the early part of 2015?
Currently, there are 2498 homes in the Charleston Market that are under contract–this includes Pending Sales as well as homes that are Contingent (these homes still have a contingency to clear before they can close; Pending homes have cleared their contingencies and are set to close).
In 2014, Charleston saw over 1000 sales each month except for 3 months–January (779 sales), February (819) and November (990).
With 2498 homes set to close in the coming months, it looks like that trend will continue into the early part of 2015.
Finally, let’s see how Charleston home values did over 2014:
Other than a spike in values in October, home values were on the decline towards the end of 2014 for Charleston real estate. So does that mean we are seeing depreciation, or that Charleston is below the National numbers?
Here is a look at the Average Sales Price for Charleston real estate for 2014 compared to previous years (this is year by year comparisons and not broken down by month like the Case Shiller graph):
Despite the year end dip, 2014 is still above 2013 for home appreciation. Over the last 2 years appreciation rates have increased at a fairly steady rate–above what is considered “normal” (about 3%-4%), but not double digit numbers.
Overall, the Charleston real estate market is doing well and in many ways is reflecting the numbers we are seeing nationally.
If you’ve read my previous blog posts, you can see that different segments of the Charleston real estate market are exceeding the national numbers by a big margin.
If you are thinking of buying or selling Charleston real estate, then check out my Pam Marshall Realtor website.