Sellers Needed In Charleston SC Real Estate Market
If you are thinking about selling a home in the Charleston SC real estate market this year, here is some important information you need to know.
I will also show you why you should list now instead of waiting.
Two very important factors that go into the decision to sell are how much you can get for your house and how much demand there exists in the market for homes for sale.
In the current market, prices are continuing to go up, and demand remains strong.
Part of what is fueling the market is the fact that there is a lack of inventory. Simply put, there aren’t enough homes for sale to satisfy the number of buyers actively looking to buy.
The most recent reports show that buyer demand remains strong despite the lack of inventory.
Home prices continued to increase in 2016, with improvements in year-over-year price changes for every month in 2016–the final numbers for November and December are just about to come out.
Prices are continuing to rise, which is good news for sellers. On the flip side, it also means that your next house is also increasing in price every day and month you hold off on selling.
Home sales also increased over 2016, showing that there are plenty of buyers out there.
However, two indicators that show strong buyer demand are showing the effects of a weak inventory: Pending Sales and Foot Traffic.
Pending Sales are the homes currently under contract. These numbers have been strong, and consistently were better year-over-year for every month in 2014 and 2015.
However, for some months in 2016, there actually saw a decrease in their year-over-year totals. That is not because buyer demand is cooling off. Rather, it has to do with the lack of homes available to put under contract.
Many buyers are finding themselves in a multi offer bidding war for homes.
Foot Traffic is a measure of people actually out viewing homes. This number also remained on the increase throughout 2014 and 2015.
But 2016 saw the numbers decrease simply because there aren’t enough houses to see.
This is clearly illustrated when you look at the Inventory numbers of 2016.
For a balanced market, the Months Of Inventory needs to be at or around 6 months.
Other than January, at no time during 2016 did we see any month hit even 5 months.
If you look at the year-over-year numbers for 2016, you can see that inventory actually dropped from 2015 numbers.
Important Factors For Home Sellers In The Charleston SC Real Estate Market
Buyer demand remains strong, and prices are continuing to rise. These factors alone make this a sellers market.
Inventory is the big issue–simply put there aren’t enough homes to keep up with the demand.
2017 should be a great year to sell your house, right?
There are some things savvy home sellers should keep in mind as 2017 gets rolling.
The lack of inventory is no secret. New home builders are working hard to fill the inventory gap with brand new homes.
You can see this is the new home sales numbers for 2016. Pretty much every month saw an increase in sales over the same time in 2015.
Months Supply of New Homes is also below where it should be…new homes are selling just as fast as existing homes.
It is important for home owners that are thinking about selling in 2017 to understand that all of these new homes being built are added competition.
In general, the majority of home buyers would prefer to buy a new home. However, often they must wait a few months for the home to be built.
In many cases they will end up purchasing an existing home simply because they do not have to wait.
However, there needs to be homes for sale available for them to look at.
As the New Homes sales numbers indicate, home builders recognize the need for inventory and are trying to fill that void. You can see how they have ramped up production over the last few years, as well as the projected sales numbers for 2017:
Seller Tenure At A High
Another potential factor for sellers is pent up seller demand. Home owners have remained in their current homes longer than they have historically.
Whereas home owners traditionally stayed in their home for 6 years, today they are averaging closer to 10 years.
A lot of this is due to the market crash a few years ago. Home owners found themselves is negative equity situations and couldn’t sell their home.
For one, they were upside down, and two because there wasn’t the demand for housing like there is now.
This has impacted the market because there is a big void of move up buyers.
First time buyers are coming into the market, but there is a shortage of homes available because many of the owners of starter homes are still in those homes.
The natural flow of people moving up to their next home and first time buyers buying their existing home has been stunted.
While many current owners found themselves with negative equity after the crash, that is not the case now. However, there is a big misconception out there as to just where they stand. Many home owners across the country now have significant equity in their homes (more on this in this post).
At the beginning of this post I mentioned why it is better to list now than wait.
At the beginning of the new year many home owners decide that they will list their house for sale. However, they decide to wait until the spring to do so.
The common reasoning is they want to wait until home buyer are out looking to buy, which many perceive to be the Spring.
However, the last couple years have proven that old theory wrong.
Buyers have been out strong at the beginning of the year the last few years.
The other issue with waiting is that by doing so, you will face more competition.
The next graph shows the amount of listings to hit the market during the first few months of 2016–but pick just about any year and you will see the same trend.
During the first few months of any given year competition is weaker.
Granted, we are in an Inventory starved market. However, the less competition you have, the more likely you will sell your home, sell it quickly, and get top dollar. And that is what you want when you are selling a home, right?
Plus, with home prices (and interest rates) on the increase in 2017, your next home is only going to cost more the longer you wait.
Can Potential Buyers Get Financed?
While buyer demand remains strong, there are other factors that are helping buyers.
One concern sellers have is whether or not prospective buyers can qualify for a mortgage.
After the mortgage meltdown, lenders tightened up their lending guidelines and getting a loan was almost impossible unless you had nearly perfect credit.
Mortgage Credit Availability has increased over the last few years, making qualifying for a mortgage easier.
Prior to the meltdown, lending standards were too relaxed. As a result of the meltdown, the pendulum swung back hard into the conservative direction.
This was an overreaction, but it was a market correction for the mistake of allowing the pendulum to swing to far in the wrong direction.
What we are seeing now is the market returning to more normal lending guidelines.
The next graph shows that it doesn’t take an 800 credit score to get a mortgage. More and more people are getting approved, and getting a mortgage is easier than it was just 3 or 4 years ago.
This may lead some to worry that we are heading back down that same path that lead to the market collapse.
However, that is flat out wrong. We are not heading for another bubble.
While mortgage lending guidelines have relaxed a little (and it was necessary for this correction), the following graph shows that we are nowhere near where we were prior to the meltdown.
Overall, the market has great potential for home sellers in 2017. Sellers need to be aware that prices remain strong and are likely to continue to increase.
Interest rates should also increase, but they shouldn’t have too dramatic of an impact on buyers or sellers.
The biggest factor facing the market is Inventory. This market needs more homes for sale. New home builders have known this and are working fast and furious to meet the demand that exists. They are taking advantage of the opportunity out there, and savvy home owners should strongly consider doing the same.
Stay tuned to my blog for more market updates. If there are any specific topics you would like me to cover, let me know in the comments.
If you are thinking about selling your home in 2017, then be sure to visit my Pam Marshall Realtor website for more information.