Luxury Homes In Charleston SC: National Trends
In real estate markets across the country, home appreciation rates have accelerated. However, the market is different for luxury homes everywhere, including luxury homes in Charleston SC.
First, here is a look at the year-over-year appreciation rates so far in 2017. This is for all homes across the country.
While this is good news, it is important to look into the numbers a little more deeply. If you are thinking about selling a luxury home in Charleston SC, then it is especially important to not take the latest reports and assume the information and stats apply to all houses.
If you have followed the market, and if you read my blog, then you know that part of the reason for the acceleration of home values is because there s not enough supply to meet the strong buyer demand. We are in a seller’s market.
So, based on those facts, a home owner would realize that now is a great time to sell a house. However, as you will see, that blanket assumption shouldn’t be made by the owner of a luxury home in Charleston SC.
When looking at market numbers it is important to keep in mind that not all homes are equal. Nationwide, and especially here in Charleston, there is a wide range of price ranges. An appraiser would not look at a bunch of $250,000 homes when appraising a million dollar waterfront home.
To illustrate what is happening across the real estate market, we need to differentiate between the different categories of homes–starter homes, move up homes, and premium homes.
This next infographic breaks down available homes by category, and breaks down the buyer pool by category as well. It compares the percentage of homes to the percentage of buyers to see if there are enough homes available.
The results are very telling about what is happening with luxury/premium homes nationwide. (By the way, premium homes refer to the top third of the real estate market by price point).
That means there is a shortage of homes by 5.7%.
This is the case in 75% of the markets across the country.
Trade up homes make up 24.3% of the national inventory, and buyers searching for these homes make up 29.6% of the market. That is an inventory shortage of 5.3%, and that holds true for almost all of the real estate markets across the country (92%).
So far, these numbers support what we have been hearing for some time now–buyer demand is strong and inventory is lagging behind.
But, when you look at the higher end market, the numbers tell a different story.
Luxury homes make up 54.5% of the national inventory. Buyers searching for these homes make up 43.5% of the market, which means there is actually a surplus of homes available in this segment by 11%.
These numbers hold true for 11% of the national real estate market.
The big takeaway from these numbers is simple–the top third of the real estate market is completely different than the other two thirds.
Supply is actually greater than demand, the complete opposite of the rest of the market.
This next infographic from Corelogic breaks down home appreciation by market segment for 2016. The slowest appreciating homes are homes in the highest price ranges.
If you want further evidence that it is a different market at the higher end, look no further than what is going on with new construction homes.
New home builders study the market and keep their fingers on the pulse of what is going on. They want to know where the market “itches” so they can scratch that itch.
Last year, builders were attacking the premium market –they wanted to get the most money from the land that they could.
Plus, the real estate market was going crazy with demand outpacing the supply. But the builders noticed something–the premium market was not acting like the rest of the market. So they shifted.
They realized that the demand was in the lower, middle of the market and that is what is reflected in this infographic that breaks down new home sales figures from the most recent US Census report.
The smallest percentage of their market has been the higher end, premium homes
Luxury Homes In Charleston SC: Are National Trends Holding True Locally?
Charleston has often not followed the national trends closely. So, what does the higher end market look like here?
The numbers here are a little harder to come by due to limitations within our MLS. For instance, when looking at overall numbers for the market, I am only able to break things down by 4 price ranges–the highest one is $349,000 and above.
This still gives me a quick look at the market. I also broke down the numbers to sold homes for $1,000,000 and above over the last year.
First, lets compare the overall MLS numbers for the last year versus homes priced $349,00 and above during the same time period.
For the entire Charleston MLS for the last year, the average sales price was $333,099. At this point in 2016, the average sales price was $315,931. That is an increase of 5.4%.
The average days on the market is 55 days. This time last year it was 65, a decrease of 18%.
The months supply of homes is currently 3.5 months. Last year it was 4.4 months. That is a decrease of 25%.
The number of closed sales is 1526. Last year it was 1483, an increase of 2.9%.
Finally, there are currently 5,341 homes for sale. This time last year it was 6,241, and decrease of 16.9%.
Now, a look at the numbers for homes $349,000 and above.
The average sales price is $628,033. Last year it was $621,427, an increase of 1%.
The average days on the market for these homes is currently 82 days. Last year it was 80 DOM, an increase of 2.5%.
The months supply currently sits at 6.4% and last year it was 6.9%, a decrease of 7.2%.
The number of closed sales is 463. Last year it was 405, an increase of 14.3%.
Finally, there are currently 2890 homes for sale at $349,000 or above. Last year it was 2809, an increase of 2.9%
So, to recap the numbers: for the entire MLS home values are up 5.4% and for the higher end homes they are only up 1%.
The average days on the market for all homes dropped by 18%, but for the higher end homes DOM actually increased (by 2.5%).
The months supply has dropped by 25% overall, but for the higher end homes the supply has increased by nearly 8%.
Sold homes are also up nearly 3% overall, for the higher end they are up 14.3%.
Current listed homes overall dropped 16.9%, and for the higher end homes they are up 2.9%.
Certainly that is not the most scientific breakdown because you really can’t lump homes that are $350,000 with million dollar homes.
The Very Top Of The Market
So, I dug a little deeper and looked at sold homes for $1,000,000 and above over the last year. There were 578 million dollar and up homes sold in the last 365 days.
I broke them down between homes sold from this day last year through the end of 2016 and then looked at the homes sold so far in 2017.
The 2016 homes sold for an average of $1,590,326 and spent an average of 119 days on the market.
The 2017 homes sold for an average of $1,666,442 and spent 147 days on the market.
The average sales price for these homes increased by 9.57% and the days on the market increased by 23.5%.
So, what does this mean for owners of luxury homes in Charleston SC?
Based on the limitations of our MLS it is hard to draw solid conclusions without more in depth research. But based on the numbers here, it does not appear that the Charleston market is mirroring the national market.
But there are similarities to suggest that the market is very different for the higher end.
It looks like the numbers aren’t too bad for the very top of the market. Values are up, but demand isn’t as strong. It looks like somewhere in the $500,000 to $1,000,000 range there is a much tougher market.
Does this mean that of you own a home valued over $500,000 you shouldn’t list? No, it doesn’t. The important takeaway from this post is simply that you can’t just hear the latest real estate news and expect it to encompass all types of homes.
Real estate is very local, and it can vary from neighborhood to neighborhood even if those neighborhoods are right next to each other.
It is important to keep in mind that of you have a higher end home, the market is a little different for you. There is more competition and the demand isn’t as strong at the higher price points.
But that doesn’t mean you can’t get sold. You just have to temper your expectations and know what is happening in your market.
If you are looking to buy luxury homes in Charleston SC then you can download my free “Luxury Home Buying Guide”.
If you are thinking about selling, then it is important you choose the right Charleston SC realtor to help you sell your luxury home in Charleston SC.