Houses Charleston SC: Clearing Doubts In The Market
There’s a lot of good news in the current real estate market, but there is also a lot of uncertainty and confusion from both potential buyers and sellers.
A lot of the doubt and confusion revolves around where prices and interest rates are heading in 2017. So, let’s take a look at some of the latest reports so people can make educated decisions going forward.
The general public likely is not aware of the dynamics at play in the market, and that is probably true for many people thinking about buying or selling.
But misconceptions and lack of information can be detrimental. It could keep people from making a move, and instead waiting. And based on the factors in the market, that could be a big mistake.
Price Appreciation Stronger Than Expected
The general forecast for home values in 2017 was a continuation of appreciation, but that it would settle into the 3-4% range. Even as recently as the 2016 Fourth Quarter Home Price Expectation Survey (released in December 2016), it was expected that home appreciation would level off to 4%.
But the tail end of 2016 and so far in 2017 we have seen home appreciation accelerate to above 5%. This is fueled by the strong pent up buyer demand that exists out there.
In fact, according to CoreLogic, we saw a 6.9% increase in the year-over-year home appreciation (including a 6.4% increase in South Carolina).
Another strong sign of buyer demand came from the April Pending Home Sales Report from the National Association of Realtors (NAR).
That month’s Index was 2.6% higher (than same month last year) and is the highest since last April. It was also the second highest since May of 2006.
In other words, other than last spring, you would have to go back to May of 2006 to see the number of homes going under contract that we are seeing right now.
This is despite inventory being at all time lows.
Obviously, this poses a challenge to buyers in the market over the coming months–simply finding a house will be hard enough, but they will also have to pounce quickly to successfully get in under contract before other eager buyers.
Pent Up Seller Demand
We are seeing pent up buying demand being unleashed onto the market despite there being slim pickings out there. But there is also pent up seller demand as well. There are several reasons for that.
Longer Tenure In Home
Prior to the real estate crash 10 years ago, people stayed in their homes on average for 6 years. With the crash more people were forced to stay in their hoe because they were in negative equity situations. As a result, people now have stayed in their homes 10 years on average.
This feeds into other factors (see below)
Concerns Over Prices
As I stated at the beginning, many would be sellers are concerned with where home prices are headed. But, based on the strong buying demand that is out there and the lack of inventory, prices are being driven upward with no sign of stopping.
The market needs more inventory, but it would take an absolute tsunami of new listings to flood the market to cause values to go down. (Here’s some perspective for you–currently there are 5,429 homes for sale on the Charleston SC MLS. Back in mid 2007 that number peaked at 11,900).
If you look at the latest projections from the latest Home Price Expectation Survey from February, you see that the mean projections still show home values to continue to appreciate at a slower pace (4.4%), but they will still appreciate. (And keep in mind that in December these experts predicted 4% for 2017, which we are well ahead of).
I’ve blogged in the past about misconceptions in the marketplace that are holding back many would be buyers. But even worse, these same misconceptions are also holding back many would be sellers.
That’s a little odd considering these people have been through the home buying process before, but after the market crashed and banks made it nearly impossible to get a mortgage, that is understandable.
But things are much different in today’s market.
You do not need a 20% down payment for a home, and you do not need near perfect credit. There is also another misconception many home owners have:
Not Realizing How Much Equity They Have
For anyone that bought 4 to 10 years ago, they remember all too well of having either negative equity on their home or barely any. Many home owners are not aware that they now have significant equity in their homes–at least 20%.
Time Is Now
The market needs inventory. Buyer demand is the strongest it’s been in a long time, and it doesn’t appear to be stopping anytime soon. Prices will continue to increase, and are increasing at a much more accelerated pace than anticipated.
So, now is the time to not only sell your home, but to look for the next home as well.
Because once a seller becomes a buyer, they will face the same challenges current buyers are going up against: lack of inventory, which is causing prices to increase.
The longer you wait to buy, the more expensive the home you want is going to cost you. Plus, interest rates are also going up which means by waiting you could miss out on the home you really want because you will no longer be able to afford it.
For many home sellers, the same scenario played out 10 years ago. They were unable to get the home they truly wanted so they settled.
Maybe not by much–instead of that home right on the golf course, they had to get one a block or two off the course.
Don’t let this happen again if this is you–if it isn’t, then heed the lesson–don’t wait because you are uncertain. Waiting will cost you.
Now obviously, if they’re not ready, willing, and able to buy right now, it doesn’t really much matter. I get that. But for the people that are ready, willing, and able to buy, it is important that they understand that waiting is not to their benefit right now.
Another Interesting Indicator
According to NAR’s first quarter (2017) HOME survey, 70% of home owners feel like now is a good time to sell. It seems that they are also aware of the impact on prices the lack of inventory has.
We need more listings to balance out the supply and demand curve.
Hopefully that gets the point across, and I can now put down my stick, lol.
If you are thinking about buying or selling a home in the Charleston area, it is important to choose the right realtor. You can learn more about me and also get a lot of helpful information at my Pam Marshall Realtor website.
If you have any specific questions simply get in touch or leave me a comment below!