Houses For Sale Charleston SC: National Sales Data and Projections
If you are searching for houses for sale Charleston SC, then you are probably wondering how things are going in the real estate market and where they are heading in 2015.
Today I am going to show data and reports from experts to give you a true look at the real estate market.
First, lets look at the year-over-year prices for the entire country, broken down by each state:
Every state has seen an increase in prices this year except for Connecticut.
Another graph, from the Case-Shiller Report shows the change in prices year-over-year broken down monthly.
Here is that report for 2014 so far:
These reports are important because by looking closely at what they tell, you can get a true understanding of what is happening in the real estate market.
Too many media outlets don’t seem to report all the facts. You will find many interpretations of what is going on in the market. One misunderstanding is that home prices are down.
However, as you can see by the graphs, that isn’t entirely true. What has happened is appreciation has slowed down. There have been some drops in price from one month to the next, and that has clearly happened in the Charleston SC real estate market.
However, as you can see, overall, prices are still up. Last year we saw appreciation skyrocket, but this year it is settling down (but still moving upward).
Prices aren’t increasing as rapidly, but in September we still saw a 4.9% increase in prices over last year.
So while the numbers are coming down as evidenced in the Case Shiller report, it indicates the market is correcting the high appreciation we have seen since 2013, and is moving to a more normal real estate market. A healthy market.
Remember what happened that lead to the bubble burst? Skyrocketing appreciation that seemed as if there was no end in sight. This time, appreciation is tapering off, but still increasing at a much healthier pace.
So, where are things headed? Every quarter the National Association of Realtors releases their Home Price Expectation Survey.
This survey polls over a hundred leading analysts, market experts and investment strategists to see what their expert opinion is for the real estate market.
The next graph shows the Mean Projected Percentage of Appreciation for the next few years (through 2019).
This is exactly the middle point of all projections by the experts. What this shows is that the market is settling into a more normal rate of appreciation after next year.
Historically, real estate has appreciated at an average rate of 3%-4% annually over the last 100+ years.
The next graph breaks down the projections further.
It shows the rate of appreciation we experienced for the 12 years prior to the bubble, as well as the projections of the Bulls (the most optimistic projections), the Bears (the most pessimistic projections), and the overall Mean Projection.
Note: this is the Cumulative Appreciation Projection through 2019, and not the projection for just one year.
This graph shows that maybe these “experts” might know what they are talking about. The Mean Projection of overall Cumulative Appreciation is right on the pace we saw prior to the bubble.
Another important thing to note–the Bears, the most conservative (or pessimistic) projections, still see home appreciation increase by 15% between now and 2019.
Another thing to point out–these “experts” projected appreciation to increase by 4.8% for 2014 as evidenced in the first graph.
Then look again at the Case Shiller graph and see that for September we are at 4.9%. These guys might know what they are talking about, ya think? (Of course, the overall appreciation for 2014 could wind up higher, but you get the point).
First, the Pending Home Sales Report, also from NAR. The Pending Sales Report is important because it often predicts future sales.
After all, these are homes currently under contract and will be closing in the next 30-60 days.
Therefore, these are the homes that will be showing up on the Closed Sales numbers over the next couple months.
Two things to take away from this report. First, Pending Sales are up for both September and October. Typically we see a drop in sales after August, but that hasn’t happened this year.
Another indicator of Future Sales is the amount of Foot Traffic–the number of people out actively looking at homes.
This number dropped significantly last winter, partially due to the severe weather experienced by much of the country.
However, so far this year is way above where we were last year, and this traffic is what leads to Pending Sales (and on to Closed Sales).
So, we have some good indications that sales will continue in good numbers. But what do the experts say?
Here are some projections for Total Home Sales for the next couple years. This includes projections from NAR, Freddie Mac, and the Mortgage Bankers Association.
Remember, these aren’t projections from some talking head on the TV, these are industry experts.
All are projecting home sales to continue to increase over the next couple years.
So, other than simply trusting the experts, what else can we look at to give us confidence in these projections?
One important piece of data is the Months Supply of Inventory of homes for sale. This lets us know where we stand in the market in terms of Supply and Demand (Economics 101).
A “Normal Real Estate Market” will see 6 months of inventory. Anything more is considered a buyers market, and appreciation decreases. Anything less than 6 months is considered a buyers market with appreciation increasing.
Which leads me to breaking out one of my favorite infographics that illustrates all this so well:
This of course leads to the next logical questions you are probably asking: So Pam, what is the Months Supply of Inventory, and do you have a cool graphic showing me that?
And of course the answers are both “Yes!”:
And another cool thing this shows us is that while the rate of appreciation is slowing to a more healthy rate (yet still increasing), the demand is still exceeding the supply.
And, if you studied the last graphic, you know that this is a sellers market and as a result, prices will appreciate.
So, what does all of this mean for buyers and sellers? For buyers, now is a great time to buy. Home values should continue to appreciate, making them a safe investment. However, appreciation is slowing down, so prices won’t get too far out of control.
However, interest rates are increasing, and we are still in a sellers market. You could find yourself in a multiple offer situation on a home, or you could simply not act quick enough before someone else snatches up a home you like.
Now is a great time to buy a home, but don’t simply go out to look–make sure you are a serious, pre-approved buyer before jumping in.
For sellers, the time to sell is sooner than later. If you are waiting to time the market perfectly, you might have missed out. While your home will continue to increase in value, it likely won’t see the appreciation we have seen over the last year or two.
Demand is still strong. However, waiting will likely cost sellers more than buyers. As the market continues to normalize, you will see slower increases in value, and the supply will eventually catch up to demand, making it more challenging to get your home sold.
Stay tuned to my blog as I will be updating market data for houses for sale Charleston SC.