I’m aware that many of you are subscribers to Brad Rundbaken’s Charleston Market Report; www.charlestonmarketreport.com. A commenter on this blog, Brett, had referred to it, and I’ve been hearing others throw out the same arguments. You may have also heard the term, “Subprime slime.”, describing analysts possible exaggerations to the fallout from failed subprime lenders, as well as failing borrowers.
There’s no way I could keep up with Brad, with the knowledge he claims regarding the interconnection between financial and real estate markets, and I’m not going to try. I would, however, like to stir up some dialogue out there to get some different perspectives. I’ve been watching and reading commentary on this week’s housing report, and opinions seem to be all over the board. What obvious conclusions can we draw, relative to Charleston? Is there an impending meltdown? Frankly, I’d sound like an idiot if I tried to present myself as someone that had the answers. I just know that so called experts (Al Parish) have developed a following, and that perhaps we might want to be more careful about grabbing onto one perspective.
I’ll be very surprised to see a real meltdown in the real estate market. There is no question that two of the factors impacting the housing market are the lending industry, and the stock market. I don’t have a house on the market, but I do have several MLS listings as a real estate agent, and I’d love to know what real estate sales are going to do three months from now. I would think the answers would be here by then. Here are my reasons why the market is softening, some of which I’ve already stated in other posts. I’m definately bullish on Charleston and do not believe there is going to be a “Meltdown” but rather a return to normal.
Money is definately an issue. The cost of money has risen significantly even with recent reductions in interest rates. We’re still higher than 2005 interest rates. It’s harder to get money.
Sub-prime fallout It is harder to get financed now, which is probably a good thing. I have not seen the actual evidence of foreclosures here in Charleston.
Mt Pleasant prices rose to the ridiculous. If you pull Mt. Pleasant numbers out of the average, you’ll see that it accounts for a very large proportion of the down side. Interestingly, prices still continue to rise slightly, if you look at the hard data thoroughly.
Katrina and Other Weather People are less likely to shrug their shoulders at being in a flood zone as they were in 2005. We are not under a frigging lake here in Charleston, but the reality is, if we have another Hugo, a lot of homes are going to be flooded. Who needs that?
New Construction is a huge factor. I’ve already beat this up pretty well in other posts. New is nice, and home owners have less money to maintain their homes. If you’re trying to sell a home in this market and you haven’t maintained your home, you could be in for a long ride. People are looking at new, even if they aren’t going to buy it, so when they look at your home, they have a strong negative emotional reaction to cluttered, stinky, poorly maintained homes with family pictures all over the walls, and intolerable wallpaper.
My Conclusion is that the clog is going to clear, especially in Dorchester County. Mt Pleasant could possibly see prices go down across the board, but even this I don’t think is certain at this point. Once things loosen up, sellers are going to become buyers, and the clearing will probably be connnected to new home inventory clearing up first. There was a huge backlog of new construction fall thrus when the interest rates shot up, and new construction buyers had to walk away from their new home, because their old home didn’t sell.
The National Market Historically, 30% of the Charleston Real Estate Market has been from outside the area. Given that other markets are in worse shape than Charleston, this is having an effect as well.