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Charleston-area homes sales up in December, median price down

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Education & Training with SuccessfulRental.com, Bluewater Property Management, LLC and Lowcountry Turnkey Properties, LLC

Charleston-area homes sales up in December, median price down

http://www.charlestonbusiness.com/news/37625-charleston-area-homes-sales-up-in-december-median-price-down

The article by the Charleston Regional Business Journal staff provides good insight into the direction of the Charleston real estate market; however, it does not provide any interpretation of the data. 

Let me touch on the slightly negative information first: decreased values.  How can decreasing values only be slightly negative? 

You are right; it is slightly positive!

How can this be?

The Charleston market has been oversaturated with homes for several years now which had lead to lower prices due to an increased supply.  As the average price of homes decreases, more buyers will enter the marketplace and start to purchase homes. 

This will in turn decrease the number of homes on the market, which eventually will start to drive the average price of homes upward.

I know that might not make sense at first, but price is nothing more than a function of supply (houses/sellers) and demand (buyers).  As long as the supply exceeds demand, the market will remain stagnant, and prices will continue to fall.

Once demand exceeds supply, prices will, finally, start to increase.  The only way for demand to exceed supply is to either increase demand or decrease supply; lower prices lead to both.

Decreasing prices are not good for sellers; however, if maximizing money from the sale of a home is the goal, then the seller needs to simply wait until the market improves.

Now onto the positive news...

Sales are increasing and the inventory is decreasing.   Demand is increasing, and supply is decreasing - sounds good to me. 

Unfortunately, current home values have to take one on the chin for the market to improve.  However, the price of houses will increase over the long run, so I am not concerned about the short term decrease in value.

Does this mean we are out of dark?  No, but at least this shows there is a light at the end of the tunnel. 

Aaron

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