Missing the rewards

I guess some people can only see the glass half empty. Our team helped 58 families achieve homeownership goals last year. With less than 15% of Charleston real estate agents completing 12 or more transactions last year, it's easy to see the glass half empty.

We sold our 1400 sqft 3 BR house in Mt Pleasant in 2005 for $289K and right now, we are looking to repurchase a 2400 sqft 5 BR house in the same neighborhood under $325K. I'd say prices have come down a good bit and given that you can't buy a 5 BR house in an equivalent neighborhood within a 5 mile radius of the beach or downtown, reality is here.

There are about 11,000 properties on the market with an average price of $527K and there are only 3600 homes under $300K which is the about the median home price in our area. In April 2008, 746 properties sold in the Charleston MLS. At the median price of $288K, that means that there is only a 5 month supply of homes for the most popular price points. Those are good odds. Granted that still leaves a lot of choices for buyers, but that is the benefit of an oversupply. It's much better than the hay day of 2003-2005 where buyers had 2 seconds to write an offer or the house would be gone.

It's hard to compare Summerville to Mt Pleasant because you are talking about 2 different locations and in real estate price is determined a lot by location, location and location. Of course, prices are going to be more expensive in Mt Pleasant since it close to the beach and downtown Charleston, not to mention, shopping, great restaurants, and overall asthetic appeal. Comparing Mt Pleasant to Summerville makes it look more affordable which it is but I don't believe we are comparing apples to applies. Before considering a move back to Mt Pleasant, we looked at several neighborhoods in the North Area that we would have elected to live in (Coosaw Creek, Ashborough East, Cedar Grove) but for houses in our price range, we still felt we would have to put $50K or more to update the property on top of spending $300-350K+ so for us, it makes sense to consider Mt Pleasant for the same or less money when you figure in the cost of work needed and that we would be close to the things we enjoy doing the most in addition to my husband's job. It doesn't matter so much for me so I spend so much time driving anyways.

For many buyers, location is important and so each person's lifestyle will dictate what is important (i.e. location to work, school, recreation, price, etc). I've had many folks that live out passed exit 199 call me to say that want to move closer back to town and that the price wasn't worth the move that far out, spending more money in gas, time with traffic, etc. I think as gas becomes more expensive, living close to work will become a higher priority. By the time you figure the cost of gas, you can save money by living closer to work and put the money in your home instead of the car.

Even Summerville prices have come down. Overall with properties we have sold in the last 12 months in the North area, they were priced significantly lower than what they would have sold for in 2005, in one case $35K lower in Ladson. Not all are so dramatic. Mt Pleasant is actually the only market that has experienced depreciation in the last 2 years. We have seen a lot of the recorrection in the $200K or less market in the North area and under $400K in Mt Pleasant. There are still some unreasonable sellers but there always have been and always will be. Buyers are more discriminating and I always encourage my clients to consider all factors when buying including resale, where the market has been and where it may or may not go. It's important to stress that no one has a crystal ball. Real estate is still a great long term investment when you look at the numbers over any 5-10 year period. The problem with the mindset of some folks is that expect to make a profit in 2-3 years and that is not historically normal. Trust me, I'm not happy about the last 2 years on one of my properties. The builder has sold it for $15K less than we paid for it, not to mention the $20K we put into it to add hardwood floors, granite, etc. But I'm not afraid to rent it out and hold onto it until the recorrection finishes in that area while taking advantage of someone else paying down my mortgage for me. There is a time to rent for everyone.

There are many properties that will be hurt namely more expensive properties above $350K (less affordable to the median income for our area) and there is still plenty of room here for recorrection in my humble opinion; and in smaller properties that are calling for significantly more per sqft i.e. newer construction neighborhoods where the larger homes have brought the values down, mostly due to builders and other fire sales. Let's face it, there are some properties that may reach their peak value for a long time i.e. a newer 1250 sqft house may not be worth more than $155K for a while depending on the location. The unvarished truth is that real estate is local and that means that IT IS different in different areas even if it is just across the bridge.