Charleston South Carolina – Greenwich, CT

Same inventory glut, same problem.

The local real estate industry is beset by the glut of homes on the market. A five- to seven-month inventory is considered a healthy neutral market. The inventory now: 15 months.

At the end of 2007, it was about 10 months’ worth.

With 10,005 homes to choose from in the tri-county region, it is an extreme buyer’s market. The problem is that buyers aren’t making many moves, anticipating a further fall to the bottom. Still others might have trouble accessing lines of credit.

“Would people buy with access to credit? As an economist, I’ll have the answer for you in 10 years,” Hefner said.

A bright spot, inventory is down somewhat from a few months ago, when it peaked at 11,191 homes in November. Because so little turnover has occurred, people presumably are making other decisions about what to do with their homes. The two big options: live in them or rent them out.

“Most people can’t take a loss. That’s why you see rental numbers going up,” said Gettys Glaze, general manager of Coldwell Banker Real Estate and president of the Charleston Trident Association of Realtors multiple listing service.

Despite the sales slump, home prices remained relatively steady in 2008.

The median price of a home sold in 2008 was $203,270, down 3% from the previous year’s $209,742.

Meanwhile, median home prices are up almost 7% from 2005, when home sales were 45% higher than 2008 numbers.

“The current inventory level remains more than double its level on the first day of 2006,” Vince Graham, president of I’On Group, said in a recent 2008 market review. “Prices have not fallen sufficiently to allow the market to begin to clear.” [emphasis added]

8 Comments

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8 responses to “Charleston South Carolina – Greenwich, CT

  1. Pingback: Instapundit » Blog Archive » “IT WOULD BE A BUYER’S MARKET, if there were, uh, any buyers in the market.” A real-estate agent on…

  2. That last line is the killer. “Prices have not fallen sufficiently…” Remember, most of these homes are overvalued by as much as double (or more) their actual values, particularly in those ‘prime areas’ targeted to baby-boomer / house-flippers.

    We’ve been looking for a house, and it would seem like a ‘buyer’s market’, since there are literally more houses now than people to fill them, but the houses are still rediculously priced for what you get. $200K around here gets you a modest-sized house with a lawn you can move in fifteen-seconds flat and a scenic view of your neighbor’s window (almost a full arm’s length away!). Honestly, are they kidding?

    (And this is, of course, to say nothing of the new spikes in property taxes everywhere, and dramatic increases in utility bills.)

    The simple truth is, while I definately want to get a house, and we could technically afford it, it really still doesn’t make sense for me to buy one. The market has a lot of bottoming out to do before the old house-budgeting addages are reasonable again.

  3. J

    If a seller is upside down with his lender, how can he reduce his home price, unless he can come up with suitcases of cash to make up the shortfall?

    Doesn’t this mean that the market for home prices is downwardly inflexible?

    Assuming I am correct, won’t it soon become cheaper to build a brand new house than to purchase an existing one?

  4. CJ

    (And this is, of course, to say nothing of the new spikes in property taxes everywhere, and dramatic increases in utility bills.)
    Ding ding ding. Increasing property taxes as both residential and commercial property values fall — how can you not love it? And when you’re talking about multi-unit RE, you can add in rising maintenance fees. Sure, people don’t want to take a loss, but soon it’s going to occur to a lot of them that it’s expensive to sit on real estate. That will put even more inventory on a glutted market.

  5. Hal

    When new buyers could flip a new buy by double the price this was a realtors market. The new buyer was taken by the realtor, but when the market is depressed, the realtors are still trying to make it a realtors market. When the markets drop the last buyer is stuck with a phony realtor, who is trying to milk out the last dollar.

  6. Suzanne

    With home prices very close to the highs of a peak not seen since records were kept, how is this a “buyer’s market”?

    Houses can rise in price 100% in a few years (at levels 7X to 10X incomes), then drop 10% or so to become affordable? Nope, prices will drop another 30% in coastal markets, and return to normal where income (and not debt) can support prices.

    See chart for all you need to know about the Housing Bubble, and how far removed from reality it was:

    We have a 50% deposit sitting in the bank, and will not make the slightest move until home prices return to historical norms (see above chart).

    We can wait longer than HELOCed and underwater “owners” can remain solvent.

  7. Bob B

    As to the question “wouldn’t it be cheaper to build than to buy?”, no it wouldn’t. Building anything is a function of time and materials. Commodity prices for building materials have remained steady and labor costs are still about the same. Also, the majority of homes are in subdivisions that can realize productivity efficiencies of building multiple houses simultaneously. Building one at a time is vastly more expensive.

  8. Scott Wiggins

    As in any bubble, those late to the party get burned…And, in every recovery, those waiting for still lower prices miss the boat. I would suggest to potential buyers that now is the opportunity of the decade to get the house you want in the neighborhood you choose at the best price with an historical low interest rate. Charleston is not a market in which loan fraud was rampant…The headlines are merely telling you what happened mainly in California, Nevada, Arizona and South Florida. Therefore, our recovery will be sooner and stronger. Charleston has a vibrant economy and a housing market that is a beacon to newcomers with low prices, relatively low taxes (compared to the northest), warm weather, great seafood and great people. There is a giant sucking sound as good people leave parts of the country condemned to awful cold weather and ridiculous taxes. We welcome them…sans the politics please. How do I know? I have been investing in Charleston Real Estate for nearly twenty years.