Bill Byrd of Byrd Property Group is back with his Spring 2022 Charleston Real Estate Market Update. Let’s take peek at the current market conditions via Bill’s handy charts and thorough analysis. Below is his report, for his full Market Update you are invited to visit his blog.
In this edition of our 2022 Spring Charleston Market Update, we will be looking at national and local historical data. This will help us understand as to what we can expect from the current trends, consequentially helping us to make better choices in the future.
Spring 2022 Market Conditions – The Charleston Real Estate Market Update
This year the Spring Charleston Market Update is being written at what may turn out as one of the most unique periods in real estate history. We are right in the middle of a whirlwind of economic changes that could change our market significantly!
I’d like to look back at our
Fall Market Report. In the Fall Market Report, we mentioned 7 Key Indicators to watch that could impact our market. Interestingly enough a few of those indicators have come to life!
Fall Market Key Indicator Recap
Inflation Risk
Well, the risk of inflation certainly came to life in a big way! Everyone is feeling the reality of higher prices everywhere we turn. From the grocery store to the gas pump, we are all paying a lot more than we were before. Below is a recent CPI Chart from FRED (Federal Reserve Economic Data) based on the Consumer Price Index pulled from
Inflationdata.com
As of the Spring Charleston Real Estate Market Update, the numbers haven’t yet significantly impacted our market. Yes, the prices of homes in Charleston have increased, but these increases haven’t slowed down the demand for homes yet.
Interest Rate Risk
Like inflation, the rise in interest rates have reduced the amount of home a buyer can buy. For every 1% the interest rate goes up a buyer loses roughly 10% in buying power. Thus, a 1% rate increase will knock someone qualified to buy a $500,000 home down to approximately $450,000. That is a sizable reduction in purchase power.
So far, it hasn’t reduced the demand for our unprecedented low inventory but something to watch.
Fed Policy Risk
The Federal Reserve Bank’s main function is to control monetary policy. The goals of monetary policy are to promote maximum employment, stable prices, and moderate long-term interest rates. To do this they have a few tools at their disposal.
In an overheated inflationary market, their goal is to slow things down by tightening the money supply. As we speak, the Fed has been making it’s moves and beginning the process of
Quantitative Tightening (QT) to combat what has now become a four decade high inflation. This “QT” is a combination of the Fed reducing its balance sheet of securities and raising interest rates.
Again, just like the two previous indicators, we haven’t seen the impact yet from these Fed Policy moves. So, you’ll want to keep an eye on the Fed moving forward, because they have just started making their changes in the last few months.
Major International Incident or Conflict Risk
I must admit the Russian Invasion of Ukraine was not on my radar when I wrote the Fall Market Update. This is exactly why I mentioned that an international incident could affect our market. We never know what is going to happen around the world and the significance of these types of incidents can have a huge impact on our real estate market.
Whether this current Russia Ukraine war ends up having a significant impact on our real estate market or not, this event has caused turmoil in the stock market and politics. Keep an eye on Ukraine to see if this becomes a bigger global conflict than it already is.
Creative Financing Risk
As rates go up, lenders get creative. As of the Charleston Spring Market Update, we have seen lenders starting to offer ARM’s (Adjustable-Rate Mortgage) again. They do this to temporarily bridge the affordability gap for borrowers. This isn’t always a bad thing and for some it can be a great tool. If you are in the market and considering an ARM, do your homework and know exactly what you are signing up for.
Spring Charleston Market Update Numbers
To put this into perspective the numbers below are taken from the MLS Reports as of March 31, 2022
Listing Inventory Still at Record Lows
From the spring of 2019 to the spring of 2022, we’ve seen within the tri-county local supply of homes for sale go down from 6,309 as of March 2019 to 1,259 as of March 2022. As I write this on April 21, 2022, the MLS shows 1,162 active homes for sale on the market!
Days On the Market Still Low
As of the end of March, our MLS shows an unbelievable median of 3 days on the market for a home to sell!
Home Prices Still Increasing into The Spring Market
Home prices in the Charleston Spring Market have been steadily rising during the first quarter of 2022. With the median sales price increasing from $350,000 on January 1, 2022, to $361,194 by the end of March.
Spring Charleston Market Update Summary
The market may be changing right before our eyes! With so many different things influencing our economic, political, and financial worlds, where we end up no one knows. What I do know, is housing is a primary need for most people.
Back in the 1980’s when I started in real estate, we sold lots of homes when the rates were very high. Record high was 18.45% in 1981. This was because people needed a place to live and raise their families. They made it work because they had a need.
Here in Charleston, we are still benefiting from the “Great Migration”. People coming here have a need! And when someone wants to move, they have to do what they have to, to get where they want to be!
Spring Charleston Market Update – What to Watch!
Key Indicators to Watch Moving Forward
- Keep watching interest rates. Rising rates may slow down the current high demand for homes.
- Rising interest rates will make the existing lower rate assumable mortgages very attractive!
- Keep watching the Fed. What they do in the next few months may determine the outcome for the next few years.
- Pay attention to what the folks in Washington either do or don’t do. It all matters on the big stage.
- Watch the inventory of homes for sale. If inventories increase, prices could either stall or drop.
- Watch to see if Hedge Funds start to sell their rental inventories. Hedge Funds have been accumulating properties since 2012 and have built up massive inventories of rental homes. Hedge Funds are opportunistic and typically buy their assets low and sell them high. If our prices start to fall, we could see hedge funds begin to sell off their portfolios! In turn, this could exacerbate a decline in home prices.
- Watch to see if new construction sales slow. Right now, that doesn’t seem possible, but things can change.
- Watch Ukraine. The outcome here is very important to the global supply chain – specifically, food and minerals.
- Watch China and Taiwan for the impacts of potential conflict.
In The Path of An Unpredictable Storm
Throw out the data from the first quarter and forget about last year! Storm force winds are coming ashore. Will the storm veer off back into the ocean or will we take it head on? We’ve got a lot to pay attention to!
I hope you’ve enjoyed my Spring Charleston Market Update. Every time I prepare a Market Update, I discover a few things I didn’t expect to learn.
Thanks for taking the time to read this, if you’ve gotten this far, I am flattered and humbled. Cheers!
The above article is Bill Byrd’s Charleston Real Estate Market Update you are invited to visit his blog for his full Market Update. Bill’s report is a deep dive into the Charleston Real Estate market and a recommended read for those considering buying a new home as well as those in the industry. As Bill states at the end of his Update…
…Throw out the data from first quarter 2022 and forget about last year! Storm force winds are coming ashore. Will the storm veer off back into the ocean or will we take it head on? We’ve got a lot to pay attention to!
This helpful and informative post outlining Charleston Real Estate Market Update has been provided to CharlestonNewHomesGuide.com by Bill Byrd of Keller Williams – Byrd Property Group located in Charleston SC. Images and article content have been edited however here is a link to the complete original post on Bryd Property Group’s blog which includes further market conditions and analysis.
Bill Byrd has been a licensed Realtor/Broker since 1986. Bill has taught pre-licensing classes at the College of Charleston and the Charleston Trident Association of Realtors. In his career Bill has represented both home builders and consumers in the sale and purchasing of new homes. Bill is currently an active real estate broker with Keller Williams Realty Charleston-Mt Pleasant and runs his real estate team the Byrd Property Group. Bill may be reached by email billbyrd@kw.com or website: https://byrdpropertygroup.com
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