Lion Tamer Required!
Yes it's that time again for an update on the local tri-county residential real estate market
(Berkeley, Charleston and Dorchester counties.) Well Spring has well and truly sprung and many commentaries coining the phrase that far from March limping perhaps like a lamb into April, the previous month came in like a lion and it went out like a hungry lion. Key point to know are as follows:
(1) March ratified contract activity finished up +28% versus last March market wide and the last two weeks have been +61% and +51% versus the same weeks last year as we commemorate the worst of last year's stay at home orders.*Remember why we focus on ratified contracts instead of closed sales...closed sales were ratified 5-8 weeks ago and reflect buyer sentiment at that time. Ratified contracts tell us what buyer sentiment is currently...and what the number of closings will look like in a month or two. The last two weeks of March have been at roughly the same level of sales as a "normal" April (2019 market) Clearly as stated Spring has sprung early as buyers and sellers are in action.
The biggest obstacle in our marketplace holding back sales currently is a lack of inventory.Demand is robust with no signs of slowing down. Market needs more inventory. If you are contemplating listing your home I can help put a game plan together to enable you to get what you want ahead of anticipated new construction in the works and coming on line later in 2021 and into 2022.
(2) in seeking to give some key metrics to the situation to ensure a balanced market in the greater metro Charleston area requires approximately 12,000 additional listings (6 months of inventory). Currently the tri-county area has about 1,400 listings in the MLS that aren't under contract. This is the lowest number since at least the year 2000. In summary the gap between the number of listings available for sale and the number of listings needed to maintain a balanced market is substantial. Again at the risk of repeating myself (as I have done over the last nine months) the situation remains unchanged: Broadly speaking, this is the best time in our housing market's history to have your house on the market to sell.
(3) Interestingly new listings taken were up 6% market wide in March versus the same month last year. Despite what you may think due to the record low inventory levels, new listings taken are actually trending close to normal levels.Listing activity is robust but houses are are selling so quickly that the inventory levels continue to erode. As a result buyers are willing to consider later move-in dates to accommodate sellers needs whether closing now or later,sellers are making the call.
(4) If a balanced market is typically measured as being a window of 6 months the Charleston market has less than one month of inventory as a whole. The most active areas have inventory levels in the 1-3 week range. These trends are being replicated throughout the SE coastline of the USA.
(5) New construction represents around 40% of all pending contracts in the MLS and new construction comprises about 20% of the closings. This is a very high number and reflects the lack of available resale inventory. (Caveat - as more units come on sale this could impact future saleability of pre-owned homes especially if dated appearance or shows signs of deferred maintenance thinking rofs, windows,HVAC electrics, flooring etc.. Again another reason for sellers to be in action).
(6) If you are waiting on distress opportunities with the mindset of stealing a deal, you may have to go, "back to the future" of circa 2008. The current Foreclosures and Short Sales market represent a combined 0.6% of all available listings currently for sale. Even this is down from 1.8% of all available listings on 1/1/2020. This market is basically nonexistent currently. Indeed any volume that may be in the pipeline as a result of the forbearance program will likely be picked up quickly close to or above retail pricing which is trending upwards. For more details see next point.
(7) There does not appear to be a threat to the housing market from a wave of REOs once "no questions asked" forbearance ends. Why?
(a) 7 Million properties have entered forbearance nationwide since the pandemic began. 63% have subsequently exited forbearance. Breakdown is as follows:
Properties that have exited forbearance and become current (43%)
Properties that entered forbearance and then paid the loan off in full (14%)
Properties that are in some kind of mitigation process (usually loan modification) and will become current soon (4%)
Properties entered forbearance and then became REOs (2%)
Properties in forbearance that we still have to contend with (37%)
(Source: Black Knight Mortgage Monitor).
(b) We are well below the amount of inventory that we need to have for prices to stop rising much less start to decrease. Consider this:
REOs and Short Sales are .8% of our inventory currently.
We are 12,000 listings short of a balanced market
We would need several thousand REOs to hit the market (at least a 200X increase over the current number of distressed listings) to get to the point where prices stop rising.
(c) Institutional buyers that buy up large numbers of properties and then rent them out (like American Homes for Rent) have been raising large amounts of capital and are sitting ready with their war chests of cash to pounce on any forbearance inventory that manages to trickle into REO status.
(d) Prices have been rising for a decade. Of the properties where the mortgage is in arrears, many have significant equity built up meaning that they can sell the property for more than what is owed. These folks will not let the property go back to the bank and let the bank have the equity. They will sell the property and keep the equity for themselves. Most of these "at risk" properties will likely not become REOs.
(e) Some of the large number of mortgages that are in arrears will "cure" or "catch up" when the generous forbearance period ends because those households either don't have a real need or their income will return as the government sees fit to allow their businesses to reopen (think about anyone in the cruise industry as one large example).
(8) Properties over $1MM continue to sell well. The $1MM+ market took off starting around July 1 and has been outpacing last year roughly 2.2 to 1 ever since.
Residential Sales over $1MM in the Charleston Trident Multiple Listing Service sales period from 7/1/2019 to 3/31/2020: 495 units
Residential Sales over $1MM in the Charleston Trident Multiple Listing Service sales period from 7/1/2020-3/31/2021: 1,136 Up a whopping 129%)
(9) Need for a real estate review is most compelling and welcome the opportunity to help you as a buyer, seller or investor navigate this current market by learning more about your wants and needs whether buying or selling, possibly even right sizing. I'm here with my full service team to help
(10) Once again both individually and as a Company it was an outstanding March. My company outperformed the market by 8 points in closed sales for the month! In seeking to take advantage of my full service offering and related resources by leveraging the strength of your affiliation with CORE thereby lessening the stress to and gain an advantage over your competition with exclusive tools like Instalist ( pool of buyers ready to get into action) the internal company Facebook page which has a haves wants and needs platform. resulting in homes going under contract in 0 days of listing on public forums. To gain knowledge of these new marketing opportunities first, email call or text me at 843-906-9669.I'll be delighted to have a quick chat to better understand how I can assist you. .
by grace to others when the strain of this market gets to them - and do your best to keep the strain from getting to you.
Along with my full service team we are here to support you and we look forward to doing so. Good luck out there it's ajungle the lion is out of its den but know I'm here for you as your lion tamer of choice - it's what I do best - having been active in this market since 2006 and not lotst a single soul!
Always great to connect. Talk,soon.
MC aka US SCOT
E [email protected]
C 843-906-9669
FOOTNOTE Here are the links to my digital presentations: ENJOY!
Buyers:
https://cloud.3dissue.com/189524/189987/250647/BuyersPresentation/index.html?r=25
Listings:
https://cloud.3dissue.com/189524/189987/250647/ListingPresentation/index.html?r=63
Mike Cassidy BA (Hons), ABR, SFR, SRES, CIPS, FCII Chartered Insurer
REALTOR OF DISTINCTION – PRESIDENT’S CIRCLE – 2012, 2013, 2014, 2015, 2016, 2017, 2018
MEMBER OF THE EAST COOPER TOP PRODUCER’S CLUB – 2012, 2013, 2014, 2015, 2016, 2017, 2018
Carolina One Real Estate
2713 Highway 17 North, Mount Pleasant SC 29466
Cell 843 906-9669
Voicemail 843 266-5093
Fax 843 202-8950