Alright so the title of this post is a little dramatic but I always enjoy looking inside statistics and numbers to see what they can reveal.
Firstly, inventory levels means months of housing supply compared to absorption rates. In plain English – how many people are buying homes vs how many are on the market. 6-8 months of inventory is deemed a ‘healthy’ market – less is a seller’s market, more is a buyer’s market. Inventory levels are important because they can give you a sense of the overall health of an area and market trends, more so than median price (which with a small sample size can be affected drastically by the sale of one low or high-priced house) and national statistics.
So let’s take a look at Charleston area inventory levels and see what they have to tell us. Note that for 2011, I am only looking at January-May.
Mount Pleasant has remained relatively stable over the past 7 years. My guess is that this is due to the tremendous growth it has experienced. We are at 9.68 months of inventory now, and I betcha it’s the bad location, ugly or very expensive houses that are sitting for a long time. If you are a seller and you’ve got a well-priced home in a good neighborhood – you’re golden. If you are a buyer – don’t dally too long unless you fall in love with one of the ugly ones.
Downtown above and below the Crosstown have followed a similar path. Hot like everything else in 2004/2005, a spike in the Very Dark Year of 2009, and now back under 20 months. So there are still twice as many homes on the market as there should be, but again, this can vary by neighborhood and price range. Real estate isn’t just local, or hyper local, it’s hyper-hyper local. For example if you want a house in Harleston Village or Longborough under $600K, there’s very little to choose from now. I sense that Downtown will fare well over the next 5 years, since urban, walkable environments are hot with Boomers and Gen Y. If Charleston keeps its job and income growth positive – it’ll be a sight to see.
Folly Beach and Isle of Palms
Oh the poor islands of Folly Beach and Isle of Palms. In 2008, IOP had 78 months of inventory. That means it would have taken over 6 years to sell everything at the rate they were going. Painful. Here’s what I think happened. The second-home and vacation-home owners all smelled The Crash coming and simultaneously put their homes on the market in a time period called The Big Dump. Because the typical buyers of those homes were also of similar ilk, they were not about to do something crazy like tie $2,000,000 or more of their hard-earned money into an illiquid asset. Interesting how the islands had their Peak of Terror in 2008, while everywhere else had it in 2009, eh? Fortunately on the islands, many people decided to take their homes off the market and rent them for awhile. Unfortunately, others had to let them go at fire sale prices or back to the bank. And thus step in the savvy investors who waited through the The Crash, amped up their portfolios in a rising stock market, and have now been stepping back in to get A Really Good Deal. And a great place at the beach too.
So what do you think? What other stories do these numbers tell?
- You’ve got questions about Charleston’s beaches? We’ve got the answers (charlestoncitypaper.com)