The Charleston Area Real Estate Market 2005-2011: The good, the bad, and the truly horrifying…

As you know dear readers, every once in a while I like to run some numbers, because just like photos or videos, they can tell you an interesting story.  For this look back at the Charleston real estate market over the past 7 years, I looked at 6 different areas, and tracked the sales volume, the number of sales, and the median prices for each.  Then I looked at the percent change from peak to trough, and trough to today.

And what I saw was truly horrifying.

So take a look at these pretty little charts I made tracking 2005-2011 for the Charleston Peninsula, James Island, Folly Beach, Isle of Palms, Wild Dunes, Sullivan’s Island, Mount Pleasant and Kiawah/Seabrook.  All these numbers came from our local MLS.

Here’s a link to the PDF Sales by area 2005-2011 if you want to pour obsessively through the numbers like I did.

charleston-real-estate-sales-volume-2006-2011

Charleston Real Estate-Sales-2006-2011

Quite dramatic, no?  But we still haven’t gotten to the horrifying…

Here are a few things that are obvious:

  • 2005 was the peak of the market considering number of properties bought and sold.
  • 2009 was the trough of the market considering number of properties bought and sold.
  • 2011 numbers are lower than 2005, but higher than 2009. (Phew!)

Let’s take a look at median prices.  Anyone have a guess as to when the peak of median prices was? Here’s a hint: it wasn’t 2005.

charleston-real-estate-median-price-2006-2011

Here are a few things that are obvious about this chart:

  • Except for Kiawah/Seabrook, the peak of median prices was in 2007. (Though Folly had a little pop in 2006.)  This happened because people hadn’t yet realized the frenzy was OVER.
  • Median prices were higher in 2010 than in 2009 for the Charleston Peninsula and Kiawah/Seabrook. (Huh??)

But I want you to note, that except for poor Folly Beach, median prices in 2011 are not that dramatically different than they were in 2005 at the height of the real estate market. 

  • Peninsula – down 20% (ugly, but seems reasonable considering the downturn)
  • Folly Beach – down 39% (I’ll explain later)
  • James Island – down 1.3% (that’s it??)
  • IOP/Sull/WD – down 20.25% (again with the reasonable)
  • Mount Pleasant – up 10.7%. (UP???)
  • Kiawah/Seabrook – down 6.3% (not bad at all)

Interesting, I know.  But I’ll say it now.  I am not a fan of median price reports because you are only finding that number right there in the middle, exactly halfway between the high and the low.  So if you have a lot of low end sales, your median price goes down, even if the house on the higher end is still worth exactly the same.

Let’s take the 39% downturn of Folly Beach and dig a little deeper…

Around 2005-2006, a few people came along and bought almost every single boat slip on the island, both at Mariners Cay and Sunset Cay, for $60,000-$150,000.  In 2010 and 2011, they defaulted on every single one of them and the slips went back to the bank.  So included in the calculations of median price for Folly Beach in 2011, were 18 boat slips which sold for $18,000-$37,000, an unusually high number of slip sales for your average Folly year.   Had those not been included, the median price on Folly Beach would have been about 10% higher than reported, and higher than that of 2010 (7 end-of-year boat slip sales also taken out).  And let’s not even get started on the number of homes that sold under $500,000. In 2005, 14 homes sold under $500,000.  In 2011 – it was 32 (many of which were bank-owned with multiple offers I might add.)

I think you get my gist.

So here’s where the Charleston real estate story becomes horrifying (or should I say ‘became’?). When you actually take a look at the percent change from peak to trough rather than just some colorful lines, the numbers you see are devastating.

Can you imagine what would happen to your average manufacturing company if THEY saw a 75% drop in sales or number of goods sold?  Total implosion. Bankruptcy. Layoffs. Disappearance off the face of the earth. Even many of their suppliers would be ruined and the towns whose economy they supported would be struggling.  Just look at Kodak, a 131-year-old company – an American icon.  $14 billion in net sales in 2005, $7 billion in net sales in 2010, and today, they are teetering on the brink of collapse.

So given all this painful past, I am proud and amazed that most of us have somehow survived, even if it was by the very skin of our teeth.  Not just homeowners, real estate companies and real estate agents, but also interior designers, builders, restaurants and retail – anyone who felt the staggering impact. Certainly, many exist today in a vastly altered state compared to 2005, but just take a look at those green numbers above – from the trough to today.  That’s Charleston’s hope and optimism staring you in the face.

Grab on.

 

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