High prices and elevated interest rates, combined with low inventory, are discouraging homebuyers in the Charleston region, as demonstrated by the double-digit percent decline in sales last month.
June should have been one of the busiest months for the residential market, but sales across the nation slumped for the third month in a row.
While Charleston tends to be insulated as a popular move-to destination, Berkeley, Charleston and Dorchester counties’ home sales fell 13.1 percent, according to preliminary data the Charleston Trident Association of Realtors released July 9.
And much of that has to do with buyers struggling to sell their homes elsewhere to relocate to the Lowcountry, said Jarrett Hodson, banker with Sweetgrass Capital in Charleston.
“People were getting aggressive coming into summer wanting to move, but for a lot of people it didn’t work out,” Hodson said.
In June, 1,587 homes changed hands in the region, a notable drop from the 1,923 sales in June 2019, the year before the pandemic. Sales volume is still higher for the first six months of 2024 compared to the same period of 2023 but barely, by less than 1 percent.
“What’s happening is if somebody can’t sell their house in Ohio, they can’t move to Charleston,” Hodson said. “There’s been a heavy, heavy movement from the Northeast, the West, but as those markets take a hit (so does Charleston).”
As a result, home sale contingencies — where a would-be buyer can walk away from a sale if they can’t sell their home by a certain date — are rising, he added.
While some can’t move, other potential sellers are unwilling give up their low-interest mortgages in the 3 percent range that they locked in during and before the pandemic, said Tara Bittl, an agent with Realty One Group Coastal in Mount Pleasant.
“We used to say people moved every five to seven years; now we’re trending closer to 11 because of that interest rate change,” she said.
Today’s Top Headlines
Story continues below
The lack of movement contributed to the local inventory level rising for the fifth month in a row to 3,813 properties, which is still considered low. A balanced market would have about 7,000 listings.
Bittl said the reduced inventory has a number of impacts, from bidding wars in certain areas to casual buyers putting their moving plans on hold.
Without genuine motivation, they really need their “heart to swoon” to commit in this market and there aren’t enough options out there right now, she said.
The Federal Reserve has yet to take action that would ease mortgage rates, which are making it more expensive for buyers to borrow at a time when real estate prices and home insurance premiums also are rising.
The average 30-year-fixed mortgage rate sits at 6.95 percent and 15-year FMRs are 6.25 percent as of July 3, per Freddie Mac.
Median home prices in the Charleston area continued to rise in last month, increasing 4 percent to $425,000 and up 57 percent since mid-2019. Insurance runs about $3,400 on average in South Carolina, according to the National Association of Realtors.
“You have to consider the cost of everything, not just the interest rates,” said Stacy Smith, broker in charge of Smith Spencer Real Estate in Charleston. “A young person buying a home is now totally pushed and it’s daunting.”
Turnkey homes are selling quickly at every price point, she added.
Homes where sellers want top-of-the-market prices for even what they consider minimal work are sitting, pushing the average days on market in June to 35 days, up 25 percent year over year, according to the June sales report.
Homebuyers want houses they don’t have to fix up, Smith said. Borrowing money to replace a roof or refurbish floors comes at a higher cost, too.