Charleston Real Estate- Home sales rebound: Generation Y aiding growth in Lowcountry housing
Mark Kaspar has always wanted to own a house.But the 25-year-old graduate of The Citadel put plans on hold until recently after landing a job at Life Cycle Engineering in North Charleston."Now I got a job in my career and I'm at the point where I am done throwing money down that black hole with renting," Kaspar said. "I'm ready to move on with my life. I grew up with a yard and that is something I want of my own."
Kaspar is among what some real estate agents throughout the Lowcountry say are a burgeoning group of "Generation Y" consumers ready to buy homes amid other pent-up demand sources. They're enticed by lower home prices and attractive mortgage rates that are low compared to years ago, industry officials have said.
Numerous factors are driving demand in Charleston Real Estate, including first-time buyers and sales to investors scooping up properties to convert into rental units. At the same time, the job market is improving and the Lowcountry remains a desirable place to outsiders, thanks in part to positive publicity such as Charleston being named the world's No. 1 tourist destination by readers of Conde Nast travel magazine.
The optimism has some local banks poised for growing mortgage activity and the home-buying market shifting control to sellers, some who may be more inclined now to raise asking prices.
"There are still a lot of 'For Sale' signs in many neighborhoods. The difference now is it's 'For Sale' signs during a more optimistic time, and that's got to help the market," said Frank Hefner, director of the College of Charleston's Office of Economic Analysis.
The Charleston Trident Association of Realtors' September housing report showed what has been encouraging residential real estate trends since the fall of 2011.
Sales have been rising, inventories have been falling and the uptick in median sales price suggests that broader real estate values are starting to rise.
The Charleston area sold 7,879 homes through September, a roughly 11 percent increase compared to the same period a year ago.
The median sale price also has risen to $190,000, up from $179,850 a year ago, according to the association.
Consumers also are inking deals at a faster pace, especially in Charleston County, where the average number of days a property sits on the market before being sold slid to 87 in September, one of the shortest spans since before the recession.
The association releases its October report on Tuesday.
The number of homes on the market usually dwindles in the fall and winter months. This year is no exception since home sales inventory for Charleston, Berkeley and Dorchester counties dropped below the 6,000 benchmark, with 5,878 homes listed as actively for sale with the Multiple Listing Service as of September.
Based on historical trends, that's enough homes to last seven months if no other properties came on the market. Experts say a six-month supply marks an ideal balance between sellers and buyers.
The faster sales pace and dwindling home inventory is shifting the advantage to sellers in some areas.
Parts of Mount Pleasant, Summerville and West Ashley have chiseled home inventory levels to five months or less, according to CharlestonRealEstateStats.com.
"Sellers are going to soon realize they are back in control and they're already starting to change their negotiating patterns," said Doug Holmes, an agent with Carolina One Real Estate who analyzes sales market statistics for the website. "They're seeing multiple offers for properties. They're getting a little less negotiable."
The Charleston area has averaged more than 200 homes under contract each week so far this year, according to Holmes' data.
The expected end-of-year doldrums hasn't necessarily started since data showed 212 homes under contract for the week of Oct. 28, up 5 percent from the same week last year. That's also the exact number of contracts for the same week in 2006, before the last recession began.
Holmes' research showed a large chunk of the Charleston real estate contracts continue to be nontraditional sales such as foreclosures and short-sales, which is good news for banks looking to shed bad debts but lamented by homeowners hoping to see their property values rise.
Wayne Hall, president and CEO of First Federal of Charleston, said the rebounding real estate market extends to homes and other properties the bank has seized from delinquent borrowers.
He addressed the issue late last month while discussing a decline the lender's portfolio of foreclosures with stock analysts who follow the company.
"Part of this success is we're starting to see more demand for these properties," Hall said.
Until recently, First Federal typically would attract one bid for each property it put up for sale. "We're now starting to see multiple buyers, and pricing has been better," Hall said.
The lower inventory and uptick in home prices is now pushing demand for new home construction, ending a long, dry spell bought on by the last downturn.
"Higher prices in Charleston SC real estate are giving home builders more leeway in raising prices, incentivizing them to ramp up on housing starts," said Patrick Newport, an economist with IHS Global Insight. "Higher prices are also boosting home sales by nudging fence sitters, who up to now have been waiting for home prices to bottom out before jumping into the ring."
The trend is starting to play out in the Lowcountry, where a surge in new home projects are back in the pipeline, said Will Jenkinson, broker-in-charge for Carolina One New Homes.
"The new homes market has shifted. Builders are looking out beyond next year," he said. "They are making plans. ... It has gone from surviving to thriving and looking at 2014."
He said the key difference now is that builders are focusing on smaller-scale projects.
Jenkinson said he noticed more buying activity among younger working adults in recent months.
"We're seeing those folks are feeling more stable with their jobs and they're ready to make that investment and that's very tempting with these interest rates," said Jenkinson, who is helping Kaspar find his first home. "It's affordable to buy when you look at the average sale price and what they're paying for rent."
Also, industry experts predict more demand from young adults who are now living with their parents or sharing apartments with roommates to become buyers.
As for Kaspar, the Texas native decided to stay in the Charleston area after graduating from The Citadel earlier this year.
He's set his budget at $250,000 and below, hoping to snag a home relatively close to the peninsula, maybe on James Island or in Mount Pleasant. He's been looking at short sales, foreclosures and for-sale properties. The location is "very key," Kaspar said.
"I do have a social life, and I don't want to be so far away," he said.
Realtors have said stringent mortgage requirements triggered by the last financial crisis have thwarted Charleston real estate sales in the past.
The increased sales activity in the Lowcountry has meant good news for local financial institutions, including Bank of South Carolina, which reported late last year that mortgage growth, both refinance and new home purchases, aided in a strong third quarter.
"Although loan demand remains flat, the contribution from our mortgage department has been outstanding," CEO Fleetwood S. Hassell said in a written statement with the earnings report released last month.
Hassell added in a later interview that while the market is largely driven by refinancing, there's been a major boost in new home purchases, which accounted for 40 percent of mortgage activity in October.
Other banks such as Harbor National Bank also are witnessing an uptick in mortgages. Demand is "up fivefold compared to last year," said Chuck Stuart, the Charleston-based bank's senior vice president of mortgage banking.
"With Charleston getting more accolades, we are seeing an uptick in second homes and investment properties," Stuart said.
The elevated activity has triggered optimism for the coming year.
"Rates will stay low and we plan to double production from this year to next year," he said. "We're hiring additional people and adding infrastructure."
BY TYRONE RICHARDSON
2012- The Post and Courier
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