Will Charleston Home Prices Continue to Increase?

Posted By Shawn Pillion @ Oct 23rd 2018 12:33pm In: Buyer Info

 2018 Charleston Home Prices

There are many unsubstantiated theories about what is happening with Charleston home prices. From those who are worried that prices are falling (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase. It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In the Charleston housing market, anything less than 5.5 months will cause home values to appreciate and anything greater than seven months will cause prices to depreciate (see chart below).

Charleston Housing supply 2018

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Charleston Months of Housing Inventory

Bottom Line
If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

Charleston SC MLS months of inventory

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