I think we can all agree that “home” means more to us now than it ever has before. Some of us are working from home remotely, while others have kids who are home schooling virtually. In any case, we’ve all been forced to spend more time inside our houses, and they’ve become so much more important to us.
What does this mean for our Charleston real estate market? Buyer showing activity was high-paced in September, which is consistent with how it’s been ever since May. Except for when the school year started, there hasn’t been any significant downturn in buyer activity throughout 2020. The reason I mention this is that it’s a huge predictor of our market. When we see a lot of buyer activity, it means we’ll see a lot of home sales coming along. There was certainly a lot of COVID-related pent-up demand from March, April, and May that’s been let loose this part of the year, which is incredible to see because it means the market is healthy.
Now that homes have grown in importance and demand is high, the challenge lies with inventory. Year over year, inventory dropped 38% in September, yet buyers continue to be motivated by tremendously low interest rates and a strong desire for the certainty of ownership in an uncertain world. They’re making offers for homes the same day they’re listed, which is increasing home sales and decreasing inventory. As this scenario continues across the country, we’ll see upward pressure on home prices—they should rise anywhere from 5% to 8%.
Another point of interest is the fact that the list-to-sold price ratio is 98.5%, which means sellers are just 1.5% off from getting their full list price. However, there’s a huge discrepancy between the active price per square foot ($208) and the closed price per square foot ($156). This doesn’t mean people are negotiating from $208 all the way down to $156; it just means there are a lot of overpriced listings.
The properties that are actually selling are the ones that are priced correctly (i.e., closer to the $156 mark). Many sellers think they can list their home for any price they want, but the truth is that you still need to price a property correctly to sell it for top dollar.
I’ve mentioned this before, but many experts forecast home prices to rise between 3% and 4% in the next 12 months in markets where supply is low and demand is high. Some believe they may appreciate as high as 8%. As we move into 2021, I believe we’ll see adjustments in our local market. Interest rates will stay low over the next 12 months, but we’ll have to keep track of demand to understand how many homes are being listed and sold and how that’s affecting supply. Remember, interest rates are driving people to buy or invest in real estate, so if interest rates change, that will change the entire dynamic of the market.
These are the developments to keep an eye on throughout the remainder of 2020 and into early 2021. If you’re thinking of putting your home on the market, give my team and me a call today and we’ll get to work on finding the perfect buyer for you. If you’re thinking of buying, reach out to us as well, and we’ll find a home to suit your needs. We look forward to hearing from you.