Charleston Market Update

Overall, the Charleston market, although it has seen an increase in available inventory and the average time it takes to sell a listing, remains relatively healthy. The median price has remained unchanged, but the level of activity still shows market resilience given all the industry turmoil at the national level and the sub-prime loan crisis.

Excepting for the time on market, Mt. Pleasant showed a stable (but soft) market. However, the decrease in inventory is an encouraging sign that may indicate bottoming out. If inventory continues to decrease in early Spring, Mt. Pleasant is poised to be one of the first sub-markets in the Charleston area to recover from the downturn (it was also one of the first submarkets to be hit). Some people believe that Mt Pleasant and Daniel Island are the "Californias" of the Charleston metro area (i.e. the trend-setters).

The Summerville market remains reasonably strong, although a little weaker. Problems with local traffic have led Dorchester County to enact a "new development freeze" for 6 months to let it catch up with infrastructure development.

The Goose Creek market continues to move forward, attracting new developments and new industry. However, the significant increase in available inventory may signal further price softening to come next year.

NEW SELLING STRATEGIES FOR THIS MARKET

With the dramatic increase in inventory in Mt Pleasant during the last 18 months, Sellers (and when I say "Sellers" I mean those people who ARE motivated to sell, not those who just want to "test" the market) must understand that they need to use different strategies to succeed.

No one can control the market. Sellers must accept that they can only control two things: Price and condition.

In a "Sellers' market" like we were living in 2005 (when we had very little available supply), Sellers could ignore any deferred maintenance issues and still receive multiple offers within days of listing the home. Sellers could price their home anywhere (within reason) and buyers would often agree to pay prices above their list price.

It is a "Buyers' market" now, and motivated Sellers must change their strategies if they wish to succeed:

1. Condition: Buyers are very picky and they have lots of homes to choose from! Sellers must take care of all deferred maintenance issues, replace tired-looking carpet, paint, landscape and stage their home to put "their best foot" forward from day one. Their home must be in perfect condition and present like a model home - otherwise it may take a long time to sell!

2. Price: Sellers cannot "test the market" any longer by pricing the home in the "middle of the pack". Nowadays it makes no sense to start higher and "be willing" to reduce the price over time gradually. This strategy will result in them "chasing the market from behind" unsuccessfully. They need to price their home aggressively to start with. Look at the competition, pick the 2-3 listings that are most similar to theirs, and price their home significantly below (3%-5%) from the beginning. They also need to make sure that their List Price is at or below recent comparable sales in the area. Otherwise they may get a nasty surprise when the Buyer's bank orders the appraisal, since these days, after the sub-prime meltdown, appraisers are very conservative!

In the end, Sellers who pick this strategy will sell first, and probably for a higher price (in a declining market, as time goes by, prices decrease). Sellers who decide not to choose an aggressive pricing strategy to start with end up getting caught in the "downward spiral" of a neighborhood, where all competitors start lowering their prices gradually, and everyone ends up in the same boat (worse off)!

CITY OF CHARLESTON RAISES PROPERTY TAXES

The Daily Journal reports:

Charleston raises property taxes

By Scott Miller , Staff Writer

Property tax bills in Charleston will rise about 4.5% next fall now that the City Council has approved the first tax increase since 1999.

Critics at Tuesday’s council meeting, when the increase was passed, said the city was taxing low-income property owners out of town. But Mayor Joseph P. Riley Jr. said additional money is needed to fund improvements to the fire department.

The fiscal 2008 budget includes $2.6 million in new taxes and $2.4 million in fire department upgrades, a direct response to the June 18 Sofa Super Store blaze that killed nine firefighters.

The budget creates positions for 18 additional firefighters, six new dispatchers, four training officers, four inspection employees, new vehicles and equipment, among other upgrades. The $143.9 million budget, a 9% increase from last year, raises the property tax rate by 3.3 mills, or 4.5%, to 77.1 mills. A mill is equivalent to one dollar for every $1,000 of assessed property value.

The owner of a home assessed at $175,000—a figure Riley used when discussing the tax increase—will pay an additional $23 annually. The owner of commercial property valued at $500,000 in Charleston will pay $99 more. Commercial property owners will pay more because their property is taxed at 6% of market value rather than at 4%.

No one spoke during a public hearing on the budget two weeks ago, but a handful of residents denounced the tax increase Tuesday. One was a Charleston real estate broker who led the successful statewide effort to replace property tax revenue with a sales tax increase to fund schools.

“Even now, with the relief we’ve gotten, taxes are still too high,” said Emerson Read, chairman of nohometax.org. “This is going to affect mostly low- and middle-income (residents), first-time home buyers and elderly retired people.”

Resident Jack Simmons agreed, saying the city was taxing people out of town.

“One of our basic freedoms is the ability to own a home,” he told the council.

Riley called the tax increase “a last resort” and again noted that the city has cut taxes 12 times since 1990.

Council members Henry Fishburne and Larry Shirley voted against the tax increase. Council members Deborah Morinelli, James Lewis Jr., Robert Mitchell, Jimmy Gallant, Wendell Gilliard, Louis Waring, Yvonne Evans, Paul Tinkler, Anne Francis Bleeker and Kathleen Wilson voted in favor.

Fishburne said the city could have trimmed fat in the budget, possibly by lowering the 2.5% salary increases given to city employees. He had previously argued that City Council does not receive enough time to evaluate the mayor’s budget proposals. Riley introduced his proposed budget about a month ago.

CHARLESTON MARKET IMPROVES SLIGHTLY

Here is a press release from the Charleston Trident Association of Realtors that has not made headlines (yet?)

Median Price Rises, Inventory Declines

Date: 11/12/2007

Charleston, S.C. (November 12, 2007) –– The median sales price of a home in the Charleston area rose for the second month in a row to $208,705, reports the Charleston Trident Association of REALTORS® (CTAR). The median price for October 2007 is 0.8 percent above that of October 2006 ($206,950), and the year-to-date median home sales price ($210,000) rose 1.8 percent over 2006 ($206,230).

The number of sales in the lowcountry declined by 22.7 percent in October 2007 compared to October of last year (792 to 1,024). Year-to-date sales for 2007 (10,902 through October) are down by 21.2 percent over the same period in 2006 (13,837). The average time it took to sell a home increased to 3 months (96 days).

“We’ve seen record numbers of homes put on the market this year which lends itself to slightly reduced sale prices in some areas and a longer selling period,” said CTAR President David Kent. “The flip side is, of course, that buyers should be really excited about the selection they have to choose from. And with interest rates and prices so competitive, this really is a great time to buy a home!"

Market Statistics

	October 2006	October 2007	Y-T-D 2006	Y-T-D 2007
Units sold	1024	792	13837	10902
Avg. Days-on-Market	77	96	65	94
Median Price	$206,950	$208,705	206,230	210,000

Inventory
Inventory declined for the fifth month in a row, resting at 10,398 homes available for purchase through the Multiple Listing Service (MLS) as of November 10. There are 1,941 condos for sale, the majority of which (366) fall in the $140,000 - $199,999 price range. Single-family homes account for 8,802 listings. The greatest number (1,789) of single family homes currently for sale are priced in the $140,000 - $199,999 range. As of today there are 1,184 properties under contract.

2007 Current Inventory (On the 10th)
June	10869
July	10865
August	10806
September	10717
October	10594

Berkeley, Charleston, and Dorchester Counties
In Berkeley County, 211 homes were sold in October 2007 with a median sales price of $176,500 and 91 days-on-market average. Of the 388 homes sold in Charleston County, the median sales price was $264,500. The average days-on-market for these homes was 114. In Dorchester County, 160 homes were sold at a median price of $178,000 with an average days-on-market of 85.

Median Sales Price Comparison
	Oct 2006	Oct 2007	Y-T-D 2006	Y-T-D 2007
Berkeley County	$169,470	$176,500	$171,753	$179,500
Charleston County	$241,000	$264,500	$239,900	$249,058
Dorchester County	$192,687	$178,000	$184,000	$193,606

HOW TO FSBO

For Sale by Owner

Some people try to sell their home on their own to try to save on commissions. This can get tricky if you don't have the experience, in fact, most For-Sale-By-Owner (FSBO) homes end up listed with a licensed Realtor, a person who knows the market and does this every day.

According to the National Association of Realtors although FSBO may work for some people, on average FSBO homes get a lower net return than those homes sold through the MLS.

Before you consider selling your house on your own, be sure to ask yourself if you are going to have the time, the knowledge and the resources needed to make it a worthwhile experience.

If you still decide to give it a try, here are a few tips that may help you:

The Home

Disclosures - A Seller’s Property Disclosure form is required by SC law. If your home was built prior to 1978, you will also need a Lead-Based Paint Disclosure.

Termites - A Termite inspection (called the CL-100 Certificate) that shows that your home has no termite infestation or damage due to termites or moisture (i.e. most lenders will insist that the CL-100 be clear before closing). If active termites exist, or damage is identified, it would be smart to have a licensed contractor repair all the damage, and a specialized pest control firm treat the home and issue a “termite bond” to guarantee no future infestation.

Repairs - fix all “deferred maintenance” items (all those items on your “to do” list that you never got around to doing). Including plumbing leaks, broken outlets, loose hose bibs, etc. If you don’t do it, there is a good chance that a) Most buyers will not be interested in your home; or b) Any interested buyer will ask for those repairs once they do their inspections.

Spruce It Up – With so many homes on the market, buyers are getting very picky! Only those homes that shine will be looked at! That includes interior and exterior paint, carpets, decoration, staging etc. If you really want to sell, get professional advice to stage your home. Staged homes sell quicker! Remember, this is now a “model home” not your living quarters anymore. No more dirty dishes in the sink, dirty clothes on the floor or dog poop in the yard!

Valuables & Personal Items – Hide all valuable items like jewelry and personal items that would be hard to replace. Lock all weapons away. Store most items that would be “too personal” in nature to prevent a buyer from picturing him/herself as the owner of the home.

The Market

You need to understand where the market is in your particular city, community and neighborhood before you price your home. This means getting access to up-to-date research about:

• Recent comparable sales in the last 6 months (the absorption or demand)
• The Competition (available inventory of comparable homes, their list prices and condition, their history on the market) (NOTE: For Belle Hall, you can look at MyBelleHall.com)
• The list of homes that were on the market but did not sell (expired and withdrawn)
• Interest rates & other economic indicators for your area that may tell a story about where the market is going.

Tip: You can do research on the Internet, starting with the county tax records to view the sales, Realtor’s websites to view the MLS listings, and driving around the neighborhood.

How Are You Going to Sell Your Home?

If you are really willing to put in the time and effort to sell your home, you can be smart about it: 80% of the potential buyers are researching their future purchases on the Internet. And more than 40% get the MLS listings through their Realtor. So you would be wise to focus on these two segments to maximize your efforts and get “bang for the buck”:

• Send information about your home to all active Realtors in the area (make sure you offer full commission to the Buyer’s Agent who brings you a buyer – remember that Realtors operate on commission only!
• Take advantage of popular times for Open Houses in your neighborhood and open your home at the same time – make sure you have adequate signage.
• Always keep up to date flyers in the flyer box on your yard. ALWAYS have a phone number where someone answers the questions a buyer may have. You do not want to lose opportunities by not being available.
• Place your house on a website and make sure it is easily accessible for everyone, including Realtors
• Be as flexible as you can with showing times. The more flexible you are, the better chances you have.
• Place pets in the garage, in cages or in the backyard. Some people do not like dogs/cats, even if they seem part of your family to you!

Tip: You need to be careful about letting unknown people into your home. When people come with a Realtor, at least the Realtor is a known entity (licensed, registered, with background check, etc.). Make sure you get their business card and ask which office they work for. You can also ask to see their Realtor license if you are not sure of their background. It is advisable to have someone with you at all times, and carry your cell phone with a police number on quick dial just in case. Always follow people, never go first. Try to keep multiple people parties together to avoid theft. Have escape plans ready in your mind. Alert neighbors when you are showing your home – so that they keep an eye out for you.

How Solid is The Buyer?

After the sub-prime loan meltdown, there are a lot of “wishful thinking” buyers around for whom it may be almost impossible to get a loan. Ask questions, just as a listing Realtor would:

• Are they buying the home cash – or do they need a loan? If they are buying cash – where do they have the money? Is it readily available?
• If they need a loan, are they pre-qualified, or pre-approved for a loan? What percentage of the value do they need to borrow?
• Do they need to sell their home elsewhere before they buy yours? If their purchase must be contingent on the sale of their own home, is the home on the market now? How long has it been on the market? What’s the market like where they are selling? Would the buyers consider a contract with a kick-out clause to eliminate this contingency if you find another buyer who does not need it?

Negotiations, and Contract-to-Closing

• Are you prepared to negotiate the terms of the contract?
• Do you know what the legal responsibilities of the seller are in SC?
• Who will write the contract? What form will you use? Which attorney will close the agreement? Who is going to pay for the closing costs? When are the Buyers doing their inspections?

Tip: It is best to think about these things before you start negotiating. Detemine what your ultimate “bottom line” must be, and have a friendly attorney ready to give you legal advice if needed.

NOTE: If you are planning to offer your home as a FSBO, I can place your information for free on my website http://www.mybellehall.com/. Please contact me on (843) 864-3777.

RETIREMENT COMMUNITY PLANNED NEXT TO BELLE HALL

By Molly Parker , Staff Writer, Daily Journal

A Georgia developer is asking the town of Mount Pleasant for permission to build a new retirement community off Seacoast Parkway that would include 25 duplexes and a 200,000-square-foot complex with apartments.

Church Design & Construction, based in Snellville, Ga., is poised to purchase a parcel totaling nearly 46 acres west of the Belle Hall subdivision and parallel to Interstate 526.

The development would occupy about 33 acres of what is now woodlands with the continuing-care retirement community building standing as the focal point.The structure would include 120 independent-living apartments and up to 60 assisted-living and/or skilled-nursing beds, according to documents filed with the town’s planning department.

The planning commission will consider the proposal at its next meeting at 5 p.m. on Wednesday, Dec. 19. The developer could not be reached for comment.

The 25 duplex cottages planned for the community “are situated to instill a sense of neighborhood at the entrance to the project and also provide a residential edge adjacent to the existing Grassy Creek subdivision,” the document states.

The Grassy Creek subdivision would be a next-door neighbor to the development and separated by a 25-foot buffer. The remaining 13 acres of the site under the plan would be dedicated to office and retail uses associated with the retirement community.

Internet Marketing vs. Print Advertising

The National Association of Realtors (NAR) performs an annual national survey of home buyers to identify trends. The 2007 survey from NAR indicates that most buyers are going online to search for their next home, and that online advertising produces over 9 times the results of newspaper advertising.

The Internet continues to be the up-and-coming medium to advertise homes for sale. Here are some of the results of the 2007 survey, including the changes from last year’s survey:

WHERE BUYERS FIRST LEARNED ABOUT THE HOME THEY PURCHASED:

• Real Estate Agent— Still number one, but down to 34% from 36%
• Internet— Up to 29% from 24%, BIGGEST MOVER!!!
• Yard Sign— Down to 14% from 15%, continues to decline
• Friend or Relative— Steady at 8%
• Home Builder— Steady at 8%
• Print newspaper— Down to 3% from 5%, biggest drop
• Directly from Seller— Steady at 3%
• Home Book or Magazine— Steady at 1%

However, many Sellers are still demanding that listing agents advertise their home in newspapers and magazines. This is probably not the best use for their agent's time or marketing dollars!

When you choose your next listing agent, make sure that he/she is e-savvy and e-connected, and that your home is advertised extensively online to reach the maximum number of potential buyers – this will make a difference!

THINGS YOU NEVER KNEW YOUR CELL PHONE COULD DO

There are a few things that can be done in times of grave emergencies. Your mobile phone can actually be a life saver or an emergency tool for survival. Among the things that you can do with it:

FIRST - Emergency

SECOND - Locked Car remote keyless access.

THIRD - Access Hidden Battery Power.

FOURTH - Disable your phone if STOLEN

FIFTH - Free directory Service

For the full story, click HERE.

THE MORTGAGE MARKET THIS WEEK

The Week in Review:

It was a relatively quiet week for mortgage rates last week. We continue to hear news of various financial institutions taking large write offs relating to the subprime market but the “Wow” of it seems to have died off. The market understands it and has adjusted expectations accordingly. This morning, however, Goldman Sacks downgraded Citigroup to a “Sell” from a “Hold” position saying that there may be another $ 4 Billion to write off related to subprime losses. This news is hurting the stock market and bonds are benefiting! It’s a crazy market.

The big news last week did not move the market but came from the Fed Chairman, Ben Bernanke. Mr. Bernanke announced that the Fed would be doubling its communications effort as it relates to the economy and the Feds forecasts. This is viewed positively and is a significant departure from Alan Greenspan’s approach where the market was often left scratching its head after his encrypted communications. So, we are hoping that more is better in this case.

The Week Ahead:

This is a short trading week given Turkey Day on Thursday. The market will be closed on Thursday and open only half days on Wednesday and Friday. So, the most interesting thing happening this week will be news on Housing Starts and Building Permits which comes out on Tuesday.

I anticipate a slow week and recommend locking rates as they continue to be very strong!

Have a great Thanksgiving!

Rates:

Conforming ($417,000 or less)

• 30yr Fixed 5.875%
• 5yr ARM 5.500%
• 7yr ARM 5.750%

Jumbo (Greater than $417,000)

• 30yr Fixed 6.500%
• 5yr ARM 5.625%
• 7yr ARM 6.125%

Justin Whitney, Home Loan Consultant
C- 843-270-8366
justin_whitney@countrywide.com
www.loansbyjustin.com

LATEST MARKET INDICATORS (NOV 07)

Market Indicators for Single Family Homes (SFD)

(To view the whole article, including the supporting graphs, please click HERE)

We are still selling a considerable number of homes in the Charleston area: Sales activity is back to 2004 levels, which was not a bad year!. So why is it that all the news that you read about real estate are bad these days? My opinion is two-fold:

a) Good or encouraging news don't sell! Newspapers and media want big headlines that make the news. So they choose whether to look at the glass half-full or half-empty, according to their view of which headling will do better for their sales. Right now they are looking at a half-empty glass...

b) It is true that we have a very high level of inventory. But we are comparing today's levels with the 3 "hottest" years for real estate in recent times (04-06), where inventory was extremely low! The trends are encouraging, we are seeing a lot fewer speculative homes being built, and the inventory seems to be coming down. The real test will come in the first quarter of next year!

How does this compare with Mt. Pleasant and Belle Hall? Inventory in Mt. Pleasant did increase more dramatically than in the metro area as a whole, since it trebled from the 2004-05 level.
But the current trend is to stabilize and decrease. For the whole of Mt Pleasant, we can see sales activity regressing to 2003 levels (a little slower than the metro average), but still
selling a substantial number of homes per month.

Belle Hall sales statistics show that this market appears to be more resilient than Mt. Pleasant as a whole, but because the sample size is smaller, we can see more fluctuation, which makes it harder to identify patterns. Inventory levels in Belle Hall, although high compared to 2004-05 levels, have shown the strongest trend to decrease, compares to the whole of Mt. Pleasant and the rest of Charleston. This is certainly good news for Belle Hall owners looking to sell in 2008!

NEW HOME BUILDERS OFFERING BIG INCENTIVES

These days my "in-box" fills up every day with "Special Offers" from builders and developers giving away freebies, increased commissions and buyer incentives. Some are offering to pay closing costs, upgrades, extra rooms, etc. Others are thinking a little outside the box: One recently offered a 2-year membership to Freedom Boat Club to whomever bought one of their new townhomes in Johns Island!

Although these incentives may work to lure home buyers, I always recommend to my clients that they view them with some skepticism. It is also important to find out:

• Have the developers increased their prices recently, just before "giving away" the discounts? (i.e. is it a "perceived" sale and not a real one)
• Have they been successful selling the subdivision, or are there any other issues that are important to know? (i.e. are there any widespread construction quality problems, problems with utilities or pending assessments on the HOA, etc.)
• Is the developer is a publicly traded company (these companies are driven by quarterly results and are able to effect larger discounts to get inventory off their books just in time for reporting to shareholders)
• Are the offers "gimmicks" or items of real value?
• At the nominal contract price, is it likely that the home will appraise given recent comparable sales activity?
• Is it a "spec" home - is it already completed or about to be completed? Builders are more negotiable on "spec" homes than on new construction, given they need to reduce their carrying costs.
  

Don't get me wrong, there are REAL BARGAINS out there (just recently a 2,600 sq. ft. brand new home in Summerville was being offered for $72 per square foot - you probably could not BUILD it for that price, without even counting the cost of the land!

Many national and local builders want to see their inventory homes off their books before the end of the year!

Happy home buying!!!

BUYERS OVERWHELMED WITH CHOICES

With around 10,000 active listings in the Charleston Metro Area, buyers can get a little overwhelmed when looking at available homes, unless they have a "plan of attack" that helps them narrow those choices.

Have you tried to buy a home lately? Your Realtor will show you many times the number of choices that you would have had two years ago. This proliferation makes it difficult to decide! Unless you have a "photographic" memory, you will probably get somewhat confused by the time you look at the 15th home! I have seen many buyers get "brain freeze" when it comes to making a decision, just because the amount of information becomes overwhelming...

When I work with a buyer client, I prefer to implement a "drill down" approach to the search, designed to narrow choices from the general to the specific. Therefore we first work on identifying preferred areas/neighborhoods, then subsections and maybe streets! This then makes searching for a particular home much simpler!

Once we are ready to look for a specific home in a neighborhood, here's what I recommend to my buyer clients (I tell them this may not work for everyone - it works for people like me, who like numbers):

1. Take abundant notes at every showing. Most people will forget details by the time they look at their 10th home! If you take notes and identify salient characteristics of each home, this will help you later.
2. Design a "Criteria Grid" where you write and prioritize your buying criteria, assigning relative importance to each criterion.
3. Rate every home you view against your buying criteria. This will produce an "absolute grade" for each home which may help you decide between homes that are "tied" in your mind...

In addition:

• Check your criteria grid grading against your emotional and "gut feel";
• Ask your Realtor to help you choose by playing "devil's advocate"
• Don't act until it feels absolutely right! These days you will not need to rush into making a decision (unless the price is very right!)

WHERE IS THE HOUSING MARKET GOING?

This is a question we get asked many times a day. My sellers want to know if they are going to lose more equity. Buyers want to wait until the market bottoms. Lenders and appraisers are caught between making money and taking risks.

My answer: Contrary to what the media says (daily), we are still selling homes at a reasonably good rate in the Charleston metro area. Sales volumes are now at the 2003 level (which was not a bad year!). Yes, there is downward pressure on prices (but please remember that prices went up 20%-30% per year in certain markets from 2003-2005, and yet the only ones complaining were first home buyers who could not get into the market). And yes, there is a large inventory that is slowing down any recovery.

The toughest competition for existing home sales are now new home builders. Because most of these are national, publicly traded companies looking to improve their quarterly balance sheets, they are discounting their prices aggressively to effect sales. And they do it mostly in the shape of incentives, so their deals are not always evident from looking at the recorded sales prices (closing costs, free upgrades, decorating allowances - there is even one developer offering free two-year membership to the Freedom Boat Club if you purchase one of their townhomes!)

This means that if you are unlucky enough to have bought in the last two years, and you live in a community where the original developer/builder is still offering your floor plan as new construction, there is very little chance that you can sell your home without losing money.

Big developers can take the hit! and they do, when they sell at a loss they take the write-off and their shareholders will be the ones paying for this short-term mentality in the long run. Having said this, I think that it is about the right time to start looking at buying select stocks in corporate building companies, after these writeoffs, when the shares are lower. I believe they will bounce back sharply. One simple reason: Demand and supply. More people, limited land.

That's why I thing that the Charleston market will rebound quicker than the average town and I am very optimistic for next year - despite the doldrums, we have lots of factors in our favor: The retiring baby-boomers (just starting), increasing employment, growing medical and financial services and a strong military presence.