Home prices hit in most areas by downturn

By Katy Stech

The Post and Courier

Originally published 12:00 a.m., January 26, 2009
Updated 11:23 a.m., January 26, 2009

 

Brad Nettles
The Post and Courier

North Charleston neighborhoods located inside Interstate 526 saw the only sizeable gain in median sale price last year. Local real estate agents attributed the jump to the city’s revitalization efforts and more expensive newly built homes in the area.

What goes up, in most cases, must come down.

For the local housing industry, Newton’s law of physics caught up with the residential real estate market in 2008, pushing down the median price of Lowcountry homes to slightly more affordable levels.

Homes last year sold at prices that were about 3 percent lower than in 2007, marking the first year-over-year price decline in median sales price in recent memory.

The Charleston Trident Association of Realtors said the median sales price for residences sold through its Multiple Listing Service was $203,270, down from $209,742 in 2007.

Mark Kearns, a Mount Pleasant real estate appraiser, estimated that most homes are now worth 5 percent to 10 percent less than what they would have fetched when the market peaked roughly three years ago. He said the falling prices come after an extended period of too much supply, too few buyers, economic uncertainty and rising unemployment.

But true to the old industry mantra — “all real estate is local” — some locations are holding their value better than others. Luxury beachside homes have seen double-digit declines in value, while buyers lately have sought out deals in modestly priced neighborhoods, keeping prices in those areas relatively stable. Properties that are in prime spots and located a comfortable distance from new developments also have held their value better.

“Money’s like water. It seeks the lowest level,” said Fudgy Brabham, broker-in-charge of Mount Pleasant-based Harbourtowne Real Estate.

To varying degrees

Association data show that throughout 2008, no part of the Charleston region was immune from the real estate recession.

But the decline in prices between 2007 and 2008 varied among the 38 individual submarkets designated by the association. Prices slipped by sizable margins in West Ashley, Mount Pleasant, Summerville and Goose Creek, while they held steady in Hanahan, North Charleston, downtown Charleston and on Johns Island.

In some areas, the declines seemed to follow basic demand-based economics.

Neighborhoods along Clements Ferry Road near Daniel Island, for example, didn’t see a huge drop in sales volume last year, perhaps because prices quickly fell to match the new market realities. The price of the typical home there went from $259,000 to $218,950 — or 15 percent — over the course of 2008.

On James Island, prices declined a modest 4.6 percent to $248,000 last year. While 699 homes changed hands there in 2007, 444 sold in 2008.

On Daniel Island, home sale values actually edged up by 3 percent to a median of $445,200, which Kearns the appraiser chalked up to the fact that sellers there already had absorbed a deep hit. Between 2006 and 2007, the median price crumbled to $431,495 from $569,000.

Overall price declines in Mount Pleasant were in line with parts of Summerville and West Ashley on a percentage basis. But because homes, on average, cost more in the East Cooper suburbs, the overall drop seemed more dramatic in terms of dollars. The median price skidded about 7 percent, to $345,000 from $370,000, inside U.S. Highway 41, and about 5 percent to $314,165 from $300,00 beyond that point.

Bright spot

The one area that saw a significant double-digit uptick in its median home price last year was in North Charleston, inside U.S. Interstate 526, where prices jumped 32 percent to $156,250. That bump was likely tied to revitalization efforts, relatively modest prices and a centralized location, said Billy Simons of Trident Real Estate.

“You’re 15 minutes away from anything,” said Simons, who lives in Cameron Terrace. “People are realizing how convenient this location is.”

Simons stressed that the 32 percent increase doesn’t necessarily mean a home that was worth $100,000 in 2007 in that area could now fetch $132,000. The jump is more likely tied to the pricier, newly built homes that were sold in that part of the city, which hasn’t seen much new residential construction until recently.

Established neighborhoods that are near new housing developments were more likely to see home prices fall in 2008. One reason: The bigger builders have the advantage of being able to cut prices and offer incentives to move inventory, while individual sellers are often only able to lower their asking prices to attract buyers.

Sellers also are going up against a growing stock of foreclosed properties, which lenders are eager to unload.

Bill Hall, a Summerville-based agent with AgentOwned Realty, realized just how tough the competition had become while sifting through sales data last fall for a client. When looking at the 10 Dorchester County homes that sold in November for between $155,000 and $165,000, he found that six were newly built and that two had been in foreclosure.

“That’s who you have to compete against if you’re an individual homeowner,” Hall said.

The buyer’s market also extends to some of the area’s expensive island communities, where double-digit price declines were commonplace as the market retrenched last year. Folly Beach sale prices fell 19 percent, Sullivan’s Island saw a 26 percent fall and Isle of Palms, excluding Wild Dunes, recorded a 12 percent drop.

“They’re waiting for foreclosure pricing,” said Ron Davis, a real estate agent based on the Isle of Palms. Davis said he expects prices for luxury homes to come down even more off their peak values.

But at least one zone in the high end of the market held its ground: the area of downtown Charleston below the Crosstown. While sales volume in that part of the peninsula fell 36 percent, prices remained level at $570,000.

Ruthie Smythe, broker-in-charge of Lane & Smythe Real Estate, speculated that was partly because of continued interest in expensive and historic properties among well-heeled second-home buyers. Purchasers of primary homes also helped maintain the status quo.

“I think we have enough primary homebuyers,” Smythe said. “That covered us.”

Reach Katy Stech at 937-5549 or kstech@postandcourier.com.

Editor’s note: Due to incorrect information provided to The Post and Courier, earlier versions of this story contained incorrect sales figures for James Island for 2008.

Copyright © 1997 – 2008 the Evening Post Publishing Co.