Many people ask me if we have reached the bottom of the market in Charleston, SC on a daily basis and I am sure many realtors get the same question as well.
Most realtors in the area are not sure what to say or do when this question arises. For me, it is really, really simple...I have a proven method. Flawless. I break out my crystal ball, gaze deep into the center, focus completely on the mystical sphere and...and.... Nothing. Nope. Nada. No Answers From My Crystal Ball.
So I Revert To My Plan B. The old 8 ball that I bought in the 1980's. Surely shaking the 8 ball will be able to tell me if we have reached the bottom of the market in Charleston, SC. So I go into my garage, turn on my lava lamp, (which happens to be located right beneath my life sized poster of Asia-the band) and grab the eight ball. I shake it feverishly. I have no time to spare. Buyers want to know. Sellers want to know. Everyone is looking for the answer to the simple question... Have we reached the bottom of the market in Charleston, SC?
The answers become very clear through the dark green anti-freeze like liquid of the magic 8 ball. In fact, every time I shake it I get the right answer:
-Yes - we are at at the bottom
-Yes - Certain price ranges are at the bottom
-Not Sure - but outlook looks promising
-Interest Rates are at the bottom - buy now!
The last answer about the interest rate was intriguing. In fact, the 8 ball got me thinking... interest rates are a factor that many people do not consider when determining if we have hit the bottom of the real estate market in Charleston, SC. In fact, the rates are tricky little variables. No rhyme or reason to their fluctuation. One thing we do know for sure, I have never seen them in the 4's until now. In fact, there were times in my career when below 7 was good. Water cooler talk revealed to me older agents that still cite when the rates in the 1980's were at 18 percent. Think about being a realtor then. No email, no fax machines, no lockboxes, no computers. They had to schlep around a big MLS book, drive around to pick up keys for every house they wanted to see and they had to contend with rates as high as 18 percent. Sheesh!!
So you are a buyer and you are asking... Are we at the bottom of the real estate market in Charleston, SC? Let me throw out a curve ball.... Who cares? Will values go down next month?... It does not matter. Unless you plan to buy and then sell in a few months, where we are in the peak or dip of the market is not as important as many people think. Sellers are the only ones who should be worrying if we are at the bottom because every day their home sits on the market in a declining economy...That's right, you guessed it.. their value goes down. Sellers should be even more hyper focused on interest rates than buyers. The reason why you might ask... As rates creep up, a seller's home becomes less affordable to buyers that might want to buy it. This is another way a home loses value.
As a buyer, it is a double edged sword. You could be saying, "well.. I am going to wait until the values go down a bit more". Sure, you could do that.. but which edge of the sword would you prefer to deal with? Buying a home for a possible $10,000 less now by waiting, or having to settle on a higher rate and pay a much higher monthly payment for years, and years and years...possibly paying an additional 50-$150,000 for your home over time as a result.
Take a look at this simple scenario and keep in mind my intention was not to wake up today and do math, but bear with me because it makes sense:
A home sells for $300,000 and a client puts down 10%. The principal and interest payment looks like this:
- Payment with a 4.5% rate: $1368
- Payment with a 5% rate: $1449
- Payment with a 6% rate: $1618
- Payment with a 7% rate: $1796
Now I could take this approach several steps further and provide charts, graphs, illustrations, charcoal drawings... multitudes of multi media showing why...but I will just show you one graph. In fact, the information here is not from me. This prediction on housing becoming less affordable this year comes from economists. Really smart, financial geniuses:
So if your close friends or family are waiting to buy a home when we reach the bottom of the real estate market in Charleston, SC... being a good friend you might advise them otherwise. Rates are beginning to go up, and a shift in thinking about the bottom of the real estate market in Charleston, SC (and a progressive move forward to buy and sell now) will leave your close friends and family on top 10 years from now.
For more serious topics, topics to really sink your teeth into, you might visit some of my other posts like Living in the Nortbridge Area of West Ashley, Violin Instructors in Charleston, Taco Boy in Downtown Charleston, Growing Up On A Farm In Charleston, or better yet... Pivotal Fitness Gym in West Ashley.
Realtor-Blogger-Ponderer about how people perceive the bottom of the real estate market in Charleston, SC.
Nat Wallen is a Realtor in Charleston SC specializing in residential property sales. He has been licensed since 1995 and is the top listing agent with Carolina One Real Estate. Carolina One Real Estate is the largest company in the Charleston SC area of 700 plus agents. NOTE: Nat Wallen never solicits consumers interacting with his blog unless requested. YOUR comments are encouraged and welcomed. Thanks!