–Drew Grossklaus, Sales Director/BIC East Cooper
At the beginning of 2022, the combination of record low inventory, high demand and low interest rates created a frenzy. It proved to be one of the biggest swings ever in Charleston real estate. The market was egregiously favorable to Sellers, and they were receiving multiple offers within just hours or a day after listing their homes. Buyers had to decide if they were willing to pay higher than market price and agree to the Seller’s terms. Of course, many did, and sales prices were at record high levels.
This trend rapidly turned with the change in the U.S. economy. During the last six months of the year interest rates doubled from the previous year, a war started in Ukraine and the U.S. economy would see inflation jump to a high of 9.1% for the year. While shifts in the real estate market historically happen, the amount of change in one year was truly remarkable. William Means’ sales for the year were down only 15% from the previous year, the lowest percent change compared to other top real estate companies in Charleston.
With 2022 being such a tumultuous year, and one that no one could have predicted given the miscellany of events, the idea of forecasting 2023 is daunting. To accurately predict the upcoming Charleston real estate market one must hope that world changing circumstances don’t occur. With this caveat, I believe that interest rates will stabilize between 5% and 6%. The previous uncertainty of how high interest rates could go made many Buyers pause their home purchasing decisions in 2022. Interest rates over the last few months have stayed relatively consistent, and while higher than in the past few years, this stability helps Buyers feel confident to move forward. While interest rates are affected by many factors, the prime interest rate consistently rising as a method to curb inflation is one of the most important. Many economists believe that inflation will decline and the increase in the prime interest rate will be reduced.
I also predict that while demand for homes in Charleston will remain high, inventory of homes on the market will continue to be historically low. The slowdown has increased the level of inventory; however, it is still not at the levels we saw before Covid. Many of those looking to buy a home in Charleston were unable to during the frenzy of 2021 and the first half of 2022. Subsequently, they continued to wait during the uncertainty of the last half of the year and are now back in the market. We have seen a shift to more market pricing and the process of purchasing has become more normalized including having an opportunity to see more available homes, schedule a second showing, write a contract with standard due diligence, financing, and appraisal contingencies, negotiate reasonable repairs, and close in a reasonable timeframe.
We often say that there really aren’t many cities that offer so much in a place to live as Charleston. Reviewing these factors and what makes the Lowcountry so special means that real estate will continue to thrive in Charleston in 2023. Year after year and in every evolving market, William Means continues to assist clients with their real estate needs at the highest level.