–Drew Grossklaus, Sales Director/BIC East Cooper
Over the last year and a half, it is no secret that the real estate market across the country has set a record pace. Stranger yet is that this occurred amidst a global pandemic. While the housing market trended the opposite of what we would normally see during a world event, we are now encountering new factors are having a negative effect. The two greatest factors currently cooling off the white-hot housing market are the war in the Ukraine and inflation. They have both created many changes in our daily lives. By and large, we have seen that Charleston has not been immune to the national housing cool down.
Many of the questions I have received over the last month are regarding the retraction in the Charleston housing market. The first that I typically answer is “have we seen a slowdown?” The answer is yes, but more importantly to what extent. We have seen a slowdown, but it has not stopped homes from receiving contracts even though they are not being submitted in the same frenzied way as we have previously seen.
Just a few months ago, many homes were receiving multiple written offers the same day as they were listed. When that much demand occurs, buyers go to many different lengths to make their offer win out over others. We were consistently seeing sellers being offered more money than they were asking, inspections and appraisals being waived, cash offers with quick closings and allowing the sellers to remain in the home for an extended period. Often a “typical” buyer who was looking near the top of their price range and required financing that was dependent upon appraisal were missing out on multiple homes due to other offers. You can imagine when demand is that high and inventory that low, prices get inflated especially for highly desirable locations and homes. Right now, the slowdown we are seeing is not a total stop in contracts, but a more normalized amount of time on the market with one contract being presented and negotiated. We are also seeing price reductions of homes that started with higher list prices that would have been difficult to justify. In some ways, our housing market is normalizing.
While the future is not clear, there are still some assumptions that can be made moving forward. One of the biggest questions will be what happens to inflation over the next six months. If the federal rate hikes continue, will it have the response to help curve inflation? An added factor to this will be what happens with the war and how it not only effects the United States but the rest of the world. Since we are now so tied together globally, if inflation comes down and the war comes to an end there could be many positives for Charleston housing.
While the supply remains low, our demand is still high. In the real estate frenzy, many people lost out on offers and are still in the market to buy a home. While those buyers will deal with higher interest rates, they will also encounter more reasonable prices and less competition. Sellers will still be in a position that their home value, while possibly not as high as the last year and half, will still be higher in comparison to when they purchased.
Our agents continually monitor world and national events to constantly keep our clients as informed as possible. If you have questions or concerns about buying or selling a home in Charleston, our team is always here to help and guide you.
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