For the most part, hurricane Florence passed by our area with very little storm impact. A few strong wind gusts and high surf caused minimal destruction to property and beaches. After the storm,
Charleston Area Home Market In 2017
Wow, Christmas went by so fast and we are now in 2017. Needless to say, and regardless of your political affiliations, 2016 was a year to remember. Yet, the New Year is here and most folks I talk to are optimistic and excited about the possibilities and hope in 2017.
For many, purchasing a new home is the primary goal this year. A new home fulfills a dream, an achievement and a milestone event in their lives. It is the basis for starting or growing a family, saving money over renting and building equity in an asset. On the other hand, purchasing a new home could be part of a retirement or simplified life plan or maybe just a necessity for a location change. Whatever the motivation may be for buyers or sellers, home sales are expected to continue to be robust in 2017.
So, if I am a buyer or seller or both, what should I expect in the market. Well, first let me say I do not have a crystal ball or a divine revelation. Of course, I do have an opinion. From a cost of money perspective, most of my consults are expecting interest rates to continue to rise. Not a crazy increase, more in the .5 to 1.0% increase with an end of year rate of 5-5.25% for a well qualified 30 year conventional loan. As a result, what is the expected financial impact? The difference in a 30 year conventional loan between 4.25% and 5.25% on a loan of $100,000 would be around $60 per month.
Now, let’s look at the price of homes. If you have taken an economics course or followed financial markets, you probably know the law of supply and demand. In simple terms, if the number of buyers remains the same and the inventory of homes available to be purchased decreases, the price of homes will increase. During the recession, the opposite was true as the number of homes on the market swelled and the people willing to buy substantially decreased causing a large drop in home prices. While there are exceptions at certain higher price points and locations, it appears the market data for the historical average home price supports a steady demand and a substantial drop in inventory in Dorchester, Berkeley and Charleston counties.
In summary, what does this mean to home buyer and sellers in 2017? I suggest the competition for homes will increase causing the price of homes to go higher. Good for the seller and not so good for the buyer. Then, a buyer financing the new purchase will have a higher payment than last year due to the higher home price and interest rate increase. It should be noted that there is nothing new with rising home prices, and in some cases rising interest rates from one year to the next. Rather, it is the extent of the increases on an individual or family budget that has to be reconciled.
Unless something horrific happens to our economy, the Charleston area will continue to be a sought out destination for jobs, recreation, retirement and vacations. Thus, moving in to that dream or retirement home will probably cost more in the future. How much more? Again, did I mention that this blog is just my opinion?
Hank Johnson, a graduate of The Citadel, has a proven track record as a CFO, businessman, Entrepreneur and real estate investor. Hank has been active and successful in the Charleston community for ove....