Charleston SC Real Estate Blog

Generationeneration X May Boost
Sagging Real-Estate Market
By Kristen Gerencher, Wall Street Journal

The housing market may be in a slump, but the
industry's long-term trends look promising as
younger generations begin to buy and trade
up. That was the consensus among a group of
consultants, analysts and developers speaking
at the recent annual meeting of the Urban
Land Institute in Denver.
Rising affordability concerns in some home
and rental markets remain a challenge, but the
generations coming up behind the baby
boomers are giving home builders a run for
their money, experts said. With more
immigration and people living alone,
demographic shifts are pressing developers to
reconsider what's worked in the past.
Generation X, typically defined as those born
between 1965 and 1979, comprise a little
more than half of the market for newly
constructed homes, said James Chung,
president of Reach Advisors, a Boston-based
marketing strategy and research firm.
But that doesn't mean the homes that lured
baby boomers, born between 1946 and
1964, are meeting the needs of the 30-
somethings shopping now.
"Generation X is in the heart of their entry-
level home-buying years and are just now
entering their peak trade-up years," Chung
said. "They haven't yet stolen the thunder of
the boomers when it comes to trade-up homes.
It's a big shift coming up for home builders
and developers."

The question was asked:
"After your show…I talked to someone about tax sales that had an interesting question.
What about any unpaid mortgages, leans etc
I heard of a tax sell and EPA charged the new owner millions for a clean up
Thanks, Donald"

You have to quiet the title with an attorney which involves a "legal" process. But in a corectly structured tax sale purchase, a mortgage disappears. I would suggest the investment into John Beck's Tax Sale Program. http://www.johnbeck.net. It's about $50.

Also, be aware, that the 12% interest is calculated based on:
12% of the amount owed so long as the interest does not exceed the back taxes and penalties.

Re: $2500 in taxes due - you buy property for $35,000 with a value of $125,000. 12% of $35,000 is $4200. You would only earn $2500 if they bought the property back in the 11th month.

Taxes in SC are paid: 3% if redeemed in the first 3 months, 6% 3-6, 9% 6-9 and the 12% in the 9-12 month range.

Let me explain my 2004 Charleston Real Estate tax sale experience. I visited the courthouse in Charleston County along with about 350 other people. After lunch, the room was half full and I bought a condo on James Island and a lot in North Charleston, SC for a total of $41,000. The lot was bought back by the original owner (during the redemption period) and we made $948 interest that year (or about 9.5%). See above for why 9.5% not 12%.

The condo wasn't bought back. So, we proceeded to the attorney to quiet the title. Apparantly, the original owner had decided to put it up for sale sometime after I bought it. In doing so, his potential agent told him he didn't own it any longer. He called wanting me to sell it back for what I paid for it. Obviously, I said no. However, with a value of $210,000, and no mortgage, I knew he was willing to fight the battle. So, my choice was "spend two years to win and $30,000 more in legal fees (with a slight potential of actually losing the case and the fees), or sell it back to him for (I thought it was fair), double what I paid plus interest. He took the latter option after I offered, and I walked out with an 18 month profit on 32,000 invested with $68,500 (including interest). I put that down on an underpriced piece of property which I now have rented. No hassles, no lawsuits.

My thinking is that the tax sale is for someone with lots of cash and no idea what to do with it. It's fun, it takes a long time and the payout is great. I heard once you could double your cash every two-three years in tax sales. I believe it. But, I believe in the cash leverage side of smart real estate buying. I'm in more control that way. But, the tax sale may be just right for you. Also, read the "Rich Dad Poor Dad" Series by Robert Kiyosaki; he made millions in tax sales.

Look for weekly updates.

The comment below is why you need to interview agents to determine who is best suited to sell your house. My belief is that a daily listing update or price change for 30 days will get the 1000's of active buyers looking at our company's inventory. As buyers who have automated listings or prospect lists get those emails each day, it keeps our property in front of them. It also says "look at me, I'm motivated," for those sellers wanting to sell. But an agent from another company had this to say (Here's the email I sent my agents in response):

I want to share with you a comment forwarded by someone at another company today:
"An inaccuracy for your listing has been sent to you by a fellow agent. Please describe the inaccuracies or incomplete information below:a 5 dollar reduction is very disrespectful to our realtor community. if you want gimmicks, please go sell cars." IN THE WORDS OF A NON-WEICHERT AGENT.

MY EMAIL CONTINUED:
I partcularly like the part about "disrespectful to our realtor community." If you are taking my advice over the next 29 days to do a daily price reduction - I would assert that we aren't concerned about what our "realtor community" thinks of listings as price reductions are for serving our sellers best interest. When a price reduction or listing change occurs, it keeps our inventory more exposed to active buyers.
The quote above is yet another example of how "Weichert Works" but that's not the case for a few of our competitors. In a slower market, we must think outside of the box to sell our listings and serve our clients. Weichert Agents, don't let other agents "in the box thinking" effect your seller service.
Happy Selling and HAPPY THANKSGIVING!

WOW! Real Estate is picking back up again. But, before the media pastes the headline, let me say it first: "How long will it last?" Now, don't get your camping gear out for another all-nighter to buy a condo - those days are over. But, I'm seeing some very healthy signs. For instance, our Mount Pleasant South office (of Weichert, Realtors) is having its best month in nearly six months. One agent in my North office sold $1.8 million worth of real estate this weekend and my Charleston office is on track for it's monthly goal. Those stars haven't aligned since July when our market hit the "big brick wall." For the third month in a row, the unsold inventory numbers are stable (this number usually has to be stable or declining for six months to see a real change in days on market or price corrections - so we still have three more months of stability needed to make a huge impact on the "supply and demand" department).
What's happening, according to our research, is people are getting their home sold in VA, DC, NJ, NY and more. My wife's father has been trying to sell his Manhatten condo for months - and finally got a contract at an excellent price. Weichert's $74 billion in sales (while a little off earlier in the year) from 2005 will be hit again in this, 2006 (a tie of the record). I've seen three multiple offer situations (in casual passing) in the last 7 days. Believe it or not, we've only have three real hard market segments right now (well let's make that four): Mount Pleasant as a whole has a huge supply (but healthy buyer supply), $200,000-$400,000 price range has 2550 listings (way to many investors trying to flip - but they're starting to become landlords by the day), and condos/townhomes (there's a ton of those). The fourth, builders with too much speculative inventory - and those neighborhoods with a huge builder presence on the "for sale" market.

The good news is - that new supply has come to a screeching halt. What we see on the market, today, is likely not to balloon (in supply) for some time to come. Some builders have really pulled back their speculative building plan. The word on the street is that some major builders are pulling back from original building plans and tearing up contracts. This is great news for real estate owners and buyers, meaning that the cycle of undersupply (hitting us again) is mere months (18-36) away.

What's HOT now? North Charleston....Summerville under $200,000. Goose Creek under $200,000. And, as a side note, there were 70 units over $1,000,000, marketwide, to close in the last 60 days. I wouldn't say that's a "hot market" but I wouldn't call it "cold" either.

What's NOT HOT? A townhome/condo in Charleston County (bargains galore right now - notice I didn't say don't buy), A Centex home (over $35,000,000 in inventory sitting as of a week ago by Centex), a $300,000-$500,000 house in Mount Pleasant. And, while this is a great time to get a price you would have never dreamed one year ago, $500,000-1,000,000 is bargain city. There are some awesome homes in those price ranges! And, a lot of them are new.

Buy informed, but buy now. I predict a rate DECREASE in the first six months of 2007 which spells momentum for real estate sales and price increases.

Mount Pleasant Real Estate? Wow! It's been a real roller coaster ride. Let's see: There were investors camping at East Bridge. There were sell outs at Bay Club. Montclair went up in value almost 100 percent in two years. Dunes West went through the roof. And, good luck finding a house in the Old Village. 10 percent? NO. 20 percent? NO. 30 Percent? Not quite. The appreciation was ridiculous, and now we are paying for it. At the peak of our Mount Pleasant market, we had 450 properties for sale with nearly 400 closing each month (that's a 1.25 market penentration or "extreme sellers' market"). Now? We have 1837 listings with an average of 169 closings per month. We had 363 closings this time in 2000. In other words, our market months (or market absorption rate) is 10.8.

So what's going on in Mount Pleasant? It's a mess. Buyers are scared. Sellers are nervous and the market is bad - but for a very short time. If you extract Mount Pleasant out of the Charleston numbers, you have "Charleston" and then you have "MoUnT PlEaSaNt." Wow! Things have changed. Let's look at Centex for example (a company I don't like). They have 1600 sf homes in Summerville for 200,000 dollars. And a home in the East Cooper (Daniel Island/Mt. Pleasant area) area for $384,900 in Shell Point. This is the problem. The commute is a bit worth it.

We've predicted that Summerville will improve in 6 months or less. This means as Summerville prices accelerate, Mount Pleasant will grow substantially in 12-18 months. This means, NOW and the NEXT SIX MONTHS are great times to buy in Mouunt Pleasant.

I've seen this before. We have a 10.8 (or 11 months of inventory) absorption rate in Mount Pleasant Real Estate. This means you can get a deal. Expect to save 10-15 percent. Make an offer now; don't wait. Homes are selling, but the investors are gone - but they are giving you a bargain. They, along with SOME of the builders have made bad investment decisions. This is not bad for the LONG-TERM investor.

But, don't expect this to last. This has happened three times in the last decade. Mount Pleasant stablizes, get's a little rough and then explodes. YES! It's rough now. But, it will come back. It's a great market. It's an exciting area - and the Baby Boomers are moving here.

My prediction? (Dont' hold me to this) But, Mount Pleasant will average double the number of sales from June 1, 2007 - June 1, 2008 as we are seeing now (meaning north of 300 per month). Taking today's inventory in to account (which will clearly reduce greatly by then), that still equates to a seller's market.

David Lereah, NAR's chief economist, thinks we're at the bottom and this may be the shortest correction in nearly 20 years. Act accordingly.

View Mount Pleasant active inventory at http://www.househuntingonline.com/content/searchform.html?city=mount+pleasant&state=SC&radius=0&formname=citystate

Why so many homes? Why is the Summerville SC Real Estate market still booming? First, I'll show you the numbers:

2784 transactions have closed this year, compared to 2,904 this time last year. Yes, there's more inventory, but the buyers haven't slowed, they've actually increased. But, the numbers don't show that, right?

In my estimation, of the 2,904 transactions closed year to date in Summerville and surrounding Dorchester County in 2005, 25-30% of them were investors. Based on my same extrapolation, nearly 50%, of those investor transactions (436 sales), have evaporated. This means that more people are moving in and buying a home to actually reside in. That means, sales are up for the end-user (the real appreciation driver) nearly 8%.

As a real estate investor, or potential buyer, you have to look at the Summerville Real Estate market very closely and realize that buying now in the face of a heavy inventory is a sound decision. Many of those investors who aren't buying any longer, are not buying because they are trying to sell. There are 1374 properties for sale in the Summerville area, and some 300 more under contract. Based on the 245 closings (in Summerville) in the last 30 days, there's a 5.6 month supply of inventory. This number was floating in the 3 month-supply range this time a year ago. What this means is that the number of buyers have gone up and the number of listings have gone up even more. With a currently stabilized inventory and demand in the market, I project a gradual up-trend over 2007 for Summerville. With a 5.6 market absoption rate (currently), which is "NORMAL," Summerville real estate will begin to enter seller's market range again in six months at a 4 market absorption if current trends continue.

We'll be analyzing Charleston Real Estate and Mount Pleasant Real Estate in the coming days in this same fashion. You can visit http://www.househuntingonline.com to check the active inventories of listings in our local market.

It occured to me that my posting on the media might create the wrong impression. I must give Kudos to the Post and Courier's overall coverage on Charleston SC Real Estate. Frequently, they publish reports highlighting industrial parks coming to our area, local Broker comments highlighting a level of optimism on our market and fairly report the nation's overall outlook on real estate. The major networks (even more than the local news) are the one's reporting real estate in a negative fashion. It's the typical media "spin" that makes for higher ratings that is creating opportunity for real estate investors right now. You can research more about Charleston area real estate trends also at http://www.charlestonmarketreport.com, another site with mostly unbiased reporting of market trends. Brad, the Blogger of that report, has done a very good job of using real numbers to report our "real Charleston SC Real Estate market."

It's certainly good to see front page stories by The Post and Courier about $130 million dollar Towne Center Transactions, 10,000 job industrial parks, and a (now twice yearly), booming housing market report (one of which was published a couple Sunday's ago). Perhaps, our local media and real estate community should continue spreading our market-wide optimistic views to the World as Charleston SC Real Estate continues to shine in 2006 in the face of a very down-market. And, it looks like we're near the low-point of our down-trend.

The market? It may be a little painful right now...a lot of inventory, a lot of numbers, but one thing is for sure. If you've bought a house one year or more ago, you've probably had some appreciation. On average homes the South (measured by Third quarter) showed 10.7% appreciation year over year. Here is how some National Markets are fairing:

Highest average price:
San Francisco-Oakland-San Jose ($702,298)
Los Angeles-Riverside-Orange County ($555,391)
San Diego ($535,391)
New York-Northern New Jersey-Long Island ($472,042)
Sacramento-Yolo ($403,886)

Five least expensive metropolitan areas (measured by Zindex):
Oklahoma City ($98,323)
San Antonio ($100,108)
Memphis ($106,664)
Dayton-Springfield ($109,162)
Houston-Galveston-Brazoria ($126,821)

Metro areas with the highest Q3 appreciation rates year-over-year:
Jacksonville (19.1%)
Portland-Salem (17.9%)
Orlando (17.6%)
Richmond-Petersburg (16.2%)
Tampa-St. Petersburg-Clearwater (15.9%)

Metro areas with the most Q3 depreciation year-over-year:
Hartford (-3.7%)
Cincinnati-Hamilton (-3.3%)
San Diego (-1.6%)
Boston-Worcester-Lawrence-Lowell-Brockton (-1.5%)
Sacramento-Yolo (-1.1%)

Visitng the National Association of Realtors Annual Convention in New Orleans, a bad real estate market could be define by what hurricane Katrina did in 2005. Arthur Sterbcow offered these comments about his company and the year following:"If you go back and follow past disaster areas, we are following the exact same pattern. We’re like Northridge after the earthquake, Manhattan after 9/11. When you take that much housing stock off the market, it puts incredible pressure in other areas and forces people into the real estate market who normally wouldn’t have been there. Our sales are up 42 percent over this time last year. But the difference is, it’s not fun. In a normal market anywhere else in the country, it’s a pretty fun, exciting and positive experience when someone is selling their home. They’re excited to move into their new home and it’s their goal. This is like getting kicked out of your house and you didn’t want to go. Here, it’s people buying homes under the duress of human misery."

This just goes to show you that even in perhaps the worst real estate conditions and American City may have ever faced, the market comes back and the people make the market. There were 1000 more closings in the six months following Hurricane Katrina, than the six months prior. This is a prime example of how real estate is not a sound short-term investment. But, over a long-term (3-plus years), wealth is consistent of those who practice that strategy.

The effects of the media on real estate. How much impact is the media having on your home's value? The answer may be surprising: "A Lot!" With almost three times the number of homes closing in September of 2006 in the Charleston, Tri-County area verses 2000 and 2001, you'd think the bubble has burst if you listen to the mainstream media. The facts? Home values in the Tri-County are up almost 80% in every area since 2000-01 and sales are nearly tripled. Yes, they are down 12% from last year's record. But, the reality is that industry is moving to Charleston, Port Traffic is up, gas is down in price, retail is solid and consumer cofidence nationally is on the rise. There are 1821 homes for sale in Mount Pleasant as of this writing and 8610 Marketwide. However, there are 1,900 homes under contract. Is this bad? NO! People are buying. And, if you've ever thought of investing, now is the time. Call your agent (if you don't have an agent, call 744-6464). Ask them to run a search of homes between $150,000-250,000 in areas like James Island, Mount Pleasant and West Ashley. You want the following features: 3-4 bedrooms, 2-3 baths and no fewer than 1200 square feet (preferably with a garage). These make great rentals, short and long term. Now, here's where you're going to make some money and capitalize on the short-term bad press: Ask your agent to search the MLS for "must sell, pre-foreclosure, allowance, etc." Search for those words shows motivation. Then ask for a Price Trend Analysis on the property type (if you're using a Weichert agent) and offer 10% off the suggested price. Doing this on average on 2-5 properties should result in a deal YOU MAY NEVER FIND AGAIN. Buy now - or CRY LATER.