This year has been great for some but tough for most. I am fortunate to have been able to guide many of my clients to a profitable purchase or timely sale and set them up for success in Real Estate as our market begins to recover.  Thank you to all of you that afforded me the opportunity to be your Realtor.
 
Many have asked for my prediction of next year's market so that they may begin to map out future decisions based on today's housing facts. Please note that this is VERY difficult to do accurately, requires an understanding of today's numbers and knowledge of the outcomes of prior historical events. One of the biggest obstacles in creating a meaningful forecast such as this is the lack of solid historical data to draw parallels from as our nation hasn't seen this type of market before - only bits and pieces match previous market events.
 
I read a report from CNBC that essentially mimicked a report I wrote a few months ago after our Team attended the REOMAC Foreclosure Conference in Florida. After speaking with Rick Sharga, VP of RealtyTrac (a leading data source for Foreclosure information), he told us to "prepare for a big year of Foreclosure sales in Charleston in 2011." Please refer to this report, written by Diana Olick, here.
 
So let's down to the nitty gritty. Here are my predictions for the following areas and price ranges (data compared with sales figures at the same time in 2009 - Data Source CTARMLS):
 
Charleston County:
 
0-250,000:
 
Sold - Days on Market:  INCREASED 7%
Months Inventory: DECREASED 11.2%
%Sold/List Price: DECREASED 1%
Average Active Inventory - DECREASED 2%
 
Expected Appreciation/Depreciation:  MINIMAL TO 2-5% DECREASE
 
250,000 - 500,000
 
Sold - Days on Market: DECREASED 4%
Months Inventory: DECREASED 32%
%Sold/List Price: INCREASED 1%
Average Active Inventory: DECREASED 11.1%
 
Expected Appreciation/Depreciation: 2-5% DECREASE
 
500,000 - 750,000
 
Sold - Days on Market: INCREASED 3%
Months Inventory: DECREASED 50%
%Sold/List Price: INCREASED 1.15%
Average Active Inventory: DECREASED 15.7%
 
Expected Appreciation/Depreciation: 5-10% DECREASE
 
750,000 - 1,000,000
 
Sold - Days on Market: INCREASED 17.1%
Months Inventory: DECREASED 51%
%Sold/List Price: INCREASED 1%
Average Active Inventory: DECREASED 12%
 
Expected Appreciation/Depreciation: 5-10% DECREASE
 
1,000,000+
 
Sold - Days on Market: INCREASED 8%
Months Inventory: DECREASED 35%
%Sold/List Price: INCREASED 3%
Average Active Inventory: DECREASED 9%
 
Expected Appreciation/Depreciation: 10%+ DECREASE
 
Dorchester County:
 
0-250,000 -
 
Sold - Days on Market: DECREASED 8%
Months Inventory: INCREASED 6%
%Sold/List Price: INCREASED 1%
Average Active Inventory: DECREASED 3%
 
Expected Appreciation/Depreciation: 2-5% DECREASE
 
250,000 - 500,000
 
Sold - Days on Market: INCREASED.18.5%
Months Inventory: DECREASED 12.6%
%Sold/List Price: DECREASED .7%
Average Active Inventory: DECREASED 15.5%
 
Expected Appreciation/Depreciation: 2-5% DECREASE
 
500,000 - 1,000,000
 
Sold - Days on Market: INCREASED 28.5%
Months Inventory: INCREASED 6.1%
%Sold/List Price: DECREASED 11.8%
Average Active Inventory: DECREASED 1.1%
 
Expected Appreciation/Depreciation: 10+% DECREASE
 
1,000,000+
 
THIS MARKET IS VIRTUALLY NON-EXISTENT.  1 SALE IN 2009 AND 1 SOLD IN 2010 ABOVE $1,000,000.
 
Berkeley County
 
0-250,000 -
 
Sold - Days on Market: DECREASED 5.5%
Months Inventory: DECREASED .8%
%Sold/List Price: DECREASED .2%
Average Active Inventory: INCREASED .1%
 
Expected Appreciation/Depreciation: MINIMAL
 
250,000 - 500,000
 
Sold - Days on Market: DECREASED 11%
Months Inventory: DECREASED 57%
%Sold/List Price: UNCHANGED
Average Active Inventory: DECREASED 12.4%
 
Expected Appreciation/Depreciation: DECREASE 2-5%
 
500,000 - 1,000,000:
 
Sold - Days on Market: INCREASED 8.2%
Months Inventory: DECREASED 53.2%
%Sold/List Price: INCREASED .6%
Average Active Inventory: DECREASED 8.5%
 
Expected Appreciation/Depreciation: 7-10% DECREASE
 
1,000,000+
 
Sold - Days on Market: INCREASED 2.5%
Months Inventory: INCREASED 6.5%
%Sold/List Price: DECREASED 14.4%
Average Active Inventory: DECREASED 2%
 
Expected Appreciation/Depreciation: 10%+ DECREASE

I am concerned with the following issues:
 
Interest Rates. It doesn't make sense (from a recovery standpoint) that rates begin to rise. I just don't think our national housing market can stomach it.  Remember, for every point interest rates rise Buyers can afford about 10% less. If rates get to the 6 to 10% (severe bearish outlook) we are screwed.
 
Foreclosures. I have harped on this all year. Banks have already bought these properties back and are in direct competition with you, the Home Owner. If your neighborhood hasn't been negatively impacted by Foreclosures I'd say it's more a matter of when - not if. If you can or want to sell now and have equity to put into one of these deals you can benefit from this Foreclosure crisis rather than be hurt by it.
 
If you're already under water (owe more than your home is worth) and hopes of having your equity come back is far gone I would seriously consider a Short Sale. Banks have figured out that, on average, Banks walk away with 10% more money in their pocket by doing a Short Sale than by Foreclosing on a Home Owner. Plan on a significant amount of effort going toward streamlining the Short Sale process as well as minimizing the deficit they hold Sellers accountable for (if at all).
 
Luxury Market. I'd say we are about half way through the negatives associated with the luxury market since we began to decline in value. Specifically, several Home Owners bought more home than they could afford using either a combination of new money made as a direct result of making money in Real Estate investments and/or extremely loose mortgage underwriting and requirements. Over $1,000,000 in Charleston County there is still a 6 YEAR supply of homes, which decreased over 50% this year from last. Berkeley County's Months of Inventory over $750,000 is scary - over 100 months.
 
At the end of the day, the recovery in our market will begin to take shape when confidence returns to the marketplace.  We are already seeing some areas recover as investors and new purchasers benefit from the lower prices owners and banks have placed on housing.  Once the inventory is absorbed (the amount of homes purchased exceeds the amount of homes that are listed for sale for several months) we will begin to see prices level off.
 
If you have any questions or comments about this report please don't hesitate to call or email me directly.
 
Enjoy the rest of 2010!

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