2017 has become an incredible year so far for Charleston’s real estate market. Last month (April) was the biggest closing month in the history of our market, meaning that more homes closed than any previous month on record. It can be challenging for buyers to wrap their heads around our current market climate, especially if they’re relocating from a part of the country with a slower moving inventory.
Charleston has been a strong sellers’ market for the past few years, but 2017 has made records in terms of number of sales, median sale prices, and a decreasing supply of homes for sale. So why is the market right now as strong as it is? It’s basic supply and demand. In short, there are far more buyers than homes for sale in Charleston.
A perfect example is the inventory on James Island. This chart below shows active listings that are for sale on the MLS. The bottom line of the graph shows the absorption rate which is the number of months it would take to sell the current inventory of homes if no new listings were to come on the market. This absorption rate is based on the rate right now that listings are going under contract. An absorption rate under 6 months is considered a sellers’ market. Exactly 6 months is considered balanced (meaning that homes are coming onto to the market at the same speed that they’re selling). An absorption rate of more than 6 months is termed a buyers’ market. In the higher price ranges ($500K plus) for James Island, it’s a buyers’ market because there simply aren’t many buyers who can pay cash or qualify for a jumbo loan.
However, in all price brackets under $500K, it’s a sellers’ market. Pay attention to the first 5 price brackets going up to $349,999 because they all have only a 1 month supply of inventory. This is about as strong of a sellers’ market as you’ll find anywhere in the country. Many James Island homes under $350K are literally going under contract within just a few days of getting listed (often in multiple offer situations) because there is simply not enough supply to meet the demand from buyers.
Charleston’s Market is Getting More Inventory from Home Builders
In areas where there is land readily available for development, Charleston home builders are flocking to build new communities to make up for this lack of inventory. Suburbs such as Johns Island, the section of West Ashley past Interstate 526, Mt. Pleasant (past Hwy 41), Summerville, and the Goose Creek/Moncks Corner border sections are seeing enormous growth right now. For example, 70% of homes under contract on Johns Island right now are new construction.
Areas like James Island and Downtown Charleston have very few options for developable tracts of land because these areas are already about as developed as they can get. The trend with new construction is that these newer homes are located further out. For example, 10 years ago, the land where Carolina Park in Mount Pleasant currently sits seemed very far out from Downtown (which was the heart of Charleston). However, now Mount Pleasant has become an area to itself with all of the shops, restaurants, and entertainment you could want without having to leave the suburb. It’s only been recently that communities like Carolina Park, Tupelo, and Dunes West are so appealing because they don’t seem so far removed from daily life.
In West Ashley, the newer neighborhoods that are further out (and selling well) are Carolina Bay and Bolton’s Landing. Buyers absolutely love the homes being built there, and this land that is very close to bordering Rural West Ashley doesn’t seem as far removed now that West Ashley has become such a hot market with good stores and foodie spots.
Want More Charleston Real Estate Statistics?
Visit our Charleston Market Statistics page which is updated monthly to reflect the most recent listing inventory, sales price, and closed properties. If you’re considering selling your Charleston home and want to see MLS statistics that are specific to your community, contact us for a free market analysis!