The housing market in Charleston, like markets across the country, has seen incredible growth in 2020 and 2021 in terms of home value. If you’re considering buying a home in the Charleston area, you might be wondering what’s going on with the real estate market and what you can expect to see next. Is this a good time to buy? Should you wait? Here are my predictions going into 2022 and my philosophy on how to approach the Charleston housing market. Spoiler: Think long term!
In the short term, we’re seeing homes increase in value at an unusually high rate. While the average increase in value of a home in this area is typically around 5% a year (which is great!), that number was an incredible 16% in 2020! It’s been an exceptional and unusual time to buy and to sell a home here.
Driving that increase are two main factors: More people moving to the area and a lack of inventory.
Charleston is (Still) Growing
Charleston has grown at a rate of three times the national average in the last decade, driving a surge in its GDP of 75%, and it doesn’t look like that growth will stop soon. It’s not just the Charleston area that’s experiencing growth, but the rest of the South, as well. The entire region is projected to grow by 58.1% from 2020-2040.
Before the pandemic, people were already moving to the area for the great quality of life, rich history, and warm weather, to name just a few attractions. When the pandemic began, people figured that since they could work from home anyway, it might as well be in a beautiful city with warm weather and lower property taxes. Many people who are new to the area have left large Northeastern urban centers, and they continue to be drawn here.
Lack of Inventory
Inventory has been low for a while, and it’s persisted throughout 2021. In October, inventory was at 1.8 months of supply, which is less than 20% of what it should be to bring the supply back into balance with demand.
A few factors work together to create the severe lack of inventory. One is the growth in population, discussed above. More people are moving in than are moving out, meaning there are just fewer homes for sale.
Another is a drop in new construction. New construction has decreased nationwide thanks to material production delays and shortages. As for Charleston in particular, due to its geography and existing level of development, builders are running out of locations to build new housing developments. We’re simply not seeing the number of new construction homes for sale that we saw in previous years, and this impacts inventory levels.
What’s Next: A Fall Spike or a Spring Spike?
The market has slowed and hit a plateau as of this fall. Many Realtors® predicted a spike in inventory in the fall, but I don’t think this will happen. I think that people who might have otherwise put their homes on the market won’t right now because of the havoc created by the covid pandemic, which hasn’t gone away.
Instead, spring 2022 is when I forecast inventory levels will rise. A moving cycle which is tied to the school calendar will lead to an increase in buying demand which in turn will push sellers into the market. A more moderate pace of sales (compared to 2020, that is) will take the pressure off of buyers to snap up properties immediately.
It will still be a seller’s market, but it won’t be as chaotic as 2020 or 2021.
The Takeaway: Think Long Term
Don’t be overly concerned with short-term trends. Think long term.
The long-term prospects of the Charleston real estate market are strong and are going to stay that way. If you’ve considered buying a house in the Charleston area, it’s still a good investment, despite the unusually high home values right now. However, you might want to wait until the spring when I predict there will be more homes on the market, and you’ll be in a better position as a buyer.
Work with Me
It’s never too early to start the process of looking for a home. If you’re thinking of buying (or selling) in the Charleston area, give me a call. My name is Kenton Selvey and I’m a Realtor® with Keller Williams who helps people find their dream home in Charleston, Mount Pleasant, Daniel Island, West Ashley, James Island, and beyond. Call me at 843-806-7222 or email me here. I look forward to hearing from you.