The Charleston housing market is certainly benefiting from a local economy that has gained worldwide attention. In fact, the city of Charleston has been well marketed for the better part of a decade, resulting in an influx of business, industry and people to the area. According to the most recent forecast, all economic indicators appear primed to move in a progressive direction through 2016, and beyond.
In spite of the expanding economy, Charleston real estate has not kept pace with the rate of appreciation exhibited by the rest of the country. In fact, year-over-year growth in home values didn’t manage to make a positive increase. Appreciation rates actually dropped 4 percent, whereas the national average increased 5.7 percent. In lieu of the negative swing, Charleston home values are still ahead of the national average. At $215,500; the median home price in Charleston is just over $7,000 more than the national average. However, with the rest of the country appreciating at a faster rate, don’t expect the city of Charleston to maintain a higher median home price for too long.
Even with the recent decrease in home values, the city has made a lot of progress that should prove instrumental to the success of Charleston real estate investors. That said; equity has made a significant comeback. Charleston real estate investors that purchased five years ago saw an average increase of $42,668 in equity. In fact, it was only recently that equity rates failed to increase year-over-year. The following highlights how much equity has been gained relative to the year of the home’s purchase:
- Homes purchased in the Charleston housing market one year ago have actually depreciated, on average, by $5,576. The national average increased $14,170 over the same period.
- Homes purchased in the Charleston housing market three years ago have appreciated, on average, by $25,888. The national average was $53,857 over the same period.
- Homes purchased in the Charleston housing market five years ago have appreciated, on average, by $42,668. The national average was $48,036 over the same period.
- Homes purchased in the Charleston housing market seven years ago have appreciated, on average, by $29,896. The national average was $13,870 over the same period.
- Homes purchased in the Charleston housing market nine years ago have appreciated, on average, by $42,283. The national average actually decreased $2,822 over the same period.
Charleston real estate investing really starts to take center stage when you consider the local economy. The Charleston Metro Chamber of Commerce Center for Business Research and the College of Charleston School of Business and Economics had encouraging words to say about the state of the economy:
“The forecast for 2015 shows a positive impact in every sector,” a report surmises. “With more than 25,000 new jobs forecast in the region in the next five years, both 2015 and 2016 are expected to see net gains of more than 5,000 jobs — the healthiest gain in several years.”
Surprisingly, in spite of the job sector’s lofty expectations, the unemployment rate increased by 0.2 percent over the course of a year. Even with the increase, Charleston’s unemployment rate sits at 5.4 percent, still under that of the national average. The most encouraging aspect of Charleston’s job sector is its growth rate. Industry is growing fast and should continue to support both supply and demand for the foreseeable future. The Charleston housing market is, therefore, in a position to gain a lot of ground in the coming years. Charleston real estate investing should take off soon with the direction things are heading.
According to RealtyTrac, the Charleston housing market has 2,539 homes for sale, and an additional 3,975 that recently sold. At the beginning of the year, however, sales were down 13 percent year-over-year. On the other hand, the number of properties that received a foreclosure dropped 31 percent from the previous month and is 52 percent lower than a year ago.
Charleston real estate investing should see an increase in foreclosure activity. At $140,00, distressed properties are approximately 44 percent cheaper than non-distressed homes. That is a $110,000 difference.
Of the foreclosures in the Charleston housing market, more than 83 percent are considered to be pre-foreclosure. That number is up nearly 8 percent from last year. Auction and bank-owned properties round out the rest of the market’s foreclosures, 10.7 percent and 6 percent respectively.
Charleston real estate is just about as affordable as it has ever been, further strengthening its position as one of the top real estate markets. In fact, Charleston homeowners allocate about 11 percent of their monthly income to mortgage payments, while the rest of the country averages more than 15 percent. That said; Charleston is more affordable than most markets across the country. Charleston real estate investors should be able to find deals that cater to their needs.
If you are interested in the Charleston housing market, Trulia has identified the most popular neighborhoods:
- West Ashley
- James Island
- West Ashley inside Mark Clark
- Harleston Village
- South of Broad
Of those that made the list, West Ashley and James Island are the most popular neighborhoods in the Charleston housing market, with average listing prices of $255,339 and $514,915 respectively.
While Charleston’s unemployment rate took a step back in the last year, just about every other economic and demographic indicator made improvements. The housing sector is expected to benefit immensely from the local economy and should see a healthy amount of supply and demand. It is expected that the following year will generate moderate increases in building permits, home sales and values. Expect future developments to cater to the Millennial generation, as the area is seeing an increase in a younger, tech savvy workforce. With everything Charleston has going for it, real estate investors are optimistic that the city will remain a hotbed of activity for years to come.
Charleston Housing Market Summary:
- Current Median Home Price: $215,500
- 1-Year Appreciation Rate: -4%
- Unemployment Rate: 5.4%
- 1-Year Job Growth Rate: 3.2%
- Population: 127,999
- Median Household Income: $51,771