Where is Our Local Real Estate Market Headed?
Category : Uncategorized
The greater Summerville area has been on a measurable upward swing for a while now but where is the market heading? While trying to time a market is like trying to catch a falling knife here are the pressures that may impact our market and an educated guess of what might actually happen.
Positive Pricing Pressures
Positive pressures that will push our prices higher up include:
Continual Job Growth – the unemployment rate in Dorchester County is sitting at around 4% and we see continued job growth with Volvo and Mercedes expanding as well as a number of smaller employers. Once of the common points employers mention in the area is the difficulty of finding enough qualified employees which leads into the next pressure:
The Influx of People to the Area – we can all see the number of people with various state license plates we are now sharing the road with and we keep getting more and more every day. This influx of people might make traffic more difficult but they do help improve our property prices since they feeding the demand. As long as we are growing faster than we are building we should continue to benefit on the resale side.
The General Upward Trend – trends are hard to break and unless there is a reason usually trends will continue, even if they slow down somewhat to catch their breath. We have a long standing upward trend for resale home in the greater Summerville area so we should continue to see positive price moves unless we get hit too hard from the negative pressures below.
Negative Pricing Pressures
Negative pressures will at the very least slow down the upward trend and could flat line prices or even send them downwards. We have a couple to worry about in our area.
Interest Rates Moving Up – rates are trending up and when they do you don’t so much lose buyers as those buyers can now buy less house so they can offer you less for your house so the average home price appreciation starts to slow down. A major upward swing in rates (which isn’t projected) actually can drive prices down for the same reason, buyers qualify for less money thus have to offer you less money for you home. While something to keep an eye on interest rate moves can be hard to predict since they often can be the result of reactionary (and as I am sure you would guess over reactionary) policy decisions so keep an eye on them but don’t try to predict too far out what they might do.
New Construction – drive around the greater Summerville area and you will see no shortage of new construction neighborhoods popping up. While these new homes will help meet our large demand they also are a negative price pressure on home around them because builders will offer incentives traditional sellers can’t and they will upsell the brand new home smell. In addition the sight of the construction can be a turn off to people driving through it to get to your home. So while we do need more homes to be build if your in an area near where new homes are being built remember your sales cycle will be affected slightly by the sight and sounds of the construction and usually much more by competing with new homes that are highly incentivized.
Affordability Factor – one thing that drives an upward pricing trend is new buyers being able to continually afford to pay the higher prices. When buyers no longer can do that we have an affordability problem where you have willing buyers who simply cannot qualify for the home they want to buy (usually this is a debt to income ratio problem). So once affordability shrinks your potential buyer pool you start to see longer sales cycles and reduced appreciation as the qualified buyers have more homes to choose from and more leverage in negotiations.
The General Economy – a strong housing market needs a strong economy to continue to grow beyond plateaus. In fact to maintain the status quo in the absence of sweeping government activity that ranges from artificially lowering interest rates to significantly reducing the standards to qualify for a home, we need at least a stable economy just to see steady sales and slight upward movement. The sheer size of the US economy and its countless tentacles make it hard to predict. We have seen a lot of positives lately if those continue we should expect the economy to help keep housing prices on the rise, but we are never more from one or two missteps to see a significant negative impact so it is kind of like a tightrope it’s all going well until it isn’t.
The Educated Guess
Ok so with around 20 years of real estate experience each where do we see the market going? Well we think 2018 will continue to trend up and end strong. However we think there are way too many variables to predict much beyond that. We have policy decisions, elections, a host of potential economic impacts, and to many other factors that will come due between now and the end of the year to really be able to guess with any certainty what 2019 might look like for our local real estate market. With that said if your sitting on appreciation and want to cash out and sell or access it through an equity line it would not be a bad time to do that now. If your a prospective buyer now might be a good time to take the leap if your not paying cash and would benefit from the current reduced lending qualifications. If your a cash buyer I would wait and see what happens and if your happy in your home with no desire to move and no need to tap into your equity then I would sit on the sidelines and enjoy the show.
If you have any questions about our local real estate market here in the greater Summerville area feel free to reach out we are always here to help.
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