Current Market Conditions
- High demand and low inventory defined the Daniel Island Real Estate market in 2023.
- Inventory of Homes for Sale was held low by owners’ desire to hold their current low interest mortgages instead of trading them for new mortgages with higher rates (i.e. the “Golden Handcuffs”)
- Interest rates remain above 5% at 6.22%
- While many of our buyer clients are not as concerned with interest rates, it continues to stop sellers from leaving their home with a lower interest rate and has priced some buyers out of the market.
- 40% of Sales in this market are all-cash!
Average Sales Price on Daniel Island for 2023 ended year at $2M which represents a +8.7% increase from 2022. Daniel Island Park saw Average Prices increase to $2.7M and Smythe Park area at $1.5M.
Average Sales price increases continue to be driven by low inventory. New Listings were down -4.1%.
Percentage of Original List Price Received for year was 95.2% - down from 98.3% in 2022. This shows that listings may have stretched prices further than buyers would go. This is also shown by Days On Market which have increased +138.5% from prior year.
Stark contrast between growth of DI Park and other areas (especially MLS wide) once again highlights that key-driver of sales price is “lifestyle.” Also shows strength of luxury price point sales in the Charleston market.
Homes for Sale down significantly from normal historic levels but have increased from beginning of 2023 by +36%. Still 1.5 months of inventory on DI is 50% of where it should normally be.
Homes For Sale levels on DI Park are close to 2014 Levels. Prior to 2013 DI Park was not opened up to significant building – so these levels are close to historic lows for last 10 years.
Total closed sales for 2023 down -6.8% from 2022 which showed an acceleration of sales in Q4 2023 as total sales were down close to -15% at that time.
Experts are forecasting that closed sales will expand in 2024 by +18% as pent-up demand to buy and sell adds more inventory into the market and lower interest rates make mortgages more affordable.
2024 What to Watch for Next
- Many experts believe for areas with continued high-demand (like Charleston) a shift of interest rates down 1.5% in 2024 ( to 5.5% or lower) could create another boom in real estate.
- Freddie Mac is already projecting interest rates of 5.75% in 2024. 5% in 2025.
- Many believe that mortgage-led buyers, priced out of the market by high interest rates, will jump back into the market driving up prices again. For example, Barbara Corcoran recently commented on potential price increases stating, “I wouldn’t be surprised if they go up by as much as 10 percent to 15 percent when that happens.”
- In Washington, D.C. there is talk of a bipartisan bill that would increase the Real Estate Cap Gains tax relief for a primary residence lived in 2 out of the last 5 years to the amounts of $500,000 for single and $1,000,000 for married couples. This would bring a lot of inventory into the market in 2024.
- The National Association of Realtors is projecting a 18% increase in transactions in 2024.
So how do we reconcile these two factors? What does this mean for the rest of 2024?
Key Take-Aways
- If you are considering selling now is still a GREAT time to do so!! Factors are in play that may impact the extremely low housing inventory levels we have seen in 2023 – so you could have more competition later in 2024!
- Experts predict a +2.2% increase in Charleston property values in 2024. Any drops in interest rates are earliest in May. Factor this into your listing price – but remember to speak with your agent about the micro-market in your area of Charleston. Looking forward to July 31, 2024 a more substantial 6.8% increase is anticipated.
- Luxury Home sales are still driven by Cash buyers – as 40% of these purchases are all cash deals. Waiting on mortgage rates to drop will not help much here.
- Buyers should not be deterred to buy in this market if they find the perfect home – prices could be higher in 2024 as there will be more competition and there is always the opportunity to refinance or take an adjustable rate mortgage if you believe mortgage rates will drop.
- Our buyer and seller strategies are design to “win” in the current. For sellers – we push lifestyle branding and demographic targeting for our homes to appeal to “affluent relocators.” For our buyers we have cutting edge market research to help make the best financial decisions and off-market opportunities to consider.
