Real Estate Market Shows Slight Recovery

The Charleston area real estate market is showing some signs of recovery, albeit very gradual, according to a University of South Carolina research economist who spoke to a crowd of Realtors Tuesday.

But if Realtors are expecting a return to the boom times of the mid-2000s, they shouldn’t hold their breath.

“We’re not going back,” said Joseph Von Nessen, a USC economist. “This is in the past now. An economic recovery does not mean a return to that time period.”

Sales increased year-over-year in the first two quarters of 2011, and if that trend persists, the third quarter should yield similar growth.

What can be expected is slow growth in sales somewhere between .67 percent and 2.5 percent over the next few years, Von Nessen said.

Speaking to the Charleston Trident Association of Realtors, Von Nessen said when comparing the worst sales month in recent years (January 2009) to January 2010, home sales increased 3.9 percent. From January 2010 to January 2011, sales increased 13.8 percent.

Other economic factors in South Carolina suggest slow gains in employment, consumer and business confidence and steady home construction starts.

Typically summer months are strong for home sales. Roughly a quarter of all home sales occur in the third quarter, so if current trends progress, Realtors should see more year-over-year growth, Von Nessen predicted.

Still, home foreclosures are driving down prices, and foreclosures, because they often lag other economic indicators by a year or more, will continue to be high through this year.

Charleston's so-called second home market is skewing numbers and making average home prices appear deflated. Removing vacation homes from the equation, he said, puts Charleston’s foreclosure and home price situation more in line with the rest of the state.

The bottom line, Von Nessen said, is that the economy is improving, but gains are very slow.

“We will get out of this one house at a time ... the same way we got in," said Rob Woodul, president of the Association of Realtors.