Carolina Coastal Review

IOP Beach Renourishment Project Ready to Start

The Post and Courier reported today that the Isle of Palms received a permit from the U.S. Army Corps of Engineers last week, the final step before beginning the beach renourishment project. Sand from 3 miles offshore should begin coming ashore in the next couple of weeks.  Read the full story.

Real Estate Internet Warning

I received a note from Mollie Wasserman, a broker with Keller-Williams in Boston over the weekend.  Seems she penned the “Real Estate Internet Warning” that I have been using on our website for the past several years and wanted to be sure she got credit for doing so. I was happy to oblige and updated my site.

It made me think about the warning and why I thought it was important to put it up in the first place.  In case you haven’t tuned into it, the warning states:

REAL ESTATE INTERNET WARNING^© - Despite advertising claims to the contrary, the Internet is NOT an experienced Real Estate Professional.  It cannot consult, counsel, advise, have knowledge of local laws and market conditions, make judgments, negotiate, "own" the result, or most importantly,  understand your individual goals and needs and care about you as a Client. Furthermore, the above data offered at this website is intended to assist homebuyers and sellers, but data by itself can be very misleading. To obtain an accurate interpretation of any information you're receiving online, please contact us.

We all get conditioned into thinking that if it’s found on the Internet it must be right and that in the data itself, the answers are found. While data and information online have value, such content is not a substitute for local experience, market knowledge, or negotiating skills. I think this is truer today than ever, as the Internet grows and more services (ie, data) comes online. An excellent example is Zillow.com.  If you haven’t checked it out, I encourage you to.  It’s a site that professes to be able to tell you what your house is worth just by entering your address. It’s a wrong assumption & perhaps a very costly one.

There is a difference between data and knowledge. zillow.com may be able to provide you with data about recent sales in your neighborhood, but it can’t have the expertise to know what the value is of your specific property.  Expecting so may cost you tens of thousands of dollars.

Every real estate transaction is unique and the needs of every buyer/seller is different. While it's easy to computerize book orders and stock market transactions, real estate sales don't fit in a mold — one house is not exactly like another, nor are any two buyers, two sellers or two transactions.

A real example is a recent sale of a condo on the island that sold for perhaps $250,000 less than what it was worth. The circumstances were unique; an estate where the children inherited a property, with no interest in the property itself but some interest in the cash it represented. I assume they were happy with the amount of cash they received and I expect the buyer was happy with the great deal he got.  Did this transaction make the surrounding properties worth less or should it be considered for what it was, a sale by a very motivated seller for a specific reason?  If a consumer were to act on this information without proper context, they could very well reach incorrect conclusions and achieve undesirable results.

It is important for us all to remember that while the internet can provide information, it can never interpret it. The bottom line: A Realtor's® true value is not in helping you find a home, or getting you numbers regarding comparable sales, though we certainly have the tools to do so. Our TRUE value is in using our experience and expertise to get you the best value once you find your home or the most money in your pocket when it comes time to sell.

My thanks to Mollie Wasserman for her insight and excellent warning message. I’ll continue to reflect it at my website and hope that that if you can use my experience and expertise, you will give me a call. It may be worth thousands of dollars!

Moving toward a 'Normal Market'

The real estate market has slowed at Wild Dunes. Is the slow market a bad thing? It may be for some of the folks currently looking to sell their property, but a change of course was needed.

The market was 'on fire' the past couple of years. Around May of this year, buyers threw water the fire and reduced it to just smoldering.

This chart tells the story. It reflects average selling prices of one-bedroom condo's at Wild Dunes, but is typical for most of the areas properties.  We had a fairly healthy increase in real estate values over the years.  Property was appreciating in the neighborhood of 15% per year, providing an excellent return.

That all changed as we neared the end of 2004.  Investors started gobbling up real estate and supplies became very low.  With little inventory to choose from, prices began to rise sharply.  In the past two years, we've seen price increases in the 30-38% range providing a fantastic return for those who bought into the market.  Appreciation at that level could not be sustained.

Fast forward to today - I would characterize our current situation as "returning to a more 'normal' market" and would expect to once again see appreciation in the 15% per year range.  The challenge for many (not all) sellers, is that they remain priced out front of the market, asking too much for their property in light of this correction.  As prices come back in line with where they should be, we will see buyers once again move into the market. 

Have any questions or comments?  We welcome you to post them to this site or if I can assist in any way, please don't hesitate to contact me.

Is the Tide Turning?

Better economic news came on November 27 from the National Association of Realtors, which reported that existing home sales unexpectedly rose by 0.5% to a seasonally adjusted rate of 6.24 million units in October, the first increase since February.

Rates on 30-year mortgages dipped to their lowest level since January, Freddie Mac reported November 30. Economists attributed the third straight weekly decline in rates to easing inflation pressures as the economy slows.

By The Numbers - Investment Property Sales Soar in 2005

Vacation and investment-home sales both set records last year. According to an annual report conducted by the National Association of Realtors® (NAR), the combined total of second-home sales accounted for four out of 10 residential transactions last year.

Based on two surveys, the report shows that 27.7 percent of all homes purchased in 2005 were investment homes and another 12.2 percent were vacation homes. All together, there were 3.34 million second-home sales in 2005, up 16 percent from an upwardly revised total of 2.88 million in 2004. The market share of second homes rose from 36 percent of transactions in 2004 to 39.9 percent in 2005. Read More.

A Look Back Over The Past Ten Years

It's been a profitable ten years for those invested in real estate on the islands.  I thought you would be interest to see a few examples of what properties were selling for ten years ago versus today (numbers reflect median selling price).

In 1996:

• Port O Call villas were selling at a price of $166,000 - today they are $680,000
• If you purchased a cottage at Sandpiper, Sandcrab or Twin Oaks, you paid just under $165,000. Those same properties sold just over $700,000 in recent times.
• A 3-bedroom unit at Mariners Walk would set you back almost $292,000 and today the last sales were $990,000.
• At Ocean Club, a 3rd floor condo in the number one building had a price tag of $425,000. The last sale on that floor closed at $1.865M

This graph to the left reflects the average prices across all properties at Wild Dunes since 1995. (Click on the graph for a larger view).

Over the years, I have heard a number of comments from people who have told me that "it just can't go any higher". I remember thinking that myself (briefly) as Port O Call's were approaching the half million dollar mark and then quickly went well beyond that number. While the market is taking a pause for the moment, I expect we will see prices continue to climb. We will need to see a few price adjustments to listings that are priced beyond the market and properties will begin to move once buyers become comfortable again.  It's unlikely the pace will see the price jumps like we saw over the last couple of years. I think more reasonable increase in value is anticipated - it's it back to the neighborhood of 15% a year, that's a fantastic growth number for a leveraged purchase.  It's a simple truth that the Lord isn't gracing us with any more beach property, but the number of people continues to grow.  It is a simple calculation of supply and demand.   

It's also true that most everything has gone up in price over the last decade. You may be interested to know just how much the dollar that was used to buy the real estate in 1996 is now worth.  According to the CPI inflation calculator, it would now take $1.29 to buy what $1.00 did ten years ago.  If you were fortunate to store your dollars in real estate, I think you more than covered the 29 cent spread.  May your investments continue to rise!