With its gorgeous beaches, charming historic character, and family-friendly communities, Charleston is one of the best places to live in South Carolina. It’s no surprise therefore that it is also one of the most dynamic real estate markets in the region, with strong buyer demand and beautiful homes for sale.
From 2021 to 2022, the Charleston real estate market was marked by ups and downs. Nationwide, the pandemic-induced housing frenzy of 2020 and 2021 – marked by record-high sales, soaring home prices, and extremely low inventory – appears to have taken its toll. Recent attempts to control inflation and return the market to more sustainable levels have been quite tumultuous, making many home buyers and sellers feel anxious and uncertain.
Navigating the tail end of this year and the first half of 2023 depends on how well we understand the major trends and factors that affected the 2022 real estate market. Whether you’re planning to buy or sell a home, this year-end review serves as a guide on where the Charleston real estate market stands and how you can prepare for the months ahead:
Table of Contents
LOOKING AT CONTEXT: AN OVERVIEW OF THE 2021 HOUSING MARKET
The Charleston metropolitan area was a strong seller’s market in 2021, punctuated by intense buyer demand and high home prices. The overall median sale price was $350,000, which was 16.7% higher than the previous year. Closed home sales also increased by 10.3%.
Housing inventory was tight throughout the year. Compared to 2020, the number of properties for sale in 2021 went down by 50.7%. When we entered 2022, there were only 1,427 active listings in Charleston.
Moreover, new construction activity was dampened by various external economic factors such as material and labor shortages, higher costs of materials, and regulations that prevented operations from scaling up quickly. By the end of 2021, there were only 0.6 months of new construction supply.
A CLOSER LOOK AT THE 2021 CHARLESTON COUNTY MARKET
In 2021, there were 11,296 total closed sales, which amounts to a 4.4% year-over-year increase compared to 2020. On average, homes for sale spent around 27 days on the market, and buyers paid 98.9% of the original listing price.
The median home price for Charleston County was $440,000, which was 17.3% higher than the median home price in 2020 ($375,000) and 35.4% higher than 2017 ($325,000).
Q1 2022: THE BEGINNING OF THE MORTGAGE RATE HIKE
Q1 STARTED WITH: RECORD-BREAKING SALES, RECORD-LOW INVENTORY
Still riding off of 2021’s strong momentum, nationwide existing home sales in January reached an all-time high since 2006, with homebuyers taking advantage of the still low mortgage rates. However, issues such as the lack of inventory, rising home prices and mortgage interest rates, and inflation have started to affect housing affordability and buyers’ purchasing power.
In January 2022, single-family homes in Charleston County had a median sales price of $500,000, which is 9.2% higher than the same month last year. However, the number of closed sales have gone down by 13.2% year-to-date, indicating that buyers are now more cautious about their home purchases. Demand is still high, as seen from the low number of days homes spent on the market (23 days). Inventory was also a remarkable 56.2% lower than January 2021, which could also account for the lower sales volume.
Townhomes and condominiums, on the other hand, had more positive trends. The median sales price of these property types was $324,158, which is a whopping 20.5% increase compared to January 2021. Although they tend to stay on the market a little longer (32 days), closed sales rose by 3.5% year-to-date. Due to strong sales and demand, inventory went down by 71.7% year-over-year.
Q1 ENDED WITH: A DECLINE IN SALES, TIGHT COMPETITION
There was a nationwide drop in existing home sales by the end of the first quarter of 2022. Many buyers were pushed out of the market because of historically high prices and low inventory.
Although new construction projects were underway, rising costs for building materials and labor continued to slow down production. With supply still not enough to meet demand, prices continued to shoot upwards.
Moreover, buyer demand and purchasing power have been strongly affected by rising mortgage interest rates and inflation. In March, mortgage rates hit a 3-year-high of 4.6%. Monthly payments were significantly higher than what homebuyers paid in previous years, which deterred many first-time home buyers.
The Charleston real estate market was no different from the rest of the county. The number of closed sales (664) for single-family homes at the end of the 1st Quarter was 14.3% lower compared to the same period in 2021. Home prices continued to rise, and by the end of March the median sales price was $570,000, which is a striking 20% increase from the previous year.
Paired with extremely low housing inventory – around 405 listings, which is a 40.2% decrease from 2021 – buyers who managed to stay in the market still faced tight competition. Listings spent only an average of 19 days on the market.
The townhouse and condominium market experienced similar trends. Closed sales (231) had a -28.7% year-over-year change, while inventory (93 active listings) dropped by 72% year-over-year. Demand was stronger than the supply, so properties for sale spent an average of only 25 days on the market.
All these factors continued to push prices for townhouses and condos upward, even as fewer sales were being made. The median sales price reached $308,000, a 37.7% increase compared to the same time last year.
Q2 2022: HIGH MORTGAGE RATES ALLOWED INVENTORY TO CATCH UP
Q2 STARTED WITH: DECLINING SALES, RISING HOME PRICES
The average 30-year fixed rate mortgage went above 5% for the first time since 2011, discouraging even more buyers and reducing the number of mortgage and refinance applications.
This also caused many buyers to move from more expensive metropolitan areas to suburban and rural areas where their money can go further in terms of housing.
Despite all this, April 2022 marked the 5th month of continuously declining sales, which some have taken as a sign of a cooling market.
In April, the median sales price of Charleston County single-family homes was $595,298, which was approximately $25,300 higher than the previous month. There were less closed sales (616) in April than in March, but it allowed housing inventory to slightly catch up.
Specifically, there were 430 active listings, and while this was 37% lower than the same period last year, it was a substantial increase compared to the previous month. Homes typically spent 15 days on the market before it was sold.
Likewise, the median sales price for townhomes and condos rose to $370,250 from $308,000 in March. Housing inventory also improved, increasing from 93 active listings in March to 107 active listings in April. However, it is still less than half of the inventory in 2021. Properties for sale spent a shorter listing time as well, spending an average of only 17 days on the market.
Q2 ENDED WITH: INTEREST RATE HIKES, COOLING DEMAND
With inflation reaching 8.6% in the middle of Q2, the Federal Reserve raised interest rates by ¾ of a percentage point in an effort to control soaring prices. It is the biggest interest rate hike since 1994, and as a result, monthly mortgage payments are more than 50% higher than the same time last year.
Nationally, the rising costs of homeownership – combined with a still relatively low housing supply – has caused many prospective buyers to delay their home purchase, which contributed further to the decline of sales.
However, the drop in demand has allowed housing supply to improve significantly over the past two months. Ideally, this upward trend should help moderate price increases through the next few months.
By the end of Q2, housing inventory for single-family homes in the Charleston real estate market (790 listings) increased by more than 80% compared to the start of the quarter, and by 11.3% compared to the same period in 2021. The median sales price for this property type also increased to $609,500 in June.
Despite cooling demand, the single-family market in Charleston remained resilient. This can be seen in the number of closed sales (652) which is higher than the number of closed sales at the beginning of the quarter (616), as well as the lower number of days properties spent on the market (11 days).
The townhouse and condominium market showed similar trends. The number of homes for sale in June (218 listings) was more than twice the number in April (107 listings). Median sales price also rose to $397,000 from $370,250 at the beginning of Q2. Properties spent an average of 13 days on the market.
Q3 2022: RESILIENT DESPITE SLOW SALES AND LOW DEMAND
Q3 STARTED WITH: A SLOWER SUMMER SEASON
While the beginning of Q3 is usually the peak of home buying activity in the country, July 2022 marked the fifth consecutive month of declining home sales. It picked up where Q2 left off, with rising mortgage rates, high sales prices, low buyer demand and purchasing power, and a slowly recuperating housing inventory.
But despite the weakened demand, homes are still selling quickly in the Charleston area. This shows that the local real estate market remained strong amid inflation and a recalibrating national housing market.
In Charleston County, the inventory for single family homes continued to moderately increase at 868, which was 9.87% more than the previous month’s inventory and 7.6% more than the previous year.
More importantly, corrections on the housing market arising from raised mortgage rates have started to take effect. The median sales price went down from $609,500 in June to $565,836 in July, accounting for a 7.16% month-over-month decrease.
Single-family home sales dipped as well, with only 529 closed sales at the end of the first month of Q3. This is 18.87% lower than in June and 24.3% lower than the same period last year. Properties sold quickly, spending an average of 11 days on the market.
Similarly, the townhouse-condominium market saw decreases in sales and prices. Sales were 30.7% lower than the previous year, with 196 closed sales. Median sales price went down from $397,000 to $367,000 month-over-month. Meanwhile, housing supply went up to 247 listings, which is a slight improvement from June’s inventory. Townhomes and condos that were put up for sale were quickly bought, with properties spending an average of 8 days on the market.
Q3 ENDED WITH: A RECALIBRATING MARKET
At the end of Q3, the US real estate market continued to be in a state of correction, with home sales and buyer activity declining for the seventh consecutive month. The Federal Reserve raised interest rates by 75 basis points in September, and the month ended with a 6.70% 30-year fixed mortgage average rate.
It is the first time mortgage rates went above 6% since 2008. While housing inventory has shown vast improvement as a result, supply was still low compared to previous years, leading to an uptick in home prices.
With the market still in flux, many buyers found it difficult to continue with their home purchase. But with less competition and more properties being put on the market, we can expect slower price growth and longer days on the market.
We can see the same trends in Charleston County. Single family home sales dipped from 529 at the beginning of the quarter to 446 at the end of the quarter, translating to a 24.1% year-over-year decrease.
Demand continued to cool down, with single-family properties spending more days on the market (21 days). The median sales price continued to increase, but the rate of growth had been slower. Between July and September, the median sales price only increased by 2.64%, standing at $580,750 by the end of Q3.
With 932 listings active on the market, the number of homes for sale in September 2022 was 10.8% more than last year. There were also 142 more listings compared to the beginning of the quarter. The sale-price-to-list-price ratio was less than 100%, showing that buyers had less competition and more negotiating power due to the higher housing supply.
Charleston County’s townhouse and condominium market followed the same trends. September sales went down by a drastic 40.7% compared to last year, with 166 closed sales. There was less demand, with properties for sale spending longer days on the market (24 days), and selling for less than the original list price (97.2% sale-price-to-list-price ratio).
Price growth had moderated, with median sales price at $379,950, which was only a 3.53% increase compared to July’s median price. Housing inventory consisted of 253 listings, which is a slight improvement from the beginning of the quarter, but was still 23.6% lower than the same period last year.
Q4 2022 AND BEYOND
Based on the market trends throughout Q1 to Q3, here’s what we can expect as we head into the last quarter of 2022 and the beginning of 2023:
MARKET CORRECTION WILL CONTINUE
Home prices and mortgage rates are expected to continue rising. As we’ve seen in the past three quarters, this causes three things: lower sales volumes, increased housing supply, and lower demand. As of Oct 20, 2022 , the 30-year fixed mortgage rate rose to 6.94%, and it seems that rates near the 7% benchmark will be the new normal in the coming months. Home buyers should reconsider their monthly budget and ideal price point, taking into account other expenses such as mortgage and home insurance, taxes, property maintenance, and more.
EXPECT MODERATE PRICE GROWTH
Median home prices in Charleston County – as well as the rest of South Carolina – continue to rise, but at a slower and more sustainable pace compared to the last two years. While this is great news for buyers, sellers might have to readjust their mindset before entering the market. On average, around 19.4% of sellers in August were forced to lower their prices due to cooling demand. A housing crash is highly unlikely, but sellers would have to lower their expectations and be more attuned to local market conditions if they want to price their home right and sell quickly.
WORK WITH A TRUSTED EXPERT
Housing inventory has been seeing a healthy increase, and this will allow the market to continue towards a more buyer-friendly direction. However, high mortgage rates will continue to moderate demand and prices, and the decrease in sales has dissuaded some would-be sellers from putting their homes up for sale.
In short, the US housing market is still in an ongoing process of adjustment and normalization, so it’s best to keep your ear on the ground and work with a Charleston real estate expert who can guide in navigating the increasingly complex market.
Ready to embark on your real estate journey in Charleston, SC? Get in touch with me, Carmilla Rená Brown, your Certified Luxury Home Expert and Luxury Home Marketing Specialist in the Charleston area. You can reach me by phone, email, or my contact page here.
