This newer house in Ashley Forest has a wrap around driveway in front of the house.
Veteran agent Corwyn Melette can personalize the difficulties that shoppers face in today’s tight Charleston area housing market. He recounts the close call of two young adults — his son and fiance.
The junior Melette, he says, stayed within his means in searching for a place to live. He “didn’t look for a 2,000-square-foot, three-bedroom two-bath (home); he looked for a townhome,” the head of Corwyn Melette & Associates Exit Realty and former president of the Charleston Trident Association of Realtors says. The decision appears to have paid off, as his son and girlfriend found a multifamily residence they like.
“Some people go in looking for too much,” the Realtor cautions.
Yet even while staying within expectations, the couple faced some anxious moments before the deal clinched. Multifamily properties in their price and geographic ranges were “very limited. The inventory; six or seven homes,” he says.
The engaged couple’s property hunting experience points to a underlying weakness in a generally strong real estate industry here: Charleston area property seekers can swing the American dream of home ownership but they fall short in finances, availability or location in tapping their “dream” house. In this housing affordability struggle, working-class shoppers settle for less or steer toward renting.
“We have an extreme housing crisis looming — in my opinion — if we don’t do something in our market,” Melette says.
Consider these examples:
Mount Pleasant, which has a median home price around $430,000 last year, lists just 82 properties on the market for $200,000 or less including land, according to Realtor.com. Of the properties with residences, all but two are townhomes or condos. The exceptions are a 1,160-square-foot house for $187,500 in the Philllips community off S.C. Highway 41 and a less than 800-square-foot residence on Venning Road between Rifile Range Road and U.S. Highway 17 North priced at $122,000.Goose Creek-Moncks Corner is considered one of the more value-priced areas in metro Charleston, ranking 19th highest out of 23 subsections by CTAR at a $205,000 median price. Yet the midpoint price of active homes in The Hamlets, an upscale section of Crowfield Plantation, is $391,250; contingent homes for sale is $402,750 and closed homes stand at $297,000, according to Drew Sineath and Associates.
Donna Converse, agent with Coldwell Banker Residential Brokerage, witnesses the frustration of potential first-time home buyers stumped by price, lack of inventory or geography every day.
“We have a buyer, approved for (borrowing) $150,000,” she says. But the single-family market in that price range has dried up. “Four months; nothing’s out there,” she says.
Retreating after the late 2000s housing slide, lenders again are offering financing up to full value of a home. “I was just informed today (July 14) of another bank which has a 100 percent loan product,” Melette says.
“I won’t say they are priced higher than they should be,” he says. “We are just about at pre-recession (price-wise),” which was a decade ago. But few properties are at the lower end of the price curve.
Possible purchasers, meanwhile, face underwriting guidelines that typically restrict housing costs to 28-30 percent of income. Therefore, buyers today should be looking at what they can buy for $125,000 based on average local wages, Melette says.
Higher-density properties such as condos and townhomes are an option, since they tend to cost less than single-family homes and offer an alternative for start-up or lower income buyers.
Converse isn’t so sure. “The problem that you have with condos and townhomes is regime fees” to pay for upkeep, insurance and other community expenses. Factoring in those costs can push up expenses and disqualify potential buyers for loans, she says. Converse cited townhomes from a major home builder in Berkeley County priced for $170,000-$205,000. The lowest cost townhome was for sale at $170,000 because it was the sales model and the builder was closing out the neighborhood, she says.
“It’s a trade off,” Melette contends. On a $130,000 condo, regime fees lift the payment to that of a $150,000-$160,000 home. Still, a condo or townhome can be a good fit. “Some people, they look at a condo. They don’t want a yard, or upkeep.”
The Charleston area housing market remains viable, Melette says, but he notices cracks. He remembers when $200,000 would cover the cost of two-story home with two bedrooms and a two-car garage. “Now, it will get you a 1,200- to 1,300-square-foot house.” Meanwhile, the average rent on a two-bedroom Lowcountry apartment runs around $1,190 a month — higher than many mortgage payments.
Any housing fix would involve a combination of public and private efforts, Melette says.
A statue in the South Carolina legislature authorized a state tax credit to companies that bankrolled affordable housing developments. But “we’ve exhausted those tax credits,” says Bernie Mazyck, president and chief executive of the Charleston-based South Carolina Association of Community Economic Development.
A bill sponsored by Sen. Paul Campbell and Rep. Leon Stavrinakis would expand the tax credit and hopefully improve on it. Right now, the pool of tax credits is $1 million for the entire state. Under the new plan, the credit would bump up from $1 million to $5 million available per project. The legislation wouldn’t come up until the General Assembly returns in January.
“We are working with the S.C. Community Loan Fund on an affordable housing survey,” Mazyck says. “But you can say by income level, residents earning 80 percent or higher of the poverty level are eligible for affordable housing.” Look at rental housing and rental costs, they far exceed the working poor’s income level, he says.
To qualify for low-income housing in Charleston a family of four would generally have to earn less than $34,400, according to the U.S. Department of Housing and Urban Development.
Apartment List national rental researcher found that poverty is increasing fastest in the suburbs, which is hitting the real estate market in Charleston and elsewhere.
From 2005-2015, poverty in Charleston shifted from high-density neighborhoods, with 37 percent in 2005; to medium- and low-density neighborhoods with just 19 percent in urban centers in 2015, the apartment website says.
According to Melette, the Charleston area housing market should remain viable, as long as home prices don’t jump too fast.
“When it’s more economical to rent than owning, then we’ve truly reached that crisis,” he says.
For more information and photos, go to www.postandcourier.com/business/real_estate/jim-parker.
Reach Jim Parker at 843-937-5542 or email@example.com.