As the curtains fall on 2023, Greenville, South Carolina, reflects on a rollercoaster year in the real estate market. This year saw unprecedented challenges nationwide, affecting homebuyers, sellers, and investors alike. The Greenville, South Carolina real estate market, in particular, faced an interesting year in 2023, marked by record-high interest rates and a scarcity of inventory.
Throughout 2023, mortgage rates climbed steadily, reaching unprecedented levels, nearing 8% according to the Freddie Mac mortgage rate index. This surge in rates significantly affected homebuyers, making it challenging for them to navigate the housing market’s affordability landscape. As a result, existing home sales experienced a notable decline, reflecting buyers’ struggle in making homeownership’s financial aspects work.
Joey Von Nessen, a research economist at the Moore School of Business at the University of South Carolina, explained that the increase in interest rates has led to decreased affordability and total demand. While this contributed to a staggering 23% statewide decline in total home sales in 2022, the trend is stabilizing with a more moderate 6% decrease observed in 2023.
Despite the affordability challenges, home prices displayed resilience, maintaining near-record highs. The U.S. median sale price peaked at $425,000 in June, contributing to the overall complexity of the market. The difficulties were further compounded by seasonal trends, with the spring homebuying season failing to materialize. Housing inventory also remained historically low, leading to a substantial drop in sales.
A survey revealed that over half of recent homebuyers considered the homebuying process more stressful than dating, highlighting the emotional toll of the challenging market conditions. Additionally, nearly 40% of homebuyers under 30 received financial assistance from their families to afford a down payment.
Interest Rates and Affordability
At the forefront of challenges in 2023 was the surge in mortgage rates. The year began with rates around 6%, eventually soaring close to 8%, significantly impacting homebuyers’ affordability. Danielle Hale, chief economist at realtor.com, highlighted that higher mortgage rates played a pivotal role in the slowdown of existing home sales as buyers grappled with the increasingly challenging math of homeownership.
Specifically, higher mortgage interest rates have made existing homeowners less inclined to move. For instance, a homeowner with a 3% mortgage interest rate might be hesitant to relocate if faced with a 6 or 7% mortgage interest rate. This phenomenon has contributed to the challenge of low inventory in the state.
The Greenville real estate market grappled with persistently low housing inventory. Throughout 2023, the average number of homes listed for sale remained below historical norms, impacting the overall market dynamics.
New listings plummeted to their lowest level on record, falling 16.4% from 2022. Months of supply reached 3.4 months, its highest level since 2019, indicating a tight market despite the slight increase in supply.
Looking Ahead to 2024
Projections for 2024 suggest a mixed landscape for the U.S. housing market, with factors such as modest economic growth, slightly higher employment, and easing inflation influencing the overall scenario, as noted by realtor.com. Furthermore, the possibility of a shift toward a buyer’s market is highlighted, driven by the end of pandemic-driven inflation and dropping mortgage rates, according to redfin.com.
Joey Von Nessen observes that the South Carolina housing market is showing signs of stabilization, indicating that the readjustment period might be coming to an end. Notably, the Federal Reserve’s indication of not raising interest rates in 2024 is expected to contribute to maintaining housing affordability and potentially stabilizing the growth rate in housing sales. This scenario implies the likelihood of relatively flat or modestly positive growth rates in the coming year.
Predictions for South Carolina’s housing market in 2024 are largely consistent with those for the U.S. as a whole. Realtor.com anticipates a return to pricing in line with financing costs, with home prices expected to ease slightly by less than 2%. Lower mortgage rates and income growth are expected to improve the home purchase mortgage payment share relative to median income. The real estate site also forecasts that these factors will keep total home sales relatively unchanged.
On the other hand, Redfin offers a slightly different perspective, predicting a 1% fall in home prices in the second and third quarters of 2024. Redfin believes sales will increase overall across the U.S., rising 5% year-over-year by the end of 2024. This is attributed to a steady decline in mortgage rates and an increasing number of homeowners entering the market as they perceive a price decline.
For the most informed decisions in real estate for you and your family, it’s essential to partner with specialists who have an in-depth market understanding. Wilson Associates stands out, not only for our expertise in the local real estate arena but also for our strong ties with experts in the mortgage, insurance, and construction fields. This extensive network empowers us to guide our clients at every stage of their real estate experience. Reach out to us today!