As of the writing of this article, the national average on a 30-year fixed mortgage has climbed above 7%. When the Fed began raising interest rates to combat runaway inflation in March 2022 of this year, the point was to curb spending. Housing is no exception.
Home prices are slowly coming down from historic highs earlier in the year. Additionally, homes are staying on the market longer because inventory has gone up with less demand due to Fed rate hikes.
Make no mistake: we are still in a seller’s market, but if this trend continues we could easily see housing shift to a buyer’s market.
What does this mean for sellers and buyers? Do these national trends coincide with what we’re seeing in the Greenville, SC housing market?
At Wilson Associates, we want to offer the best advice possible to both buyers and sellers. As one of Greenville, South Carolina’s premier real estate agencies, we understand that it is our duty to give you the facts, whether or not these facts help or hurt our bottom line.
The Greenville, SC Real Estate Market Year-to-Year Comparison
The best way to assess the current state of the real estate market in Greenville, SC is to compare where we are right now with where we were last year at this time. The table below offers an overview of the Greenville housing market for the years of 2021 and 2022, along with the month of August in each year.
Greater Greenville Real Estate Market Overview
|Key Metrics||August 2021||August 2022||Percentage Change||2021 YTD||2022 YTD||Percentage Change|
|Pending Sales||1,593||822||-48.4%||12,443||10, 703||-14.0%|
|Days on Market||21||21||0%||32||23||-28.1%|
|Median Sale Price||$270,000||$310,000||+14.8%||$256,688||$301,080||+17.3%|
|Percentage of List Price Received||100.6%||99.5%||-1.1%||100.2%||100.8%||+0.6%|
There are many ways we can view the figures above. The first thing we might point out to you as a potential buyer or seller is that home prices remain high. We included the median sale price of homes in the Greater Greenville real estate market, but the average sale price paints an almost identical picture.
Home prices have gone up considerably over the past year. At the same time, you will notice that the average sale price on homes appears to be decreasing slightly. From August of last year to August of this year, they are up 14.8% compared to 17.3% over the course of the entire year.
Does this mean that home prices will continue to drop as the data for September and October becomes available? If you’re a seller, should you expect that home prices will dip?
Our answer: we don’t know for sure. When the Fed slashed rates during the Covid pandemic, they were responding to recessionary conditions brought about by an unprecedented historical event—we don’t see pandemics that shut down the global economy every month.
But with rates at 0% for much of 2020 and 2021, both the national and Greenville, SC housing markets exploded. Add in the stimulus money and additional unemployment insurance that the Federal government gave Americans during the pandemic, and you had a perfect recipe for inflation across the U.S. economy and in housing markets nationwide.
So, what comes next?
Admitting that we don’t know for sure is honest, but it doesn’t help you navigate the tumultuous waters of buying and selling a house in 2022. If inflation goes away, and the Fed halts rate hikes, it’s entirely plausible that home prices will stay at their current levels.
A Housing Market Correction or Implosion?
But it’s important to remember that our current housing situation goes all the way back to the Great Recession of 2008 when a housing market implosion produced a decade-long underbuilding of new home constructions.
Whenever we discuss the current state of the housing market, it’s essential to keep in mind that we’re discussing a situation that goes back more than a decade. In short, the 2008 housing crisis put the brakes on residential construction in a major way—you may remember all the news stories of unfinished “ghost” subdivisions across the United States at the time.
2008 is an important touchstone in another way as well: every time we see a slight dip in housing prices, homeowners assume that we’re headed for another collapse.
When we said we didn’t know what was going to happen in the Greater Greenville real estate market, we were humbling ourselves to the fact that no one knows what’s going to happen in the economy. That doesn’t mean we can’t venture a hypothesis based on a thorough and robust analytical approach.
Although it’s difficult to see from this image, the upstate of South Carolina is not predicted to experience a drop in home prices before the end of the year. Even into Q1 and Q2 of 2023, analysts don’t really see home prices dropping significantly in most of the country. A few
housing markets in Arizona, California, and scattered mainly across the Pacific coast will see dips in housing prices, but, for the most part, home prices look as though they will remain steady.
Economists and housing experts are in near agreement that we will most likely see a housing price correction—anywhere in the neighborhood of between 3%-7%—rather than a full-scale implosion of home prices.
This is very good news for you whether you’re a buyer or seller: if you’re a seller, you can rest assured that you likely won’t be underwater in your house. And, as a buyer, you can feel relatively comfortable knowing that whatever home you choose to buy will likely maintain its value—especially when it comes to viewing housing as a long-term investment.
Inventory, Inventory, Inventory
You know the #1 rule in real estate, right? Location, location, location. When it comes to our current real estate market in Greenville, SC, we might say that the #1 rule is inventory, inventory, inventory.
The basic economic principle of supply and demand tells us that when there is greater demand for a thing (in this case, homes) than there is that thing available, prices will rise. Of course, the opposite is also true.
During Covid, people had a hard time buying and selling homes for the obvious reason that purchasing a home means dealing with others in person. Many real estate agencies tried virtual home tours and open houses, but it really wasn’t the same thing.
One of the reasons we’re seeing the prices for houses slow down slightly, and the climate become better for buyers is that the supply has increased, and the demand (due to Fed rate hikes) has decreased.
Buyers of homes today are experiencing less competition when it comes to offers on homes, and are gaining greater negotiating power. While the price of homes is rising, we are not seeing the huge increase in prices in the Greenville, SC housing market that we were just months ago.
Looking at the chart above again, you will see that housing inventory has grown by more than 75% from August of this year compared to August of last year. If this trend continues, you can expect that home prices will stop increasing, and we will experience a correction in the Greenville, SC real estate market.
Buy, Sell, Or Hold?
We have now reached the million-dollar question: should I sell a home in Greenville right now? Should I buy a home?
At Wilson Associates, it is our responsibility to tell you we can’t predict the future. Whether inflation disappears or continues to rise is anyone’s best guess. What we can tell you is that, in our informed opinion, when it comes to the real estate market in Greater Greenville, SC, there are opportunities for both buyers and sellers.
We know that the situation for buyers is improving, although it remains a seller’s market. We can also say with a degree of confidence that it doesn’t appear that the bottom is about to fall out of the housing market—2008 this will not be.
We can also tell you that, after decades of living and working in Greenville and its surrounding cities, we rarely encounter buyers who regret buying their first home, their dream home, or simply a better home.
So to answer the question above—buy, sell, or hold?—we can only answer: do what will make you happy. After all, happiness is still relatively immune to market forces.