On a corner south of Broad Street, not too far from the Battery, there’s a whole lot of history for sale. Homes at 3, 4, and 5 Atlantic Street are all on the market, each going for well over $1 million. They aren’t alone.
The tough housing market has pinched real estate business everywhere, and the crown jewel of the Lowcountry, downtown Charleston, has been no different. Last year, only 35 homes sold for more than $1 million south of the Crosstown. That was roughly half of the keys exchanged just two years earlier. As of last month, 111 of these opulent million-dollar homes were on the market.
But there are already positive signs in 2010. Realtors are seeing more interest, and the perpetual staring match appears to be over between sellers convinced of their home’s value and buyers waiting for desperation to bring prices down to the ground.
Last month, two homes were sold and six more were under contract, far outpacing the three sales in January 2009. And the market in Harleston Village, a big neighborhood that was one of the hardest hit in the recession, has had six homes under contract in the last 30 days, matching its total sales in the last six months.
“There are buyers who have been kicking the tires for the last few years,” says realtor Ruthie Smythe. “Those folks are coming back, and they’re buying.”
Looking at the numbers, 2007 was a very good year: 69 homes sold at more than $1 million south of the Crosstown. It was a year that Smythe would rather not see again.
“It was unsustainable,” she says. “We don’t want to go back to where we were.”
The housing bubble has had its autopsy. On the peninsula, prices that would rise at about 10 percent a year were suddenly jumping up 25 percent a year. And, with an endless pot of credit and the prodding of a slew of house-flipping shows, buyers were more than happy to pay, whatever the price.
But blaming them is like blaming the kid in the candy store — he’s not soothing that sweet tooth unless mom brought her wallet. With little concern about failure, banks gobbled up reckless loan after reckless loan. A buyer’s credit rating was marginalized and their ability to pay back the loan was ignored. Instead, mortgage companies were betting a resilient, ever-growing market would win out over the consequences of their bad decisions.
They were wrong, but they got the second best thing — politicians in Washington who were just as fatalistic as the bankers were blissfully, carelessly optimistic. Billions of dollars went to each big bank to shore up bottom lines and prevent calamity.
In order to sustain the lower end of the real estate market, tax credits were offered for first-time homebuyers. But there was no help for the folks who bet on a big home, lost their big job, and ended up with a big mortgage they couldn’t pay for.
A Real Fine Place
It’s big pockets that have sustained the market over the past few years. There were still cash buyers to be found for the really expensive homes, as opposed to the expensive homes (it’s the difference between a $1 million home and a $4 million home). The median price for million-dollar sales downtown actually climbed in 2008 and went even higher in 2009.
“There aren’t many markets that can say that,” says realtor Casey Murphy.
But now, buyers with slimmer pocket books are making the rounds.
“Maybe they won’t buy the $2 million home,” she says. “Maybe they’ll buy the $1.8 million or the $1.7 million home.”
And, if you have that kind of money, the real estate world is your oyster, Smythe says.
“If you can choose to live somewhere, you’re choosing the quality of life,” she says.
In Charleston that quality of life comes with the eternal perks of location (urban, water adjacent property) and history (most of these homes are examples of turn-of-the-century Charleston two turns ago).
It’s a unique market impossible to reproduce in a cookie-cutter suburb that can offer something similar (or larger), but it’s never the same.
“People who want to buy here haven’t changed,” Murphy says.
Start Your Engines
The real problem for the market over the past year has been two-fold. Sellers were looking for the big check their neighbor got two years ago, and buyers were looking for the big deal awaiting them if they just played a little hardball. And rarely would the twain meet.
Murphy suggests the rebound we’re seeing began when sellers started taking a hard look at the market. They realized that, aside from a cheaper price, they had little to offer than the 50 or 60 other high-end homes.
With a few price cuts here and there, buyers who had been on the edge jumped in. In a unique, competitive market like downtown Charleston, it was a wake-up call for others who were caught waiting.
“There are a number who just saw a whole bunch of stuff disappear from the list,” Murphy says.
But, it’s still a very big list.
Realtor Georgia Bell estimates that it could take more than four years to unload the inventory of high-end homes on the market.
Competitive prices are still going to be key in sustaining the growth realtors are seeing so far this year.
One of Bell’s sellers recently dropped their price to just under $1 million and is seeing results, including two offers.
“If something is priced really well, it’s moving,” she says.
Murphy’s sellers at 4 Atlantic Street have also dropped their price, and they’re close to working out a deal, pulling one of the corners at that packed intersection off the market.