The number of homes for sale across the region dipped to a five-year low in September, while sales volume increased by double-digits for the third straight month, the Charleston Trident Association of Realtors said Monday.

While the inventory of homes for sale locally is still roughly double what it was before the housing market overheated — nearly 8,000 are on the market now versus around 4,000 in 2004 — the report shows steady improvement in market conditions.

When there is a glut of homes for sale and the supply far outstrips demand, it takes longer to sell those homes and it’s harder for home-sellers to get the price they are asking. As the housing bubble peaked there were 11,879 homes for sale in Berkeley, Charleston and Dorchester counties, in the spring of 2008.

Demand fell sharply in the following years, along with prices, as the nation plunged into recession and homes sat on the market for months awaiting buyers.

Last month the number of homes for sale dropped below 8,000 for the first time since 2006, the association reported. During the month, 774 homes were sold though the local Multiple Listing Service, at a median price of $183,822.

“This is an incredibly positive sign for the Charleston real estate market” said Rob Woodul, president of the Realtors group.

Pricing remains soft — good news for buyers, who are shopping at a time of record-low interest rates, with 30-year mortgages available at around 4 percent interest.

The median price of a home sold in the tri-county area last month was about $5,000 lower than a year earlier, and sellers this year have been accepting, on average, about 90 percent of their original asking price.

“Our local market is still weighted in the buyer’s favor, but a consistently shrinking inventory may indicate a more balanced buyer/seller ratio,” Woodul said. “We expect to see the volume of sales gradually slow, as it typically does heading into the end of the year, but buying activity continues to outperform 2010 levels.”

By: David Slade

June 4, 2011

Legislature passes point-of-sale law

Legislation that will cut property taxes on commercial properties and second homes sold in South Carolina has been approved by the General Assembly in a compromise that also gives local governments flexibility in raising tax rates.

The bill awaits a decision by Gov. Nikki Haley and would be retroactive to the first of the year.

“This will spur out-of-state interest in second homes as well as both residential and commercial investment opportunities, which will result in more market activity, job creation and overall economic stability to South Carolina” said Rob Woodul, president of the Charleston Trident Association of Realtors.

The legislative compromise sought to balance demands for tax relief from the real estate industry against local governments’ fears of lost revenue. It comes after four years of off-and-on negotiations that followed the statewide property-tax changes that went into effect in 2007.

“It’s not everything we wanted, but it’s a great start,” said Nick Kremydas, chief executive of South Carolina Realtors, a statewide trade group. “The real estate and development community believes this will be a good shot in the arm and will help us compete with other states.”

At issue was what’s known as point-of-sale assessments, the practice of revaluing properties for tax purposes when there’s a change in ownership.

Those assessments typically result in sharply higher property taxes, which have discouraged sales, according to real estate professionals.

The assessments are considered particularly troublesome for commercial properties because tax increases can put the buyer at a competitive disadvantage with similar businesses whose taxes have not gone up. If one shopping center were sold and a similar one was not, for example, the shopping center that was sold would be reassessed and the owner might have to charge higher lease rates to make up for higher taxes.

“On the commercial side, tenants are the people who were getting hit in the head by this thing,” said Elliott Summey, a commercial real estate developer and Charleston County councilman. “It’s the dry cleaners, the restaurants, the small guys who are leasing these spaces.”

The legislation approved by the House and Senate would create a 25 percent discount for commercial point-of-sale values. Here’s how that would work:

If a property valued at $200,000 were sold for $300,000, the taxable value would rise by 50 percent under the current rules. The new rules would discount the new property value by 25 percent, so the property sold for $300,000 would have a taxable value of $225,000 and a much-reduced tax impact compared with today’s rules.

And in the current real estate climate, a 25 percent discount often could eliminate any tax increase by reducing a property’s tax assessment to its presale value.

The discount could not reduce a tax value to less than it had been, but the total assessment could be reduced if the property declined in value.

The discount would apply only to commercial properties, a category that includes apartments and second homes, but not owner-occupied homes.

The change will mean less tax revenue for local governments and schools, which for years have been fighting the real estate industry’s demands for more far-reaching property tax changes. But the compromise plan is a small revenue hit compared with a legislative proposal earlier this year that would have eliminated point-of-sale assessments for all properties, retroactive to 2007.

“It’s obviously a loss to local governments, but everybody came to a middle-ground understanding, and I think we reached a good compromise,” said Reba Campbell, deputy executive director of the Municipal Association of South Carolina. “We hope this has put the issue to bed.”

The property tax changes in 2007 were meant to protect property owners from big tax increases for as long as they own their property while resetting a property’s taxable value to what it’s really worth when the ownership changes. Without an ownership change, a property’s assessment can rise no more than 15 percent every five years.

The tax law, Act 388, also imposed limits on property tax rate increases.

In any given year, a municipality or school district may raise its property tax rate only by the percentage change in the consumer price index plus the percentage increase in the population, neither of which have increased much lately.

Kremydas said the rules created a use-it-or-lose it situation, where governments might raise taxes when they didn’t have to, out of fear they might not be able to do so in the future.

The compromise legislation would allow governments to roll over the amount they could have raised taxes for up to three years. Instead of being allowed, for example, to raise taxes by 2 percent in each of the next three years, a government could raise taxes by 6 percent in year three.

“We’ve been lucky in Charleston County to be able to live within our means, but it will be good to have that flexibility,” Summey said. “That’s a great compromise.”

A spokesman for the governor was unable to provide her position on the legislation Friday.

Reach David Slade at 937-5552.

In the US, as a whole, there has been a surge in sales activity, as well as a decrease in the average time a home is on the market. The unemployment rate is also improving overall, despite its small rises and falls. These traits and others are creating economic optimism throughout the country.

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