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Morris Island

A recent Post & Courier editorial suggest that Folly Beach’s STR Cap has had a noticeable impact on home sales. This analysis falls error to the idea that correlation suggest causality. It is important to look at all of the data before making assumptions. In fact, in a new article published in the Post & Courier titled ‘Charleston home price nearly doubles in 10 years as sales fall for 25th consecutive month’, the paper states that the downward spiral in home sales started in September 2021; almost 2 years before the Folly Beach referendum.

Recent comments by the Charleston Realtors group acknowledge that larger market factors are having a significant impact on the area real estate market.

Higher mortgage interest rates, elevated prices and a dearth of available homes are causing sales to sag, though the percentage decrease in transactions was not as pronounced as in previous months, according to the Charleston Realtors group. source October 10, 2023 Post & Courier

“This is a challenging market for most buyers, but particularly first-timers, as borrowing costs and sales prices continue to rise,” said Katesha Breland, president of the Charleston Trident Association of Realtors. “Potential buyers have become increasingly sensitive to even slight fluctuations in mortgage rates, which have remained above 7 percent since mid-August.”

Once you look at the data, it is clear that the 2020-2022 market data represents an inflated benchmark and that larger market forces are responsible for the current downturn of the real estate market on the island. Simply blaming the STR cap only promotes more division and does not acknowledge the bigger market dynamics at play.

During the pandemic, Folly Beach 2020-2022 Witnessed a Historically High, Bubble-Driven Market. The Real Estate Market has Changed in 2023, What We are Seeing Now is Simply a Correction:

  • Demand for Vacation Homes Sits Near 7-Year Low
  • Residential real estate transactions dipped 12 percent last month in Berkeley, Charleston, Colleton and Dorchester counties
  • Charleston County saw the lowest number of closings for the month [September] in five years when 1,244 sales were recorded in September 2018 as Hurricane Florence affected business activity. Measured against a September without a hurricane, home sales approached a level last seen nine years ago, when 1,315 transactions were recorded.
  • Given current [interest] rate conditions, year-over-year existing home sales sagged for the third consecutive month, slipping by 0.7%, with all four major U.S. regions posting declines, according to the National Association of Realtors (NAR).
  • “With housing payments near their all-time high, a lot of people can’t afford to buy one home right now, let alone a second … “it’s simply a challenging time for most Americans to buy a vacation home.” Redfin deputy chief economist Taylor Marr
  • Demand for second homes — residences that are used for only part of the year — was 52% lower this past March than it was pre-pandemic…
  • Since vacation homes aren’t essential, their potential buyers are quicker to retreat from the market.
  • With the shift back to office work, second homes lose their appeal as there’s limited time to enjoy them. Even though remote work is more prevalent now than pre-pandemic, job openings allowing such flexibility have dwindled since early 2022.
  • Other Markets Have Seen Similar Price Corrections: If you compare August 2022 to August 2023, Kiawah Median Sales Price is down 35.6% and Sullivan’s Island Median Sales Price is down 69.2%

We Need to Move Forward on the STR issue

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