It was the best of times; it was the worst of times, wrote Dickens, who might have been referring to Charleston’s Jekyll and Hyde residential real estate market in 2022. In the frenetic first half of the year, market conditions were much the same as in 2021 — very little to purchase, withering competition for each unit on the selling block, sale prices thousands over even the inflated list prices. For sellers, it was Tony the Tiger’s idea of great, with houses selling for ever more money in relative nanoseconds.

G-R-R-R-EAT!

Buyers, on the other hand, were frustrated by losing out bids on the few options available whose costs kept growing.

But as Dickens further observed, 2022 was a tale of two markets: “It was the season of light; it was the season of darkness.” As the Federal Reserve raised interest rates, it pushed borrowing costs from near zero to above the historical average, shrinking affordability further.

Some potential buyers scurried to the sidelines just as some sellers took the leap to cash in. Houses for sale began piling up to half the normal level, a quantum leap from the wasteland of the previous 18 months. Prices stabilized, sales cooled, nerves calmed.

“We carried forward the momentum of ’21 into ’22 for half of the year. The second half of the year was when the markets started to normalize gradually,” said Lyles Geer, president and broker-in-charge at William Means Real Estate. “Both in terms of demand and general market activity — not as many showings, not the appetite for buyers that we were initially seeing. General hesitation of financial security and buyers’ confidence in the future market.”

Today, overall home sales are crickets in some areas, merely slow in others.

National Association for Realtors chief economist Lawrence Yun says a million fewer homes changed hands nationally in 2022 than in 2021. He predicts sales across the country will continue to taper in 2023, accounting for the fewest home sales since the shadow of the Great Recession. That is even as demand outpaces supply and prices hold steady.

But while we may live in America; we also live in the Charleston metro, and that’s a house of a different color.

The Charleston market is likely to remain somewhat stronger than that, thanks to the continuous inflow of residents from other parts of the U.S., particularly those from higher-cost markets like New York and Boston who are unfazed by the run-up in prices here.

Consider these odd facts about the 2022 Charleston metro real estate market, according to the Charleston Trident Association of Realtors: 

Home sales declined every month of the year.

Total sales declined 18% from 2021 to 19,846.

Mortgage interest rates over the course of the year ranged from 3.25% to over 7%.

The median price spiked 14% over the year to $398,615 as inventory lagged demand.

The median single family home price is 50% higher than in early 2020 and double the cost from mid-2015.

The median sales price topped 100% of list price during the spring before inching down.

The average amount of time a house sat on the market before selling dropped to two weeks mid-year before bouncing back to a month by year-end. That is still half the time it takes to sell a home in a balanced market.

The early bird got the house

Carly Hitchens’s home buying experience encapsulates the real estate market in 2022. Hitchens runs the animal rescue operation The Bridge Between and needed something inside 526 with some space for animals. Despite expert help from Realtor Matt Pettite at The Cassina Group, she spent a year looking without success. Her half-dozen bids were burdened by FHA financing that requires risk-reduction activities like inspections and appraisals that others can waive. It wasn’t just that she lost out; she couldn’t even get real estate agents to call back.

With her lease running out and skyrocketing interest rates eroding her affordability, Hitchens found an historic James Island home — once owned by a freed slave whose descendants still lived in it — with lots of land and a sale price she could just afford. Hitchens bonded with the owner and her list price offer won the day, even after her lender required major improvements, including a new roof, connection to city water, and a brand-new HVAC system, for which the owners paid.

Even then, the delays pushed the closing date further and further back, endangering the locked-in mortgage rate.

She finally closed as her lease and her interest rate were expiring.

“With higher rates, there was no way I would have been able to buy. I’m grateful every day I get to live on James Island and in that house.”

Hitchens paid $422,000 for a modest 40-year-old house and pays 4.375% interest. That is way above the sub-3% rates floating around the year prior but two percentage points below the going rate at the time.

Hitchens is relieved she persevered.

“People told me to wait, that the market was going to crash, that interest rates were going to come down, but Matt, my Realtor, was great and he said ‘I don’t think so.’”

Multiple mini-markets in one

Of course, the Charleston real estate market comprises many sub-markets geographically, by type of residence, by use and by price. For example, says Charles Sullivan of luxury home company Carriage Properties, individuals who purchase homes over $2 million are generally unaffected by mortgage rates because they pay cash. The cooldown in that market had more to do with the decline of the stock market, not the rise in interest rates, he said.

Indeed, prices in tonier areas of the region experienced the largest price leaps in 2022 — Sullivan’s Island, Isle of Palms and John’s Island all experienced at least 75% run-ups in prices since 2018, compared to about 50% in the rest of the market.

Kiawah Island, where homes in the millions are the rule, saw sales prices more than double in that four-year span.

In Summerville, prices rose more slowly and inventory remained steady from the beginning to the end of the year, according to the Charleston Trident Association of Realtors monthly market reports. But single-family houses spent an astonishing three days on the market prior to purchase, on average. That rose to 10 days by year’s end, just one-sixth of what is typical. It appears that rising prices closer to Charleston drove buyers farther out.

Recognizing that the real estate market’s hair was on fire in 2021, comparisons to it might not be apt, said Katesha Breland, president of the Charleston Trident Association of Realtors and broker/owner of Sweetgrass Realty Group, a boutique full-service real estate firm. She says the unique events surrounding Covid set the market ablaze for two years and caused distortions that are unlikely to be repeated.

Peering beyond 2020 and 2021 offers a whole new perspective.

“You can’t look at stats for one year because real estate is not a one-year investment. When you look back at the last normal year — 2019 — the number of sales has increased since then,” she said.

The market is normalizing

Indeed, normalizing is the word you hear a lot from Breland and others in the real estate industry. With inventory of homes for sale increasing and interest rates stabilizing near the historic average, buyers and sellers are returning to their traditional patterns.

“List prices not as aspirational anymore; sellers are beginning to understand that to sell property they need to be realistic with pricing and realistic in response to offers,” said Owen Tyler, partner and managing broker at The Cassina Group. “Realistic means looking at all offers — it doesn’t have to be all cash, 15% above list price. When we go to price our house, our list price needs to be verifiable as opposed to a number from the clouds.”

Prices and interest rates affect affordability primarily for first-time home buyers and former homeowners, who don’t have a house to sell in to a high-priced market. For them, the lament is similar across the board: there are few homes in good condition for sale in the Charleston market for less than $250,000. For existing homeowners, Owen Tyler points out, much of the machinations of the real estate market the last three years has merely been noise.

“For buyers, if you have bought a house to flip it, you need to watch the market. If you bought your house to live in it, you’re going to be fine. It’s a longterm investment. It’s a commodity when you sell it but it’s your home when you live in it,” he noted.

And because this is Charleston, SC, a beautiful, historic, coastal city, pulsing with economic activity and not yet ruined by population surge or reclaimed by the climate-altered sea, the housing market is headed ever upward, despite momentary fluctuations.

“My takeaway is we’re still good,” said Katesha Breland. “It’s business as usual.”