Home Sales

In 2009:  137 homes sold on Daniel Island; Upswing seen in fourth quarter.

For calendar year 2009, 137 homes were sold on Daniel Island, with the fourth quarter witnessing an upsurge in home sales – 18 homes were sold both in October and December 2009. DI home sales in 2009 totaled $69.5 million, for an average of $507,526 per home.

Of the 137 homes sold, 60.6% (83) were single family homes, while 39.4% (54) were attached residences (condos or townhouses).

Over the last three months –October-November-December – home inventory continued to grow, with 24 homes newly listed compared with 18 sales, or a ratio of nearly 1.33.

Lot Sales

In 2009:  30 lots sold on Daniel Island, average lot price over $600,000

For calendar year 2009, 30 lots were sold on Daniel Island, for a total price of $18.38 million, or an average of $612,667 per lot. Of the 30 lots sold, more than half were priced between $155,000 and $375,000. But the average was brought up by five lot sales which eclipsed the $1 million mark – these five sold for $1.475 million, $1.575 million, $1.60 million, $1.65 million, and $2 million respectively.

In 2009, the third quarter was the most active period, with 14 lot sales; by contrast, there were four lot sales in the fourth quarter of 2009.

Two accompanying charts summarize lot sales in 2009: chart #1 lists 2009 sales by dollar value; chart #2 compares lot sales over the past four years, on a month-by-month basis.

"2009 ended with a long awaited significant increase in buyer activity on Daniel Island. We are quite excited as we begin 2010. We believe the increase in buyer activity will be sustained due to two factors. First, buyers who have been considering making the move to paradise sense things are changing. The highly favorable market for buyers won’t last much longer and this combined with amazing mortgage rates has intelligent buyers looking and making offers. The second factor is the Boeing plant and supporting vendor operations. We are already seeing substantial Boeing activity on Daniel Island and it will only get stronger. Boeing families are already buzzing about the convenience and wonderful lifestyle offered by Daniel Island. We believe the island businesses and even office space will see major improvement as Boeing folks settle in this year.

"Of course there is lingering bad news. Foreclosure will create distraction and pricing instability. The number is significant, but we believe this distressed inventory will be largely cleared out by the third quarter due to pent up demand for deals. We will have to see how the foreclosures affect overall pricing on the island. The expectation is homes will not appraise in some situations, derailing deals agreed to between seller and buyer. These times require enormous patience. 2010 will be a much improved year for sales, but it will be 2011 before the market returns to a level of balance."

"2010 could be the year that we see mortgage rates rise from their 2009 historical levels. It has happened just in the first week of the year. Mortgage rates tend to mirror the movement of treasury (bond) yields since your mortgage (once closed) is really sold as a bond in most cases. In December 2009, the 10 year Treasury yield was 3.20% and it’s now 3.84% as of the first week of January. According to mortgage giant Freddie Mac, the 30 year conforming fixed rate has gone from 4.71% to 5.09% in the same time period. One of the reasons we may see higher Treasury (bond) yields, and thus higher mortgage rates, is the fact that some experts think the economy will improve this year – making stocks a better investment than the ‘almost risk free’ bond investment. If the economy improves and companies do better over the next 12 months, then stocks are going to be a much better buy than bonds and this will push mortgage rates higher.

"Another reason for the increase in mortgage rates concerns the Federal Reserve’s program to help keep mortgage rates low by purchasing as much as $1.25 trillion worth of mortgage backed securities. A mortgage-backed security is a pool of mortgages packaged together and sold as a bond. The government has been buying these securities since the private investor did not have any desire for such investment. The Fed’s program comes to an end on March 31 and if they do not extend the program it will be up to the private investors to buy the mortgage-back securities (a bond). Is the private investor ready to jump back in to buying an investment that relates to how a mortgage is being paid?

"In 2010, if stocks become attractive and the government decides not to extend any of its programs after March 31, and the private investor decides to run from any type of mortgage-backed investment, then we may see 5.50%-6.00% (or higher) by the end of the year. But let’s remember, it’s all relative. We saw 4.50% on a 30 year fixed rate in 2009 but that does not mean that 5.75% is an unattractive rate. Let’s hope for an improved economy, better business for everyone, and people finding jobs, even if it does mean that the mortgage rate has to rise to 6.00%. We all know that even with a 4.50% rate it didn’t cause a mad rush to buy real estate."