Summer in the lowcountry brings sweltering heat and high humidity, but it also brings great real estate market activity. This summer was no different with 29 properties selling in McClellanville and Awendaw in the months of June, July and August. Eight of those properties (5 lots and 3 homes) came from McClellanville’s small but desirable Historic District. The cooler Fall air doesn’t show any sign of slowing down the real estate market as interest in the area remains high.
In the previous issue I spoke of an increased interest in home building and am happy to report that it has blossomed into what I am now going to call an all out “building boom”. Some might not think six new homes breaking ground in the next few months a “boom”, how- ever for a small area like McClellanville these are monumental numbers given only five new homes were built in the previous four and a half years. New construction is not only a boost to the local economy, but also a boost to consumer confidence. With such significance placed on new home construction, I thought it would be valuable to spend this issue explaining some historical data.
Land sales generally represent around half of the sales in our area. This is much higher than many more urban areas, but look around, we’ve got lots of land that remains vacant. What is important to first understand about the McClellanville / Awendaw markets when it comes to building is that very few homes are built “on spec”, that is to say that the builder starts construction and then speculates for a buyer. We have no tract homes where a whole street of homes is built at the same time, and local construction is almost exclusively high quality single family homes. Building companies are typically small consisting of a general contractor with a framing crew of 3-6 people. They focus their attention on only one or two projects at a time and hire subcontractors to conduct tasks such as electrical, plumbing, sheetrock, etc. Buyers use a real estate agent to help them identify and acquire the vacant lot, doing all of their due diligence to deter- mine it will suit their needs and then contract with a builder (who we are happy to recommend) who handles the construction. Require- ments to build in a certain time frame are rare on land and it’s quite common that people buy land as an investment only or purchase many years out from the point that they intend to build, though some do break ground more immediately.
2005 experienced a high point in land sales and what was interesting, was back then you could buy a vacant lot and build a new house for cheaper than you could buy a comparable home in the same area which may have been 10 or more years older because existing home prices were rallying and the cost of construction materials and labor were relatively low. 2006 and 2007 were record years for construc- tion with a total of 20 homes built in McClellanville. Still you will note that is considerably lower than the 68 lots that were purchased in the single year before that.
The downturn in the market around 2007-08 had fewer and fewer people purchasing land because foreclosures and short sales began to drive the price of homes down much more rapidly than land sales fell. During the next few years, you could not build a new home for anywhere close to the prices that people were able to buy foreclosed and depressed homes.
This current market has a year of stability under its belt and the option to buy an existing home or build is split pretty evenly. If you can find something on the market that meets your needs and taste then you will come out a little cheaper than you would pay to build that home new on a similar lot. That extra amount you are paying when building gets you exactly what you want as well as the idea that you will not likely have to make any major repairs for those first 5-10 years of the home.