The latest Columbia SC real estate news recently included the U.S. Department of Housing and Urban Development (HUD) issuance of new regulatory guidelines to the Fair Housing Act. The new guidelines more closely quantify and qualify “those actions or policies by landlords, property managers, real estate agents or lenders that could be classified as discrimination” against people protected under the Fair Housing Act. Under the new regulations, HUD is able to charge those in violation of the act and have the U.S. Department of Justice (DOJ) represent the complaining party. Violations carry with them the possibility of damages paid to the complainant in addition to potential civil penalties and applicable punitive damages as determined by the court.
This past April, HUD added a codicil to the Fair Housing Act regarding the assessment of criminal records in certain real estate transactions. HUD contends that refusing housing to people based on their criminal background or arrest record is discriminatory. Their reasoning? Because a disproportionate number of people with criminal pasts are comprised of racial minorities. In addition, this past September, HUD further opined that language-related housing restrictions or caveats violated the Fair Housing Act. Their reasoning? They contend the language barrier between the national origin of those seeking housing closely corresponds to their limited proficiency in speaking English.
So, what’s behind the new regulatory guidelines and why are they in the latest Columbia SC real estate news? Experts say clarification is an important addition to the Fair Housing Act because such measures help to better define discrimination in housing, and to close potential loopholes to provide equal housing opportunities to all U.S. residents. Furthermore, with home ownership at its lowest rate in over 50 years, more and more people are renting. HUD wants to make sure property managers are well-versed in the guidelines and their ramifications. With more people renting now than owning, HUD is aware that the ongoing relationship between the housing provider – the landlord – and the property manager extends longer than that of a real estate agent or mortgage lender. In comparison, while an agent’s or lender’s involvement with a person protected under Fair Housing ends upon completion of the transaction, the landlord and property manager interaction continues throughout the term of a lease. In addition, according to experts, many housing providers and landlords are not "up to speed" on the Fair Housing Act regulations and are not complying as a result. Enter HUD to start better policing the industry.
HUD’s ruling regarding limited proficiency of the English language was designed to clear up existing grey areas or implied loopholes. The new regulatory additions say the refusal on the part of property managers or landlords to rent to people who can’t speak fluent English is discriminatory, based on their national origin. In addition, the law encompasses all areas of housing – including lenders. What this means is that lenders must be able to translate forms and allow for interpreters to be present during the loan application process and the loan closing. HUD has identified this shortcoming as a hindrance that, until now, has prevented prospective borrowers who don't speak English from getting mortgage financing.
Experts say as trends in housing tend to grow and change, more regulatory guidelines will ultimately be added to eliminate the loopholes and grey areas which still exist – especially regarding the responsibilities and limitations on housing providers. Most property managers expect HUD as well as state legislatures to provide additional guidelines to further clarify what's expected from the rental housing industry. Better regulation within the industry, on both the federal and state level, would allow for educational opportunities for housing providers and landlords, therefore minimizing the number of occurrences of violations of the Fair Housing Act.
Property management insiders say their hope is the states recognize there is an information breakdown, and awareness is needed to educate people working in what is a specialized niche within the real estate market. They cite training for landlords, housing providers and property managers as the most important factor to help them understand the regulations and their obligations under the Fair Housing Act guidelines.
One property manager summed up a critical issue affecting the rental industry and the impact some decisions make with respect to the regulations. Their expectation is that additional regulations will eliminate the subjectivity of opinions in the process of leasing rental units to minorities and others. The property manager went on to say that he usually suggests property managers distance or remove the landlord from the decision-making process when it comes to the rental properties. After all, he contends, that’s what property managers are for. They are the experts. “You take out any sort of human judgment… because even if it’s well-intended, there could be something that would have ramifications… counter to the HUD guidelines,” he said.
HUD normally tailors their new guidelines and clarifications based on previous Fair Housing Act violations of which they are made aware.
The prognosis seems to be clear. Fair Housing Act regulations will likely continue to be part of the latest Columbia SC real estate news. The government, it appears, will add more layers to the Fair Housing Act in an effort to ensure those protected under the Act will not be subject to discrimination. While it’s a noble, admirable end – nobody should be a party to discrimination – the means to that end remain bureaucratic, arbitrary and borderline overkill.
As long as the home ownership rates continue to be as high as they are, more people will be forced to rent – including a large number of people protected under the Fair Housing Act. Those people include substantial numbers of minorities as well as non-English speaking tenants who’ve migrated into the United States.
The latest Columbia SC real estate news is that we can expect Fair Housing Act regulations to get broader to encompass more aspects of rental real estate and housing.
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Among several housing-related stories making the news around here locally asks the question, Is there a Columbia SC housing bubble in our future? Before we can attempt to answer the question, let’s define what is meant by a “housing bubble.”
What exactly is a "Housing Bubble?"
A “housing bubble” is an increase in housing prices fueled by demand, speculation and fervor in the market. Bubbles normally begin with an increase in housing demand, usually accompanied by a very limited supply. When speculative housing investors enter the market it further spikes demand, which increases prices even more.
While the definition certainly sounds like what’s been trending in the housing market lately, let’s look at several reasons there isn’t a Columbia SC housing bubble on the horizon.
Average home prices are currently higher than they were in 2007 in more than 20 major metropolitan markets. In addition, larger cities with limited home inventory of both new and existing homes are seeing prices rise as high demand continues. Home sales throughout the nation recently reached the second highest level in more than 10 years, according to the National Association of Realtors. Despite these occurrences, some housing analysts say any “bubbles” that may exist are relegated to certain local markets, and the bubbles haven’t created the financial risk inherent with the housing boom of roughly 10 years ago. The earmark of the housing bubble that occurred during that time period was the easy availability of credit – highlighted by borrowers that should not have qualified for mortgages they received.
Still, the housing market is nowhere near where it was during the housing boom – and the resulting bust – that made just about every city's real estate news almost daily.
While mortgage interest rates are near record lows and the affordability of housing is still high, absent are the speculative buyers driven by easy credit availability. During the boom, many of these speculators were investors seeking to make a quick profit. In addition, the lenders who fueled that speculation along with making credit available to non creditworthy borrowers have long since learned their lesson, it appears. So, too, have the mortgage lending regulators, who have implemented a range of policies and procedures to better safeguard lending institutions from violating lending practices that may repeat history.
The Columbia SC housing bubble debate continues.
Experts say definitive housing bubbles are a rare occurrence. Despite some of the warning signals that exist in today’s market, the truth of the matter in today’s Columbia SC real estate market is, there are just as many other factors that are non-existent.
A great number of well-respected economists have studied and tracked housing bubbles. Most of them agree that when a market bubble occurs, home prices increase slowly to being with and gain traction and momentum in time. During this rise in prices, the home buying public is usually skeptical and unfazed initially. Economists say they’ve seen the same sorts of bubbles in other markets – stocks, commodities, futures, even art and wine. Over time, the initial skepticism morphs into a semi-acceptance by the buying public, as they witness prices being pushed even higher, or as the name implies, the bubble gets bigger.
As the low cost and high availability of mortgage credit gives the bubble a greater opportunity to continue to grow, it invites new participants. Many of these new purchasers, or speculators, are less credit-worthy and less savvy than typical real estate investors. However, they all have one thing in common – they all envision selling their newly-acquired real estate properties at a profit – fueled by the higher prices they feel they can command. This increased speculation can grow at such a rapid pace that the news may imply “the sky’s the limit” when it comes to housing prices in such a market. The result? Investment growth expands so much that it increases the housing supply, which in turn exceeds the existing housing demand. When supply outweighs demand, prices fall – or in this case, the bubble bursts.
Economists argue that what’s missing in the Columbia SC housing bubble equation is widespread participation on the part of the buying public. Gone are the days of flipping condos in popular locations. Gone, too, are the mortgage loans made on homes that exceed their value. The biggest change is that borrowers with poor credit aren’t able to borrow money as easily as they were during the housing boom and resulting crash. A case in point is the simple fact that it’s difficult, at best, for a homeowner who is still underwater on his mortgage to refinance.
Looking ahead.
Some real estate analysts say they expect certain changes in the near future to occur that may burst any regional, localized Columbia SC housing bubble that may exist. They cite potential interest rate increases by the Federal Reserve as among such events. However, they are quick to point out that the banking system today – unlike the real estate news of a decade ago – isn’t overwhelmed with sub-prime mortgages. In addition, most banks aren’t leveraged to the success of the real estate market anywhere near the degree that many were years ago.
Simply put, the existing housing market issues aren’t severe enough to spark another recession – at least not one of national proportions. Most economists agree that there may be a series of “mini-recessions” that are locally or regionally based and will only affect the players in high-end residential or commercial real estate. That bubble – if it can be called a bubble – will likely burst.
In the meantime, there will be expected fluctuations in housing market supply and demand. New home construction will continue to try to keep pace with the demand for new products and new home innovation at prices average American families can afford. And while interest rates may not stay as low as they have been, there’s little reason to believe that mortgage availability will suffer for the time being. Comparatively speaking, while there are some similarities in the true definition of what a Columbia SC housing bubble is, the simple truth is that the U.S. is no where close to the dire straits the housing market found itself in just a short decade or so ago.
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The latest Columbia SC real estate news indicates recent employment gains could improve the price recovery of luxury homes on the market. During the first quarter of 2016, unexpected stock market volatility caused a decrease in luxury home values. Prices were able to recover slightly during the second quarter with an increase of nearly 1%, according to a nationally recognized real estate data firm. Luxury homes are typically defined as being in the top 5% of the highest-priced homes sold in each American city. Let’s look at the impact the recent job market improvement may have on luxury home prices.
Help For Luxury Homes? Columbia SC Real Estate News
The U.S. stock market took quite a tumble in June with the Brexit vote and the resulting repercussions throughout world markets. However, it’s rebounded considerably since that time and recent employment numbers are likely to boost the stock market even more. Economists expect the employment growth to aid the recovery in luxury home prices.
With this recent Columbia SC real estate news, analysts say the higher, luxury end of the housing spectrum is more sensitive to changes in the stock market. The reason is that homebuyers with higher net worths and incomes are likely to have more money invested in various equities than middle America. Some economists say the housing market, in general, can adjust and adapt to even large spikes or dips in the stock market. However, they say, there are some markets – especially those in high-value real estate areas – where volatility in the stock market has a very direct correlation to the luxury housing market. In those markets, what happens in the stock market is more closely tied to real estate transactions because homebuyers in that income segment rely heavily on market activity to produce down payments and other liquid investments. Plus, there’s often a resulting sensitivity from foreign buyers who would otherwise invest in high-end real estate. Global volatility and its effects on the U.S. stock market curb – at least temporarily – their interest in purchasing luxury homes in some major cities.
The improvement in the jobs report, some analysts believe, will make it more likely the Federal Reserve will raise interest rates during the year. While not directly tied to mortgage interest rates, a hike in the fed funds rate may signal an end to record-low mortgage rates. Despite the seemingly negative impact such an increase may have on most homebuyers, a mortgage rate increase will probably not affect buyers in the luxury home market. In the words of one real estate professional, “Luxury (home) buyers aren’t motivated by mortgage rates. As evidence, luxury home prices were sluggish in the second quarter even though rates were near rock bottom levels.” Real estate agents and economists alike say what matters the most to buyers in the luxury market is a solid investment opportunity that is likely to pay higher returns in the future – much like their investment philosophy in the stock market. So, if the employment results do spur growth in the economy, there could likely be an improvement in the luxury housing market, regardless of what happens to interest rates.
Regarding the Federal Reserve, some economists maintain there will be no increase in interest rates for the remainder of 2016. In addition, some feel that bond yields – to which mortgage interest rates are more closely tied – may move downward as a result of several other global market factors. One respected economist said, “Rate hike odds by year-end shifted from 32% to 40% after (the recent) jobs number.” That would mean the likelihood of the Fed increasing short-term rates would still lean in favor of that not happening.
Of course, the luxury housing market – like its counterpart at other points in the buying spectrum – still suffers from a lower than normal inventory. However, if higher prices return, investors and homeowners are more likely to put their homes on the market – especially if the stock market continues its return to normal levels – allowing them the opportunity to use those additional earnings to purchase newer or larger homes.
The unknown factor that could affect luxury prices is the upcoming presidential election. With that event occurring in the fall – coinciding with the normal housing market shift that post-spring and summer bring – there could be a leveling off of luxury home prices. Interestingly, however, politics overseas may increase luxury prices in some U.S. markets traditionally popular to foreign investors. Real estate analysts point to Miami Beach, Florida, for example, where luxury home prices rose roughly 22% during the spring quarter.
Economists and political pundits alike continue to debate what effect the U.S. presidential election results will have on the housing market in general. If history is any indication, little impact is expected for several months after the presidential election. Either candidate, including those that may be reelected or replaced in upcoming Congressional races, will individually or collectively need time to assess and change economic policies. While we will all likely keep an eye on Columbia SC real estate news on a regular basis, most analysts say the greatest likelihood for the real estate markets to be affected will lie in the hands of the American public and the perception that a win by either party will make a difference in their financial future. In short, human nature takes over and prospective home purchasers who are optimistic about the country’s economy will likely be bullish on home ownership – if the price is right – while those with a more pessimistic opinion will likely be more cautious until economic conditions improve.
The bottom line is the real Columbia SC real estate news is that it remains to be seen how the recent job gains and the November election will affect the housing market.
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Columbia SC real estate news includes one recurring question: “Where are all the houses?” It’s a question real estate professionals, economists and prospective homebuyers have been asking for some time now. While home buying demand is high and home prices have been on the rise, the real estate market has still not completely recovered. In addition, home ownership today is a better financial move than paying rent – especially because mortgage interest rates are near all-time lows. Despite these favorable market conditions one thing is missing – home inventory. Let’s take a look at some of the reasons inventory is scarce and why it’s so important and how it affects Columbia SC real estate news.
Columbia SC Real Estate News – What the Future Holds
An economist from real estate data firm, Trulia, said, “At a time when rising prices should be inducing inventory, exactly the opposite is happening.” He went on to say that the lack of inventory has been the biggest story so far in 2016 and will continue through the end of the year.
According to another real estate data firm, Zillow, inventory in the month of May for low-tier and single family residences fell nearly 9% compared to May 2015. Middle-tier home inventory dropped 9.7% compared to the same period last year. Top-tier home inventory decreased .5%. With over half the year behind us, what does the future hold? Here are a few predictions most all analysts agree on.
Interest rates may reach record lows.
Some U.S. economists predict mortgage interest rates to dip to record lows. This is due in part to the recent Brexit controversy, which pushed the Treasury rates to new lows. Treasury bonds have long been the benchmark for mortgage interest rates. Experts say the low rates may increase home demand, and mortgage lenders are already reporting a spike in refinancing. Naturally, if rates stay low or go lower, refinancing will likely continue.
New home construction is still lagging.
New home starts during May nearly reached 1.14 million, falling short of the 1.5 million expected and required to help supply to match demand. To make matters worse, the majority of the single family homes built recently have been on the higher end of the price spectrum. Lower-priced, starter homes for young families and first-time borrowers continue to be lacking.
Another often-asked question making Columbia SC real estate news these days is “Will Millennials ever begin buying homes?” Experts ask an even more telling question – “Will builders ever start building homes Millennials can afford?” The answer is a resounding “possibly.” In recent months, growth in new home sales prices has cooled slightly to about 4% on the top-tier home market. However, on the lower end it’s risen to 8%. Median home prices have gone up roughly 5.4%. Most economists argue that raising starter home prices would spur additional new construction in that market segment.
Homeowners aren’t selling their homes.
In today’s market, for a variety of reasons people aren’t selling their homes and moving as often as they once did. That means there are fewer homes being put on the market – contributing to the inventory problems. While home prices have risen, signaling a great time for homeowners to sell, they’re finding prices on their next home are higher, too. They simply can’t afford to move out and move up.
Demand remains strong.
Historically, home values appreciate at an average annual rate of 3%-3.5%. Currently, home values are appreciating at a higher rate – 5% or more in some markets. Experts cite low home inventory, low mortgage interest rates and a strengthening job market. In addition, as mentioned earlier, buying a home is a more attractive financial decision than renting. According to Zillow, the current breakeven point for home ownership – the length of time a homeowner would need to live in a home before buying would be monetarily advantageous over renting – is 1.8 years. In addition, Trulia estimates in order for that situation to change, mortgage interest rates would have to reach 7% or better. In this economy, that's doubtful.
Be prepared to pay more – and faster.
Columbia SC real estate news sources say it’s not unusual for homes to sell well within the typical average of 45 days – sometimes considerably less. According to industry insiders, that’s the shortest length of time homes have been on the market since 2009. On average, it’s a week faster than a year ago. Analysts expect that will continue at least for the near future.
In addition to the short period of time homes are on the market, they’re also commanding prices that are very near the asking prices. National surveys say homebuyers are paying 95.3% of the asking price – again, the highest in a decade or more. Sources say that in some markets the sale-to-list percentage is more than 100%. The reason? In a hot market with high demand and low inventory, people need to move fast to get the house they want. The more quickly they move, the more likely they are to overpay. Speed leaves little time or desire to negotiate price.
There are other factors on the radar.
As a result of the housing conditions and their collective affect on the market, it’s unlikely the Federal Reserve will raise short term interest rates again this year. The probability that mortgage rates will remain low is pretty good. Of course, anything could happened in a volatile world economy, but most economists say any marked ripple affect would be minimal, at best.
Lastly, since this is a presidential election year, there’s always an unknown factor that hovers above real estate activity. Columbia SC real estate news sources say some brokers are experiencing hesitation from clients to list or buy due to the election’s uncertainty. Expert opinions vary as to if and how the real estate market would be affected – regardless of which candidate wins.
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The Columbia SC home buying experience continues to be an elusive one for many first-time purchasers for a variety of reasons. Student loan debt is among the biggest hurdles facing prospective buyers that ordinarily would be prime candidates to purchase homes. In addition, not only is student loan debt responsible for delaying first time home buyers from entering the market, in some cases it has long-term effects.
A recent study was conducted by the National Association of Realtors in conjunction with SALT, a consumer literacy program provided by the nonprofit American Student Assistance organization. The study’s findings show that 71% of non-homeowners with student loan debt say that debt is the biggest obstacle preventing them from buying a home. Even more concerning was the revelation that more than half of the respondents said their student loan debt would likely keep them from buying for the next five years or more. Let’s examine how the Columbia SC home buying arena is being impacted by student loan debt.
Columbia SC Home Buying: The Student Loan Debt Roadblock
Not only has mounting student debt affected the housing market in terms of purchasing, it remains a serious roadblock for college graduates unable to comfortably afford rising rents in many parts of the U.S. Student loan debt is identified as the main reason 4 out of 10 college graduates still live with family members. These and other findings were the result of the recent survey of 3,000 people who are making on-time payments on their student loans.
The survey showed the lion’s share of those postponing Columbia SC home buying was comprised of older Millennials, aged 26-35. They were also the segment carrying the most debt – ranging from $70,000 to $100,000.
Surprisingly, over half of those surveyed in each segment reported that student debt – regardless of the amount – was affecting their ability to buy a home and postponed their decision to do so. Roughly half of younger Millennials live with family members, some paying rent and some not.
While college graduates as a whole are more likely to maintain steady employment and have the income to qualify for home ownership, their student loan debt payments are standing in the way. As one student put it, “Student loan debt is far outweighing the benefits of my degree.”
Even more frustrating to many is the realization that interest rates on student loan debt is markedly higher than current mortgage interest rates.
A majority of the non-homeowners in the survey who earn more than $50,000 annually reported that their student loan debt adversely affects their ability to save money for a down payment. Those earning $50,000 or more are above the median income level necessary to purchase a single-family home in the U.S.
Student Loan Debt Adding Stress
The added stress of several hundred dollars per month on a student loan when added to the normal demands on a household budget equates to thousands of dollars over time that could be used for a down payment.
A total of 80% of the Millennials in the survey said their student debt clearly hampered their ability – and willingness – to save for a down payment to purchase their first home. While low down payment loan programs are available in the Columbia SC home buying marketplace, those options come with certain restrictions. The low down payment loans have tight limitations on the borrowers debt-to-income ratio, and student loan debt figures heavily in the equation.
Ironically, prospective buyers aren’t alone in their student debt woes. Student loan debt is also responsible for changing the perspective and decisions of potential home sellers. Almost one third of current homeowners surveyed reported they were putting their plans of selling on hold because of their student loan debt. Roughly 20% of respondents said it was just too costly to sell their homes and move to a bigger or better home because of the monthly debt payments.
In addition, 7% of those surveyed reported bad credit marks as a result of student debt issues and 6% said they were still underwater on their home mortgages. They cited student debt as the reason they are unable to pay more towards their mortgage balance.
With inventory low in the Columbia SC market and home ownership at a dramatic low, the problems that student debt adds to first time home buyers is significant.
Younger homeowners are unable or unwilling to sell and move up and many older homeowners are still housing their adult, college graduate children, preventing them from downsizing. Combine that with an usually low number of homes fro sale in the market and it’s a recipe that has pushed prices upward. Real estate professionals say the market is beginning to show a little resistance to higher prices, but the problems still exist.
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