A lot of housing experts and economists are expecting the Columbia SC housing market recovery to gain steam in the new year. But three big factors could still derail the whole ball of wax!
Biggest Threats to the Columbia SC Housing Market
1. Incomes Not Keeping Pace – Despite a much rosier outlook for jobs, incomes are still not keeping pace with Columbia SC housing market prices. And that could make it hard for buyers to afford homes in the areas they want to live in. Income is not rising fast enough and affordability is a growing obstacle to homeownership.
2. Lenders Too Skittish – Mark Zandi of Moody's Analytics says, the key risk to the Columbia SC housing market recovery is still the difficulty many potential homebuyers have getting mortgages.
Even though Fannie Mae and Freddie Mac recently eased lending standards, it doesn't mean lenders are going to take it easier on borrowers. In fact, many lenders may still be too nervous to lend to borrowers who don't have near perfect credit or large cash down payments.
In addition, former homeowners who lost their home to foreclosure may have to overcome damaged credit histories financial burdens brought on by the recession. Meanwhile, Millennials who might be looking to buy have short-lived credit histories and heavy debt loads from student loans to contend with.
3. Sharp Increase in Mortgage Rates – While Fannie Mae doesn't expect to see a sharp jump in mortgage rates, the Federal Reserve could surprise everyone and send its benchmark rate higher than it's projecting.
The Fed is uncharted territory, and if it pushes rates up, it could have a big impact on the market.
Stan Humphries, chief economist for Zillow, said if rates climbed to 6%, it would mean home buyers in some markets like the Columbia SC housing market would be spending more than half of their income for housing.
That would probably mean home prices would have to come down to more affordable levels or sales would slow to a crawl.
Other factors not even part of our 3 biggest threats to the Columbia SC housing market include foreign buyers and investors. What happens if they all stop buying, which is starting to happen in some parts of the country.
Stay tuned, we'll keep you updated on Columbia SC real estate throughout the coming year. Find more Columbia SC housing market news to your right under our Columbia SC Real Estate Categories. And don't forget, we post daily tips on Facebook and Twitter. Be sure to check us out there as well.
The Columbia SC new homes market was a bit on the sluggish side overall in 2014, but some analysts look for things to turn around in the next 2 to 3 years.
Some blame the overall slow comeback on builders who are reluctant to move very far outside of their familiar markets into more peripheral areas as well as their refusing to cut prices.
Columbia SC New Homes Cost Much More
Buyers who purchase Columbia SC new homes are paying much more than those who buy existing Columbia SC homes. The price gap between the two types of homes, which historically has been in the 15 percent to 20 percent range, has ballooned to between 30 percent and 40 percent in recent years, according to data from the National Association of Realtors.
Construction of Columbia SC new homes have been at low levels the last few years. Single-family housing starts nationwide this year reached 650,000, but a more normal rate for the sector is considered to be 1 million. A shortage of new-home construction is putting higher premiums on Columbia SC new homes as well as those in other areas nationwide.
Underproduction of Columbia SC new homes is one key reason for pushing up prices, and that price premium could widen even more if housing starts don't rebound soon. On a national level, NAR projects single-family housing starts to rise to 820,000 in 2015, which is still under the historical average.
We'll keep an eye on this trend for Columbia SC new homes and keep you informed on how builder sentiment and reluctance to lower prices affects the market as we move forward through 2015.
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2014 was an encouraging year for the Columbia SC housing sector. Housing nationwide found itself on a bit of a roller coaster.
2014 kicked off with the "Polar Vortex" blamed for slowing home sales in the early part of the year. As we close the door on 2014, the National Association of Realtors says sales of previously owned homes fell short of 2013's total, while the latest monthly data on new homes show sales were up just 1.8% from a year earlier. Meanwhile, price gains for previously owned homes have slowed significantly. Still, builder confidence in the market for newly constructed, single-family homes has been high for six straight months.
Economists say the Columbia SC housing market is showing mixed signals because it's normalizing, leveling off after a much more rapid recovery last year that was simply unsustainable.
What to Expect for Columbia SC Housing in 2015
Columbia SC home prices didn't increase as fast in 2014, and they are expected to stick to that trend into the new year. Easing housing inventory levels and the exit of investors from the market are helping to put the brakes on home-price escalation. This change represents a fundamental shift in the market: We seem to have moved out of the rapid recovery phase and into a new normal. Gone are the double-digit gains of 2013. The National Association of Realtors predicts an annual gain in home prices of 4 to 5 percent in 2015.
The home buying process should get a little less hectic in 2015, thanks to eased inventory and credit plus the exit of investors from the Columbia SC housing market. Since the recovery began in earnest in late 2012, buyers have really taken it on the chin, forced to contend with low inventory, tight credit, bidding wars and intense competition from investors and all-cash buyers.
Mortgage Rates Seen Rising in 2015
The Mortgage Bankers' Association predicts that rates will rise to 5% by the end of 2015; Freddie Mac's chief economist Frank Nofthaft expects a more cautious average of 4.5% in 2015. The MBA says there is plenty of reason to believe a short-term fund rate hike could come by mid-2015, pushing mortgage interest rates up with it. Still, last year economists predicted that mortgage interest rates would hit 5% by the end of 2014—and yet the average rate for a conventional 30-year, fixed-rate mortgage stood at just 3.93% last week, compared to 4.42% one year earlier. For most of 2014 interest rates were flat or declined. A great reminder that economists can make their predictions, but we wouldn't recommend anyone bet the farm on their forecasts.
Rents likely will continue to keep rising in the new year, and many housing analysts predict that an increase in rental costs in 2015 will outpace annual home-price gains. The rental market will likely remain a “landlord’s market” in 2015, with vacancy rates expected to stay below 5 percent in the new year.
Columbia SC Housing Likely to See More Sellers
More people are expected to try to sell their homes in 2015 (and Realtor.com predicts that existing, or previously owned, home sales will grow 8% in 2015). The entry of these previously owned homes onto the Columbia SC housing market could suppress the demand for more expensive newly constructed homes. Many Millennials forming their own households will need to save for a down payment before buying, so they'll rent instead of buying new homes. The vacancy rate for single-family homes is still near its recession high, which is likely to further depress construction of new single-family homes. So builders will continue to meet the demand for apartments–and multifamily housing could have another strong year, and builders are expected to shift to building less expensive homes.
Foreclosure filings have been on the decline this year and are expected to continue their descent well into 2015. The only uptick has been in foreclosure auctions, which are up 5 percent in November compared to one year earlier. Foreclosures will likely fall to pre-crisis levels in 2015.
The Columbia SC housing market is expected to be driven more by underlying economic fundamentals–job growth, incomes, household formation–than by macro-economic factors such as national price crashes. Mortgage interest rates and price recovery have driven the Columbia SC housing market for a long time. Now we're seeing that those factors aren't nearly as important as local economics.
Stay tuned as we wait to see how many of the 2015 Columbia SC housing market predictions actually come true, and how many of them we'll be looking at this time next year and saying, "Don't believe everything you hear from economic forecasters."
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So you started thinking about selling your Columbia SC real estate, and you figure: Let's wait until the spring or early summer before listing. The yard will look its best and potential buyers will be out in force. And everybody knows that winter is dead time for Columbia SC real estate. Right?
Well, that's the widely held belief. But national statistical studies suggest it's not necessarily the case.
Advantages of Buying Columbia SC Real Estate During Winter
Winter — officially Dec. 21 through March 20 for the current season — can be a surprisingly advantageous time to list, shop, negotiate and buy Columbia SC real estate. Consider some findings by researchers at Redfin, the online realty brokerage.
Redfin studied home listing, sales price and time-on-market data from 2010 through this past October from around the country, updating a two-year analysis it completed last year. It concluded that if you want to sell for more than your asking price, listing in December, January, February and March gives you a better chance, on average, than if you list any time after June through November.
During the past three years, listing during these four months has produced higher percentages of above-asking price sales than any months other than April and May. In 2012, at the inception of the housing rebound, December listings produced the highest percentage of above-asking sales for the entire year: 17 percent.
Researchers are quick to note that the advantages of listing their Columbia SC real estate in winter compared with other seasons are not huge. But the fact that winter produces at least competitive or better results by some measures should encourage some potential sellers to get into the game sooner rather than later.
For potential buyers of Columbia SC real estate, the winter season may find some sellers more flexible about negotiations over prices and terms than they would during the middle of the spring.
In its two-year study completed last December, researchers found that sellers of Columbia SC real estate were better off listing their homes in the winter than during any other season.
Bottom line: Columbia SC real estate does not hibernate from December through March. More than 5 million homes typically are resold annually in the United States, and many of them are listed and sold during the winter months. In strong local housing markets such as Columbia SC , the likelihood of selling your home within 180 days is higher when you list during the winter months compared with any other season, according to Redfin's 2013 study.
With the forecast of higher mortgage rates on the horizon, there may never be a more affordable time to buy Columbia SC real estate than right now. Talk to us about rates, and where prices are for Columbia SC real estate. We're here to help you in any way that we can.
We have more articles about buying and selling Columbia SC real estate in the sections on Columbia SC Home Buying Tips and Columbia SC Home Selling Tips under our Columbia SC Real Estate Categories to your right.
Don't forget, we also post tips and news about Columbia SC real estate and other general real estate news daily at Twitter and Facebook. Be sure to follow us there.
First-time Columbia SC homebuyers now account for only one-third of all home purchases, the lowest share since 1987.
That's according to an annual survey conducted by the National Association of Realtors, which questioned a random sample of people who purchased homes between July 2013 and June 2014.
Reasons First Time Columbia SC Homebuyers Are Vanishing
Of the many reasons first time Columbia SC homebuyers seem to be disappearing, rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who've experienced limited job prospects and flat wage growth since entering the work force. Adding even more trouble for would-be first time Columbia SC homebuyers, those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.
Wages should go up as the job market continues to improve, but first time Columbia SC homebuyers report that getting a mortgage is a lot harder than they expected.
NAR Chief Economist Lawrence Yun said in a statement recently, "Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years."
The median age of first time homebuyers nationwide was 31, and their median income was $68,300. Their typical purchase: a 1,570-square foot home costing $169,000, something that is increasingly more difficult to find in the Columbia SC real estate market.
The typical repeat buyer, by contrast, was 53, with an income of $95,000. Repeat buyers bought bigger and more expensive homes.
Home sellers, meanwhile, are getting older: 54 on average now vs. 46 back in 2009. The typical seller has been in his or her house for 10 years — a new high.
If the share of first time Columbia SC homebuyers continues to shrink, many homeowners who would like to move up to a more expensive house may find it harder to sell their current home.
To stay abreast of news that affects the Columbia SC real estate market, bookmark our site and check back often. We also post tips and news daily at Twitter and Facebook. Be sure to follow us there.