As Columbia SC home improvements heat up, homeowners are spending money on their homes in greater numbers than almost ever before. Fueled by the added home equity rising home values have produced in the last few years, savvy homeowners are investing money in those Columbia SC home improvements that will give their homes the greatest returns on investment – in the form of even higher sales prices at a later date. Here’s a closer look at what’s causing the phenomenon and what you can expect in the future.
Columbia SC Home Improvements Raise Values
Homeowners who have elected to cash in on their home equity gains in order to undertake bigger and better remodeling projects are on track to increase spending on Columbia SC home improvements by more than 8% by the first part of 2017. This, according to a recently released report by Harvard’s Joint Center for Housing, is a considerable boost from the historical average of 4.9% annually.
Analysts predict the pace will signal a complete recovery of the national home remodeling market by the middle of 2017 – up from the worst decrease since such statistics have been tracked. After adjusting for inflation, the annual expenditure is expected to reach $321 billion, slightly less than the previous record set in 2006 prior to the housing crash.
The comeback story of home equity in recent years, along with near-record low mortgage interest rates, have enabled homeowners throughout the nation to refinance and tap into the cash from their homes. During the first quarter of 2016, homeowners gained more than $260 billion in home equity. That impressive gain means that 38 million borrowers now enjoy a minimum of 20% equity in their homes – according to a recent release by Black Knight Financial Services. In addition to greater equity and lower interest rates, consumer confidence has also been an important factor in the growth in Columbia SC home improvements. With increasing homeowner confidence comes greater desire and willingness to further invest in their homes. For many homeowners, kitchen and bathroom remodeling projects are the most popular. Surprisingly, however, one of the Columbia SC home improvements that can yield the highest return on the investment dollars spent is added insulation. In addition, home improvement contractors say multiform remodeling projects are up more than 67% from a year ago. Furthermore, roughly 25% of remodeling firms report their clients are undertaking multiple projects simultaneously.
Economists say this phenomenon in home improvement activity is a classic example of what one termed, “nesting is investing.” Simply put, it’s the feeling homeowners have that spurs them to do something that will add value to their house. It reinforces pride in ownership and the idea that homeowners recognize the appeal their homes have to prospective purchasers – especially if the homes are well maintained and modernized with the conveniences that appeal to today’s home shoppers. Not only does nesting factor into the home improvements, the growth in home sales activity also helps increase remodeling activity. As homeowners prepare their homes for the real estate market they often perform repair and refinishing work to improve curb appeal and maximize the impact of the first impression a prospective buyer may have.
Growth in Columbia SC Home Improvements
Growth in the Columbia SC home improvements and remodeling sector has been a welcomed addition to category retailers such as Home Depot, Lowe’s, Sherwin Williams and others. As a result, their stock prices have risen in the past few months. That trend is likely to continue throughout the next several months and into 2017. This boost comes at an especially good time, as homebuilders are building fewer homes than are required to meet the market demand. Existing homeowners, therefore, are doing everything they can to make the necessary improvements to help their homes look new again.
Homeowners are less likely to move due to the lagging supply of new homes, so they often choose to have improvements completed that they had previously put off for various reasons. Now, with the additional equity available – coupled with the low cost associated with refinancing – luxuries such as outdoor kitchens, decks and patios, and swimming pools are within reach. Best of all, while homeowners are conducting Columbia SC home improvements at near-record investment levels, loan-to-value (LTV) ratios are still relatively low, on average 68% – considerably lower than a decade ago. This means homeowners are in a much more stable equity position than that of their peers during the most recent housing crisis, where many borrowers were underwater with their LTV ratios.
Regardless of whether the motivation to perform home improvements or renovation projects is for the current homeowner’s benefit or to better position it to sell at a later date, the bottom line is improvements are occurring at a near-record rate. That should help the resale market because improved homes – assuming the improvements contribute to increased value – should sell at higher prices in the future when compared to homes that haven’t been renovated. Even relatively inexpensive improvements such as energy-efficient appliances or smart home technology can add value to an existing home – especially in the eyes of younger buyers who have become accustomed to cutting edge technology. In addition, younger buyers are more environmentally conscious and are attracted to homes showcasing those features.
While homeowners are tapping their equity sources to perform needed or desired improvements, don’t look for older homeowners to overspend on the work or overextend themselves when they borrow. Similarly, there is a segment of the homeowner population that will be more cautious than others in borrowing against their home’s equity. Many of these homeowners have recently been through the worst of times. They’ve witnessed family members, friends and coworkers experience problems when what they owe on their home mortgages exceed the value of their home.
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The Columbia SC real estate market has probably changed quite a bit since the last time you were part of a home sale closing, if ever. Not only has the housing market changed dramatically in recent years, but so have mortgage lending requirements. In addition, as a homeowner your needs and desires for your next home have probably changed, too. So, if you’re looking to move up or move out of your present home you’re likely in the middle of a well-known dilemma: Should you sell your current home first or buy your new one? Let’s take a closer look at that situation and consider a few ideas.
Columbia SC Real Estate – Making the Right Move
A logical place to start to analyze the problem of whether to sell first or buy first is to examine just how much risk you’re willing to take. If you fancy yourself a veritable Las Vegas gambler that goes “all-in” every chance he gets, you may decide to assume a greater risk than some people. So, if you elected to buy your new home before you sold your existing home, the possibility of having two house payments at the same time may be less stressful for you than for others. Conversely, if you felt that situation would lead to sleepless nights you’d probably be more comfortable – and well rested – by taking a more conservative approach. That will entail selling your current home first before you started your new home search.
In addition to your risk tolerance, there are some other factors that could potentially sway your decision. Because Columbia SC real estate prices have risen while housing inventory from which to choose continues to be thin, it’s possible you could sell your existing home but not be lucky enough to find a new home immediately. What could make matters worse is, if the added stress and pressure to rush to find a new house led you to settle for something less desirable than you wanted.
Columbia SC real estate experts suggest you ask yourself these important questions to more fully understand the timing of your current home’s sale and your next purchase.
Can you afford two mortgage loans at the same time?
Carefully examine your income and obligations to determine, are you able to comfortably afford two mortgage payments at the same time? If the honest answer is “no,” then do yourself a favor and sell your current home first. A mortgage lender will ask the same question and perform the same financial analysis. Remember, just because you can afford it, doesn’t mean you should.
Some lending institutions offer bridge loans – short-term loans designed to allow flexibility between selling one home and buying another. The normal term is six months to a year.
Another consideration is where your down payment will come from. Do you have enough money in a savings or investment account you plan to liquidate? If not, are you planning to use the equity in your existing home? While some lenders may be willing to provide you with a 100% conventional loan – enabling you to buy the new home without first selling your current one – some lenders may not.
How soon do you want or need to move?
Often the biggest deciding factor of what to do first in the selling-then-buying versus the buying-then-selling conundrum is how quickly they want or need to make the move. If you’ve taken a new job that requires you to relocate out of state, it may be best to put your home on the market first. That way, as you make plans to move and begin your new home search if your home sells it will make your relocation easier and less stressful. However, if you're simply shopping for a larger home or want to move into a nicer neighborhood it could be better to not sell your home immediately. Wait until you find a new one that best fits your needs. This is where the advice of an experienced Columbia SC real estate agent can be invaluable.
Are you aware of the newest regulations?
If it’s been awhile since you’ve bought a new home with a mortgage, you’ll need to be aware of some new federal regulations that took affect late last year. The TILA-RESPA Integrated Disclosure rules now require mortgage lenders to give new borrowers two forms – one at the beginning of the loan application process, and one upon loan approval. The importance of these forms is this: The Closing Disclosure form must be given to the borrower no less than three days before the loan closing. You can no longer expect to close on the sale of your existing home one day and close on the new home purchase the next.
The Closing Disclosure requires the lender to have all the integral parts of the mortgage loan finalized and approved prior to the three-day period. The result often means selling one home and buying the next can be a little “iffy.” Closing delays are a likely possibility. Know what to expect and rely on the advice of your mortgage lender and Columbia SC real estate agent. It can help make the process flow smoother, without snags or delays.
Do you need a negotiating advantage?
Some experts say that purchasing your next home before selling your existing one has distinct benefits. Make an offer to purchase a home without the often-used contingency on the sale of your current home. It will likely be considered more favorably by most sellers. So, if you can swing both loan payments or can get a bridge loan or other financing, go for it!
Do you have somewhere to move while you wait to buy a new house?
As we’ve discussed, a tight housing market with low inventory gives you little from which to choose. As a result, you could find yourself without a home if you sell prior to buying something else. Before making a move requiring you to find a new home quickly or renting a place, think it through. Don’t panic or rush into buying a home you don’t really want. Take your time and make a plan. Remember, too, that it’s okay to rent while you’re looking to buy something new. Be aware that most rentals require at least a six-month lease – and many require a year.
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Columbia SC insurance experts report many first time homeowners find buying home insurance more than a little intimidating. Insurance professionals recommend prospective buyers consider a few common questions before they begin shopping for coverage. Doing so may give first time buyers a better understanding of Columbia SC insurance and a greater comfort level as they discuss their insurance needs.
Columbia SC Insurance – Some Q&A
Let’s examine some frequently asked questions from first time home buyers.
Am I required to get insurance prior to buying a home?
Some may find this surprising, but the answer is actually, no. While most states require drivers to have auto insurance coverage on a newly-purchased vehicle, that's not the case with a home. The big exception, of course, is if you are taking out a mortgage loan to purchase your home, the lender will almost always require home insurance coverage in at least the amount of the mortgage to protect the collateral.
What type of coverage is included?
Most standard home insurance policies generally cover the structure of the home, its contents (furnishings, appliances and personal items,) other structures on the property, and additional living expenses. Here’s a closer look at each:
The Structure: In the event your home is damaged or totally destroyed by a fire or other covered peril, your insurance policy will cover most of the expenses required to repair or re-construct the house. Keep in mind, the coverage of your structure isn’t necessarily the same as the amount your home cost when you bought it. Most Columbia SC insurance experts recommend having structure coverage in an amount required to completely rebuild your home in the event of a total loss.
The Contents: Contents coverage applies to your personal possessions in the home. This portion of your insurance policy is activated if your belongings are damaged or destroyed by a covered peril, such as a fire. A word of caution, however, if you own items of higher value like expensive jewelry, rare antiques or a valuable art collection, most insurance policies contain a maximum – or cap – on the repair or replacement value of those items. Typically, the cap is $1,000-$2,000. Most Columbia SC insurance companies can add a rider to your existing policy to increase the coverage amount for your higher-valued possessions.
Liability Coverage: Liability coverage is the part of your home insurance that can help pay for medical, rehabilitation, or funeral expenses if a person is injured while on your covered property. In addition, if the injured party sues you that coverage can help pay for the costs associated with the lawsuit – and its consequences.
Although coverage amounts vary, typical liability coverage limits are $100,000. According to Columbia SC insurance professionals you should consider setting coverage limits between $300,000 and $500,000. This is especially true if your home features what lawyers term “attractive nuisances,” such as a swimming pool, a trampoline or a swing set. Because these items are often responsible for home injuries, increasing coverage limits is recommended since today’s medical and legal costs can mount quickly.
Other Structures: Additional structures on your property such as a detached garage, tool shed, workshop or children’s playhouse are covered in the event of damage or loss by a covered peril. This portion of your policy would help pay to repair or reconstruct the structures.
Additional Living Expenses: Should your home be destroyed by a covered peril, this coverage can help pay for living expenses like hotel accommodations and food expenses for the amount of time you’re displaced from your home. It is highly recommended you discuss this with your insurance company to understand the limits of coverage. Most policies limit the amount of time you and your family would be covered.
What are covered perils?
Standard Columbia SC insurance policies cover damage as a result of fire, hail, lightning, windstorms, theft, vandalism, explosions, and riots. In addition, water damage from frozen, burst, or leaking pipes is usually covered. Remember, damage caused by earthquakes or floods is not covered. Those natural disasters require separate policies for each specific coverage.
How much coverage do I need?
The best way to make sure you have enough coverage is to take a complete inventory of your home. Make a list of everything you own and the value of each item. It’s best to have a photo or video file of your possessions and, if possible, include the receipts or other proof showing the amount you paid for them. Make several copies of the inventory list and keep them in various safe locations like a bank safe deposit box, a personal file in your office, or at the home of a relative. Meet with your insurance company and review the list with your agent. They will best determine the amount of coverage you need.
What determines my premium?
The cost of your Columbia SC insurance policy is determined by these factors:
- Your credit score
- Your claims history (both personally and the history for the area in which you live)
- Your home’s location
- Your home’s age
- Costs to rebuild your home
- Your home’s proximity to a fire hydrant or fire department
- Whether you own pets or not. For example, owning a dog – especially certain breeds – may require additional liability coverage
- The types of coverage you choose
How can I save money on my premiums?
Consider these money-saving ideas:
- Discounts. There are discounts available. Having your home and auto insurance with the same company can often earn a discount. Having home safety features such as security systems or smoke alarms can also save money.
- Raise the deductible. Your deductible is the amount of money you have to pay out of pocket on a claim before your insurance begins to pay. Increasing the deductible will save money on your premium. Be careful, however, that you don’t create a financial hardship if you have a claim by having your deductible too high.
- Increase your credit score. Insurance companies use statistics citing your credit score as an indicator of how likely you are to file an insurance claim. Do what you can to improve your credit score. Increasing your score can decrease premium payments.
How do I select a company?
Like most large purchases, we suggest you shop around. Most Columbia SC insurance companies offer different coverage terms and costs. Get quotes from several companies and compare what each covers and what it costs.
You can find more articles pertaining to Columbia SC insurance in the Columbia SC Insurance section of our site below Columbia SC Real Estate Categories in the column to your right.
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Columbia SC home selling can often take time and try a homeowner’s patience. To successfully accomplish the goal of selling your home, planning ahead is vitally important. One of the best plans a prospective seller can have is to hire the right real estate agent.
Columbia SC Home Selling – Ask an Agent
It’s important to select a real estate agent who’s able to gain your trust and confidence, inform and educate you as a homeowner, and effectively promote your home for sale. A good agent will be expected to be responsible for all aspects of selling your home – from hosting open houses to working with potential buyers and/or their agents.
Prior to hiring an agent, we suggest asking the following five questions to make sure you make the best choice.
What is your experience and local market expertise?
While experience doesn’t necessarily equate to skill, most real estate agents with years of experience, impressive recommendations and a good education will likely be very qualified. Don’t be bashful in your interview. Ask your prospective agent if they work full time or part time. Find out how many homes they’ve sold in the past year, two years and three years. Ask how many other sellers they are currently representing.
Are you a member of a real estate agent organization?
Agents who are members of a professional organization usually have pledged to conduct themselves according to the organization’s bylaws and code of ethics. In addition, find out what additional training or certifications they may have that could give them an advantage over others in the Columbia SC home selling market. As an example, an agent designated as a "Certified Residential Specialist" has attended a series of training classes in residential real estate. Additionally, many agents in recent years have become certified in short sales, foreclosures, and other specialties.
What is your marketing plan to sell my home?
A knowledgeable agent knows that a combination of effective marketing efforts is necessary in today’s market to successfully sell a home. Because online marketing is so important in the Columbia SC home selling arena, ask your prospective agent how many photos of your home will be taken. Will they be taken by a professional real estate photographer? Because it’s such a popular feature on the Internet and social media channels, will the sales efforts include video? Ask your potential agent about additional marketing materials, other advertising, home staging, open houses and listing your home on various real estate websites such as Trulia, Zillow, Realtor.com and more.
In today’s real estate marketplace, a larger number of home shoppers than ever start their search online. Therefore, professional photography, videography and home staging can give your home the Internet equivalent of “curb appeal” before prospects actually visit it in person.
Discuss your prospective agent’s plans and strategy. Listen for concise, comprehensive and aggressive ideas.
Do you have any recommended service providers we should work with?
Seasoned, experienced Columbia SC home selling experts are usually well known in their community and they have a network of sources within the real estate industry. So, when you conduct an interview with a prospective agent, inquire about other professionals such as mortgage lenders, home inspectors, or contractors. Using the resources your agent may be able to bring to the table will give you an advantage in the long run. It will not only save time, but once you're satisfied with the agent you select, you should have an equally high degree of confidence in the third parties he/she may recommend for various aspects of your home sale.
Can you provide me with three previous client references?
It’s not unusual, of course, for a prospective employer to ask for references as part of a job interview. In much the same way, since you’re considering “hiring” a real estate agent, don’t hesitate to ask them for client references. Contact the references by phone or email and ask them to share their experiences in working with the prospective agent. In addition, ask your potential agent about customer reviews and client testimonials.
After you’ve conducted interviews and asked these questions of your prospective real estate agents, you'll have a pretty good idea about who to select and why. Choose the agent that best meets the criteria you expect from a Columbia SC home selling expert. Remember, the “partnership” you form with your real estate professional is vitally important to its success. Make sure you and your real estate agent are on the same page in every aspect of the sales process – from the listing to the closing table.
Most importantly, make sure you understand the comparable sales in your neighborhood when it comes time to discuss your home’s listing price. If you’re far apart from each other, that’s probably an early sign of potential problems down the road. However, keep in mind – no matter what emotional or personal connection you have to your home – your agent is the expert. They can recommend the best sales price to ask for your home. More importantly, the price will be based on what the current real estate market will bear. A good listing agent wants to sell your home for as much money as the market can support. Anything more and your home may stay on the market longer than you want. Anything less and you may end up leaving money on the proverbial table.
See more articles pertaining to selling a home in Columbia SC in the Columbia SC Home Selling Tips section of our site below Columbia SC Real Estate Categories in the column to your right.
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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.
See more articles pertaining to real estate news in the section of articles on Columbia SC Real Estate News just below Columbia SC Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.