Mortgage amounts are rising more quickly than Columbia SC home prices, an unusual phenomenon that seems to confirm continued weakness at the lower end of the housing market, according to the Mortgage Bankers Association.
When Mortgages Began to Exceed Columbia SC Home Prices
The average size of mortgage loans began to outpace the recovery in Columbia SC home prices in September 2011. By December 2014, according to the trade association's weekly mortgage application survey, the average mortgage loan amount had risen by nearly 32 percent. The average for the week ending March 6, for example, was $294,900, a record high. In other words, the average mortgage now exceeds levels reached before the recession when Columbia SC home prices climbed to unsustainable heights.
There is a lot more activity at the higher end in general. Jumbo loans (which exceed conventional conforming loan limits) account for about 25 percent of mortgages. The brisker activity among jumbo borrowers — those who take out loans greater than $417,000 — is partly because, while there has lately been some loosening of credit for borrowers at the lower end, for the most part, the easing of guidelines has been a bit more on the jumbo end.
Buyers on the lower end — looking for Columbia SC home prices at $250,000 and below — are generally of moderate credit and are having trouble or being intimidated from applying for mortgages.
Borrowers are still being rejected at a historically high rate. According to the Federal Reserve, consumer attitudes towards the availability of applying for, and getting, a mortgage is not changing. Fully 40% of those who might want a mortgage think they’ll be rejected if they apply.
Just in the last year, the mortgage rejection rate jumped 10%, from around 15% of mortgage applications being rejected to nearly 25% being rejected. Even though word may be getting out that there are more types of mortgages available, such as the recent low-down-payment options from the government-sponsored enterprises, the sad reality is that of those people who think they can get a mortgage, too many aren't even applying.
We will continue to monitor Columbia SC home prices and the mortgage market as it relates to prospective buyers and their desire to get their own home in 2015.
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In our Columbia SC Real Estate News for March 2015:
Home Prices Up Year-Over-Year
Home prices across most of the country were down for December, but still faired better than they were a year ago.
Black Knight Financial Services released its latest Home Price Index Report this past week, which showed that home prices nationwide were down an almost-flat 0.1 percent in December. At the same time, 2014 ended with home prices doing 4.5 percent better than a year prior.
According to the report, the average home prices in the U.S. in December were around $241,000, up from $230,000 a year before and inching closer to the June 2006 peak of $268,000.
The Northeast and Midwest showed the most notable price drops in December, while a few metro areas actually showed rising home prices for the month.
It's not unusual to see home prices and sales drop off during December, as most people have their focus on the holidays. However, data suggests that's all about to change…
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Why Columbia SC Home Prices May be Ready to Lift Off
Data suggests that Columbia SC home prices are about to accelerate.
Earlier this week, the S&P/Case-Shiller Home Price Index, on a month-over-month nonseasonally adjusted basis, posted an increase for the first time since August. Winter's chill is beginning to thaw, even though old man winter is still clinging on in many areas. On a seasonally adjusted basis, the index posted its best price gain since 2014. Prices, however, are still more than 16 percent below their prerecession peaks.
A few things have been holding back Columbia SC home prices lately. For one, inventories have dried up a little, limiting choices. The National Association of Realtors (NAR) notes that families are staying in their homes longer, an average of 10 years vs. the long-term norm of seven years. Wage gains have also been lukewarm so far in the recovery, which is hampering first-time buyers. And evidence shows that student loan debt is limiting the ability of many Millennials to get a mortgage.
Yet positives are showing up.
The household formation rate has increased to its highest level since the housing bubble. New-purchase mortgage applications are inching higher, thanks to the recent decline in home loan interest rates. (See our next story below)
New first-time homebuyer affordability, according to the NAR, has returned to early 2014 levels. And thanks to deleveraging efforts — defaults, short sales and the like — household mortgage debt has returned to 2001 levels, according to data from the Federal Reserve.
While some hurdles still remain, including relatively tight mortgage credit conditions, Columbia SC home prices look ready to accelerate as winter — which has been brutal in much of the country — gives way to the summertime peak in housing activity. Plus, this year's prices could get a boost because relatively fewer homes are available. As Columbia SC home prices rise, new construction activity will follow, providing a lift to U.S. economic growth later this year.
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Columbia SC Mortgage Rates Rise for Third Straight Week
Columbia SC mortgage rates are still well below year-ago levels, but rates rose for the third consecutive week this past week.
Freddie Mac says the average rate on a 30-year fixed-rate mortgage rose to 3.80 percent in the week ending Feb. 26, up from 3.76 percent last week. A year ago, 30-year rates averaged 4.37 percent.
A 15-year fix averaged 3.07 percent this week, up from 3.05 percent. A one-year adjustable-rate mortgage averaged 2.44 percent, down from 2.45 percent.
Freddie Mac says rates rose this week, in part, on strong housing data. New home sales topped expectations in January, hovering near a six year high. The monthly S&P/Case-Shiller Home Price Index showed prices in December in the 20 largest cities were up an average of 4.6 percent from a year earlier.
Stay plugged in with us right here, and we'll keep you up to date on Columbia SC mortgage rates, as well as news affecting interest rates overall.
Columbia SC home prices increased in August, yet the pace of these gains continues to slow, helping to improve affordability for potential buyers.
Real estate data provider CoreLogic said recently that Columbia SC home prices rose 6.4 percent in August compared with a year ago. That marks a decline from an annual gain of 6.8 percent in July. Columbia SC home prices had been rising as much as 12 percent yearly toward the end of last year.
Columbia SC Home Prices Not Adjusted for Seasonality
Prices rose 0.3 percent in August from July. But CoreLogic's monthly figures aren't adjusted for seasonality, such as buying that occurs during warmer weather.
Sales struck a plateau in the middle of last year and have remained subdued for much of 2014. As sales have slowed, so have price gains. That should eventually make it easier for would-be buyers to afford a Columbia SC home.
As the pace of price gains has slowed, so have sales of existing homes.
Home Prices Dropping Nationwide Too
Nationwide, the National Association of Realtors reports that purchases fell 1.8 percent to a seasonally adjusted annual rate of 5.05 million in August. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward. Overall, the pace of home sales has dropped 5.3 percent year-over-year.
Economists associate annual sales of 5.5 million with a healthy market.
The NAR also said that median sales prices had risen 4.8 percent over the past 12 months to $219,800, but that average slipped slightly in August compared to prices in July and June.
Follow news on Columbia SC home prices and the housing recovery right here by periodically checking back in the Columbia SC Real Estate News section of our website under Columbia SC Real Estate Categories.
The growth of Columbia SC home prices, both the quarter-over-quarter and year-over-year, are lower than they were 12 months ago, but wages are not keeping up. This word according to data released from Trulia for July 2014.
The month-over-month increase in asking Columbia SC home prices of 0.8% was in line with the average monthly gain over the past year, settling back down after a 1.2% month-over-month gain in June. The quarter-over-quarter increase of 2.5% remains below the level of last spring's price spurt, when the quarter-over-quarter increase was 3% or higher in March through June 2013.
Columbia SC Home Prices Continue Widespread Increases
Although Columbia SC home prices aren't rising as fast as they did in spring 2013, price increases continue to be widespread with overall year-over-year price gains, and quarter-over-quarter gains.
Nationwide, for the first time in more than two years, none of the 100 largest U.S. metros had a year-over-year price increase above 15%. The stagnation of wages and household income, though, shows that as Trulia states, incomes aren't keeping pace with even slowing price gains.
Why are home prices in some areas rising faster than others, and why are some actually falling? Because the housing market is still recovering from the bust, and local markets where prices had fallen most are now seeing larger price gains. That's the "rebound effect," which was fueled by investors and other home buyers scooping up relative bargains. Once those bargains are gone, there's no more room to rebound.
We're already seeing gains in Columbia SC home prices slow dramatically or even reverse slightly in some isolated locations.
Stay abreast of all the news affecting Columbia SC home prices right here at our website. More articles regarding Columbia SC housing can be found in the Columbia SC Real Estate section, or the Columbia SC Real Estate News section, both to your right under Columbia SC Real Estate Categories.
Columbia SC home prices are hitting highs not seen in years, thanks mostly due to low inventory.
Still, as many borrowers struggle with unwieldy mortgage payments, and certain areas are still deluged by foreclosures, news of record high prices are causing some concern. Looking forward, economists expect home-price growth to slow down.
CoreLogic’s deputy chief economist Sam Khater said in a statement, "We are at or slightly above where we should be from an equilibrium stand point and what had been driving prices up rapidly is just the price correction because home prices fell too far."
On the one hand, home buyers are fearful they won't be able to find a home. On the other hand, home sellers are ecstatic as Columbia SC home prices soar. Diane Olick has more on this dilemma…
We have other articles and tips pertaining to the Columbia SC real estate market and rising Columbia SC home prices. We have tips for buying a home, including things you need to know before, during and after the home buying process. Check out our other Columbia SC Home Buying Tips to your right under Columbia SC Real Estate Categories.