A combination of rising Columbia SC home prices and higher interest rates are making home affordability increasingly out of reach for many.
Even at 4 percent, the long-term mortgage rate has been in historical territory not seen in 60 years since the low for the 30-year fixed was set at 3.31 percent last November. Interest rates for 30-year fixed-rate mortgages have risen about 0.5 percentage points over the past several weeks and are expected to hover between 4.0 and 5.0 percent during the second half of 2013.
Columbia SC Home Prices Still Within Reach
Combined with rising Columbia SC home prices, affordability is out of reach already for a typical household according to Freddie Mac's monthly housing market outlook for June.
Freddie Mac vice president and chief economist Frank Nothaft thinks while rising interest rates will reduce housing demand, rates would have to increase considerably more before the reduction in demand for home purchases would be substantial.
Freddie Mac believes that at today's Columbia SC home prices and income levels, mortgage rates would have to be nearly 7 percent before the median priced home would be unaffordable to a family making the median income in the Columbia SC area.
With high affordability, markets can absorb a further rise in mortgage rates before we would expect housing activity to slow substantially. After all, real interest rates are still half of what they were prior to the recession and are still very low by historic standards.
Look for a sharp decline in refinance volume in the second half of this year. Freddie Mac projects that refinance originations will total about $1.1 trillion in 2013, down from $1.5 trillion in 2012.
There are several factors we believe will cause increases in Columbia SC home prices to slow down in coming months.
As of the first quarter of 2013, average Columbia SC home prices, as well as prices across the United States are back at their mid-2003 levels.
One of the most widely followed measures of Columbia SC home prices jumped 10.9 percent year-over-year in March, beating most expectations in a resounding reminder of the housing rebound in the cities covered by the S&P/Case-Shiller indices.
You may have also noticed more "For Rent" signs of late. This appears to be a nationwide trend that has turned some would-be-sellers into landlords because they are underwater on their mortgage and unable to sell their home. Many of these are homeowners who would sell if they had enough equity to do so.
Why Columbia SC Home Prices Slowing Down Won't Be All Bad
Given the low level of inventory, pent up demand, and significant investor buying, real prices have been increasing fairly rapidly over the last year. We expect more inventory to come on the market as sellers who were forced to stay on the sidelines due to the lower prices get back into the market, thereby causing price increases to slow down.
This would not necessarily be such a bad thing, in that prices rising too fast can actually thrust us into another housing bubble, and no one wants to go through that again. We'd like to see Columbia SC home prices move more sideways for a year or two to give the market more stabilization.
We believe the combination of more homeowners putting their homes on the market, along with rising interest rates on mortgages, will slow down the increases we've been seeing in Columbia SC home prices.
We'd love to know how you, our readers, feel about the latest report on Columbia SC home prices. Do you think we're heading for another bubble, or will things slow down as more inventory hits the market? Your comments and thoughts are welcomed and encouraged.
After a rough past 5 to 7 years, Columbia SC home prices are slowly returning to normal, and Case-Shiller predicts home prices will continue to average 3.3% increases annually over the next 5 years.
The Columbia SC housing market was the closest thing to being called “normal” in 2012 that we’d seen since 1977. For the past 14 or 15 years, Columbia SC home prices and sales have either been boosted by a bubble mentality, or by crash psychology. From 1998 until the peak of the housing bubble in 2006, Columbia SC home prices grew by more than 5% a year. But once the bubble burst, prices plunged, falling over 30% through the middle of last year.
It wasn’t until late 2011 that markets started to stabilize. Between September 2011 and September 2012, average U.S. home prices rose 3.6%. By then, 62% of the 384 metro areas Case-Shiller tracks reported rising home prices, up from just 12.5% of all markets during the same period a year earlier.
By the end of 2013, some analysts predict Columbia SC home prices will be heading even higher. Of course, we all know that real estate is local, and depending on where in the Columbia SC area you are, foreclosures still working their way through the system may keep prices softer in your neighborhood than in others.
Other than the remaining foreclosure inventory still being dealt with, there are many positive trends in today’s market. Columbia SC home prices are extremely affordable and mortgage rates are still near historic lows.
Overall, Case-Shiller expects stronger demand for housing going forward, and the sector should once again have positive impact on the overall economy.
We’ll continue to closely monitor the Columbia SC home prices and sales and let you know where things are going. Our advice would be, “if you’re waiting for a bottom, you appear to have waited too long… as Columbia SC home prices definitely appear to be heading in a northerly direction now. Give us a call, or fill out our contact form if you’d like for us to contact you about any particular home you see listed in our MLS.
We encourage you to look around at the homes for sale on our site here, and let us know if there is anything we can assist you with. Columbia SC home prices won’t be getting any lower than they are now, so if you’re ready to get into your own home, or move up to a larger home, we’re here to help.
Columbia SC home prices are expected to rise a modest one to two percent in 2013 from the fourth quarter of 2012. Gains in some areas of Columbia SC will be stronger than others, but overall, Columbia SC home prices have finally turned the corner, and we see no reason to be fearful of further large price declines.
This creates a new playing field for homeowners, who are finally able to sell, as well as would-be buyers who’ve been delaying a purchase in anticipation that prices would keep falling.
The Mortgage Bankers Association forecasts that more and more house hunters will start coming off the sidelines, with new-home loans for purchases expected to jump 55%, based in dollars, in 2013.
Are Columbia SC Home Prices Set to Skyrocket Again?
With these things being said, don’t expect Columbia SC home prices to be off to the races again in a year or two. We just don’t see that happening.
Homes in many markets are selling in a matter of weeks, often attracting multiple bids — but only the ones that are properly priced.
With competition heating up, casual house shopping isn’t going to cut it anymore. If you are serious about making a move, be prepared to make an offer. If a house has been on the market for three months or longer, you can afford to be more aggressive, but if it’s a new listing, a low-ball bid will get you ignored.
If tight lending standards return to historical norms, the real estate market could see an additional 500,000 to 700,000 home sales in 2013.
Since jobs are the engine of the housing market, a pickup in hiring later in the year, which economists are predicting, could accelerate a real estate rebound in the second half of 2013, meaning even higher Columbia SC home prices the longer you wait to purchase.
Columbia SC 
home prices have been rising steadily for the past several months, but some fear the rapid increase could actually start hurting the housing recovery.
The rise in Columbia SC home prices is mainly due to investors, mostly large hedge funds, that have been swooping into various area and inhaling properties as fast as their plentiful cash will let them. They are turning those properties into rentals, and getting anywhere from 8 to 12 percent returns on their investments, thanks to still hot demand. The trouble is, as Columbia SC home prices rise, those returns shrink.
Columbia SC Home Prices Recovery at Different Rates
While Columbia SC home prices are recovering at a somewhat different pace than the rest of the country, they are recovering. Some areas are still in the red, while other areas are seeing double-digit increases in prices.
Even outside the Columbia SC market, this national housing recovery is dependent on investors, who are largely all-cash buyers. The mortgage market is still too restrictive to support the kind of bulk-buying that needs to occur, and many potential buyers either lack the credit scores or the confidence to jump in. Another 14 million borrowers still owe more on their mortgages than their homes are worth, according to Zillow, and are therefore unable to move.
Foreclosures will remain elevated for the foreseeable future because 5 million properties nationwide are either in the foreclosure process, or their owners are behind on their mortgages. Another concern is that Columbia SC home prices are rising faster than incomes, which could push owner-occupants away just as they were starting to get into the market again.
Nationwide, the risk of sales dropping as investors leave different markets is higher where the biggest drop in prices was felt in the first place, like Columbia SC home prices. While we believe the market has turned positive for the most part, there are still some areas of the economy that could affect Columbia SC home prices in the future, and we’ll keep you up to date on those right here on our website. Bookmark our site and check back daily, or add our RSS feed to your RSS reader for continuous updates.