Experts and economists agree, Columbia SC home values are expected to end 2013 up an average of 4.6 percent, and rise cumulatively by 22 percent over the next 5 years. These percentage increases come from a nationwide panel of economists, real estate experts and market professionals in every market, not just the Columbia SC market.
Columbia SC Home Values Expected to Continue Upward
Survey respondents predicted Columbia SC home values will rise another 4.2 percent on average in 2014, before moderating somewhat to annual appreciation rates between 3.6 percent and 3.8 percent for 2015, 2016 and 2017. On average, panelists predicted Columbia SC home values to rise 4.1 percent annually from 2013 through 2017, exceeding the pre-housing bubble (1987-1999) average annual appreciation rate of 3.6 percent.
This is the first time the predicted average annual growth rate for the next five years has surpassed pre-bubble levels since the survey's inception three years ago. "The panel is quite bullish on home prices near-term, considering a pre-bubble average appreciation rate of 3.6 percent per year," said Zillow Chief Economist Dr. Stan Humphries. "That said, their expectations are a bit shy of the home value gains of 5.5 percent that we saw in 2012, implying some moderation in the pace of gains. The panel expectations are consistent with continued strong growth in Columbia SC home values this year. This is being fueled by tighter-than-normal inventory of homes for-sale and robust demand attributable to high affordability and a stronger general economy."
The most optimistic group of panelists predicted a 6.1 percent increase in Columbia SC home values in 2013, on average, while the most pessimistic predicted an average increase of 3 percent. Through 2017, panelists predicted cumulative home value changes of 22 percent, on average. Expectations for cumulative home value change projections ranged from 34.2 percent among the most optimistic quartile to 11.7 percent among the most pessimistic, on average.
The first quarter 2013 Zillow Home Price Expectations Survey asked the panel to indicate their view of a reasonable timeframe for "winding-down" government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The majority of panelists (59 percent) indicated that a reasonable and appropriate timeframe for winding-down the GSEs is within the next five years. On the opposite ends of the spectrum, 13 percent suggested a timeframe within the next two years, and 10 percent said they believe a period of more than 10 years is sensible.
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Limiting real estate tax deductions could definitely affect Columbia SC home values, and it’s an issue you’re likely to hear more about as Congress and the Obama administration continue negotiations on the comprehensive tax reform that could send the economy over the “fiscal cliff.”
What Could Happen to Columbia SC Home Values?
Any significant reductions in these long-established tax benefits would inevitably trigger declines in Columbia SC home values. Under some circumstances, they could be well into the double digits — 15%, according to Lawrence Yun, chief economist of the National Association of Realtors. “That’s how much we can expect values to fall as buyers discount the value of the deduction in their purchase offers,” according to Yun.
Cutting back on real estate write-offs could make homes less attractive financially, but other potential features of a final tax compromise could counteract the loss of deductions, softening the net impact on values. Plus no one on Capitol Hill is talking at the moment about eliminating the mortgage interest or property tax write-offs, just capping them in some way for higher-income individuals.
But would limiting real estate deductions necessarily lead to lower Columbia SC home values? A 1995 study by the consulting firm Data Resources Inc. estimated that a consumption-based “flat tax” that repealed all deductions would lead to a 15% aggregate decline in home values, costing owners $1.7 trillion in equity holdings.
More recently, a 2010 study for the Tax Policy Center of the Brookings Institution and the Urban Institute sought to model the effects of Obama’s tax reform proposals for fiscal 2011 — limiting mortgage interest and property tax deductions to the 28% bracket level, and the simultaneous increase in the highest-income tax brackets back to the levels existing before 2001.
In one scenario, when taxpayers in the 33% bracket had their mortgage interest deductions limited to 28%, with no other tax changes, housing values dropped 6.9% to 15%, according to the study. The restrictions would have the heaviest effects on houses in areas of the country with relatively high local tax rates and where the costs of renting a home or apartment are favorable when compared with the costs of purchasing.
The reference to “certain assumptions” is key here. Nobody knows what shape tax reform — if it occurs in 2013 — will take: How drastically Columbia SC home values could be pared back, how long a transition period would be provided and what other elements in the final deal might serve to cushion the effect on homes, such as by spurring more vigorous economic growth, lower federal deficits and debt.
But for a segment of the economy such as Columbia SC home values, where asset values are tied in part to long-standing tax subsidies, almost any change that reduces those benefits appears likely to have at least a mildly negative effect on pricing. That is what is now in play on Capitol Hill.
Stay tuned to our site. We’ll keep you up to date on Columbia SC home values, and how they may be affected by any tax reform that Congress may enact.
Columbia SC economy and home value confidence seems to be on the rise, according to Fannie Mae’s April National Housing Survey.
Americans continue to expect home prices to go up, with the projection averaging 1.3 percent over the next 12 months, the highest value recorded.
A high percentage (71%) of Americans still say it is a good time to buy while the percentage (15%) who said it is a good time to sell was up 1 point from March.
Doug Duncan, Fannie Mae’s chief economist, says “consumer views of housing market conditions have become more supportive of home purchases, and sustained healthy hiring is required to help realize these improved expectations.”
Columbia SC Economy Appears to be Increasing
The percentage of Americans who believe the economy is on the right track rose to 37 percent, a 2 point increase from the previous month and the highest level in the survey’s two-year history. Still, an even greater 56 percent believe the economy is moving in the wrong direction.
Also, 23 percent of Americans reported their household income is significantly higher than it was a year ago, while 36 percent said their household expenses are significantly higher since the same time period. Both categories rose 2 percentage points compared to March.
The expectation for average rental prices decreased slightly to 3.6 percent; in March, respondents expected rent to go up by 4.1 percent over the next 12 months.
If respondents were to move, 32 percent said say they would rent while 64 percent said they would buy. The percentage of those who said they would rent increased 2 points and reached the highest level since November 2011.
With the Columbia SC economy and home value confidence apparently increasing, would you say things are on the right track, or moving in the wrong direction? We’d love to hear your thoughts.
Thinking of selling your Columbia SC home? The first big question you must answer is, what is your Columbia SC home worth? The best way to determine the current value of your home is by having a comparitive market analysis (CMA) done on your home…
Pricing your Columbia SC home properly before putting that “for sale” sign in the yard is critical to your success in selling your home.
Contact us for more information on getting a CMA done for your home.