Nearly one-third of all Columbia SC homebuyers, and 68 percent of first-time buyers, were 34 or younger last year. Those numbers are expected to grow as millennials now represent the largest share of buyers. But many millennials are making some pretty costly mistakes according to a recent report from the National Association of Realtors. Here are three common and potentially costly mistakes to avoid no matter which age group you fit into.
First Mistake Columbia SC Homebuyers Make
Overestimating what you can afford. First-time Columbia SC homebuyers often focus on the down payment and monthly mortgage amount when calculating how much they can afford and forget to factor in closing and other costs. They often times get to the closing and are shocked by the amount of money they have to pay.
Get pre-approved for a mortgage so you know how much a lender is willing to lend before you make an offer on a home. But keep in mind the amount you're pre-approved to borrow from a mortgage lender may be more than you can actually afford once you factor in taxes, insurance and other costs like condo or homeowners' association fees and maintenance.
Your total monthly payment (including mortgage principal, interest, real estate taxes and homeowners insurance) shouldn't exceed 28 percent of your gross, or pretax, income.
Columbia SC Homebuyers Need to Remove Emotions
Columbia SC homebuyers need to remember to buy with their head and not with their heart. Get too emotionally attached and it can set you up to spend more than you can afford. Make sure to prioritize what you want in your home. Make a list of the most important features, whether you want a certain school district, updated bathrooms, a backyard, etc. Then figure out what you aren't willing to do without. You won't find the perfect home that meets your entire list so narrowing it down to what matters most can help you through your search process.
Columbia SC Homebuyers Need to Plan
Once you've narrowed your search and you're ready to make on offer, check with your agent about the current demand for the home you're considering. Is the home getting multiple offers? Has it been on the market a long time? Will it require a lot of upgrades?
Make sure you get a thorough inspection. Columbia SC homebuyers often don't get an inspector with expertise to check the pipes, the plumbing, or air conditioning. You want someone who knows what they are doing.
Remember to think about resale opportunities. Just because you don't have children, the next family who comes along looking at your home for sale might, and where the home is located in relation to good schools may be the difference in whether they buy your house or not.
We have more tips for Columbia SC homebuyers under our Columbia SC Home Buying Tips section just below our Columbia SC Real Estate Categories in the column to your right.
Remember, we also post daily on our Facebook Page, and over at Twitter. We'd love you to check us out there too.
With more and more houses getting older and older, how could this aging trend affect Columbia SC home buyers in the future? The Department of Housing and Urban Development's American Housing Survey (AHS) shows that the median age of homes in the United States is now around 35 to 40 years old.
The National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case Columbia SC home buyers will be responsible to update their new residence. Even homeowners who aren't selling will need to consider remodeling for structural and aesthetic reasons.
Columbia SC Home Buyers Face Higher Prices
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn't meet the demand of Columbia SC home buyers.
In December 2014, the average cost of a new home was $298,100 while the cost of an existing home was $209,500. Saving that kind of money on a home purchase allows a Columbia SC home buyer to budget for a remodeling project.
Many Columbia SC home buyers opt to save on remodeling costs by doing things themselves. According to a 2013 American Housing Survey, a homeowner can save more than half the cost of a project by doing it themselves. A professional bathroom remodel runs $8,221 versus a do-it-yourself job at around $3,000. The kitchen, one of the most costly remodeling projects to do, comes in at around $15,000 for the do-it-yourselfer and around $35,821 for a professional to do it for you.
Buying an existing home can put first-time Columbia SC home buyers in a better financial position. Instead of renting until they save up money for that brand new home, they can begin gaining equity in their house and enjoy the benefits of having their own place.
Get more tips and articles designed to help Columbia SC home buyers save money on remodeling jobs in the Columbia SC Home Improvements section below our Columbia SC Real Estate Categories in the column to your right.
Remember, we post tips for Columbia SC home buyers daily on Twitter, and also over at our Facebook Page. We'd love you to check us out there too.
There are some things Columbia SC home buyers need to know about this current seller's market we're in, but it's not all that bleak if you're looking to buy a home.
Although sellers are enjoying an edge with surging prices and tight inventories, it's far from all negative gloom and doom for Columbia SC home buyers.
Positive Factors for Columbia SC Home Buyers
Mortgage rates are holding in historically low territory, with the 30-year-fixed rate lower than 4 percent for most borrowers with good credit. And new programs from Fannie Mae and Freddie Mac should make it easier for first-time Columbia SC home buyers to buy a home.
To qualify for Fannie's and Freddie's mortgage programs with just 3 percent down, prospective Columbia SC home buyers must have a credit score of at least 620. They must also be able to able to prove income, assets and job status, and purchase private mortgage insurance.
Overall nationwide, the housing market is favoring sellers. Total housing inventory at the end of February increased just 1.6 percent to 1.89 million existing homes available for sale. For the second month in a row, unsold inventory is at a 4.6-month supply, which is below what is considered normal for a healthy market.
Competition between regular Columbia SC home buyers and investors is decreasing, with home prices climbing and with fewer below-market distressed properties for sale. The share of home sales to institutional investors and all-cash buyers dropped to four-year lows in 2014, despite a quarterly increase in the fourth quarter.
A recent study by the National Association of Realtors found that rents are still climbing. The study also found that renters are spending about 30 percent of their wages on rent, compared to homebuyers who spend below 15 percent of their wages on a mortgage payment.
Despite low inventories, Columbia SC home buyers are picky about the condition of properties for sale and expect homes to be move-in-ready. Buyers don't generally want to assume any risk with properties that need work, particularly first-time buyers with limited cash resources.
So even though it is considered a seller's market, Columbia SC home buyers still have an edge in many categories, unlike many seller's markets we've seen in the past.
Remember, we also post daily on our Facebook Page, and over at Twitter. We'd love you to check us out there too.
Fewer and fewer Columbia SC homes are being bought and paid for with all cash. The same trend is holding up nationally as well.
Cash home sales fell to 35.5 percent of the market nationwide in December 2014 compared to 38.5 percent in December 2013, according to new numbers released by CoreLogic.
A high rate of Columbia SC homes being paid for with cash are often thought to indicate investors are playing a larger role in real estate purchases, as they usually have more cash available than traditional home buyers, who more typically utilize mortgage loans.
The year-over-year numbers for cash sales have fallen every month since January 2013, making December 2014 the 24th consecutive month of year-over-year declines in the share of cash sales. The peak came in January 2011, when cash sales made up 46.5 of home sales.
Who's Buying the Most Columbia SC Homes?
While the number of Columbia SC homes being bought with cash is continually dropping, a new study by the National Association of Realtors on generational trends found millennials represented the largest share of recent buyers of Columbia SC homes.
It is the second year in a row the study found those aged 34 and younger did the most home buying — 32 percent of the total in the United States.
Generation X, those aged 35 to 49, were the second largest group, at 27 percent.
Get more information about news that may affect buying Columbia SC homes in our section on Columbia SC Real Estate News to your right under Columbia SC Real Estate Categories.
Remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
A study to make Columbia SC homebuyers realize they could qualify for a free down payment without hitting the jackpot and winning the lottery found that 87 percent of all U.S. homes qualify for down payment help.
Columbia SC Homebuyers Need to Investigate Options
Many Columbia SC homebuyers, especially Millennials, have not fully investigated their home financing options because they are pessimistic about qualifying for a mortgage. The Homeownership Program Index highlights the wide range and availability of down payment programs available to today's Columbia SC homebuyers. 91 percent of the 2,290 programs in the registry have funds available to lend to eligible homebuyers. Income limits vary depending on the market and programs extend beyond just first-time Columbia SC homebuyers. It's important for buyers to research down payment programs as part of their loan shopping process.
Historically low homeownership rates across nearly every age demographic have led to a public policy push to lower the barrier to homeownership through down payments as low as 3 percent, but the fact is, the barrier to homeownership is often much lower than even that 3 percent for borrowers who take advantage of one of the myriad down payment help programs available across the country.
RealtyTrac looked at 2,290 down payment programs from Down Payment Resource's Homeownership Program Index and found that out of more than 78 million U.S. single family homes and condos in 1,792 counties with sufficient home value data, more than 68 million (87 percent) would qualify for a down payment program available in the county where they are located based on the maximum price requirements for those programs and the estimated value of the properties.
Columbia SC Homebuyers May Be Missing the Boat
You could be REALLY missing the boat if you don't at least look into one of the free down payment plans available across the country.
We have seen a dramatic increase in financing options available and loosening of credit scores with conventional 3 percent down payments readily available for qualified Columbia SC homebuyers. This is great news for the millennials and Columbia SC homebuyers re-entering the market.
Get more information about how first time Columbia SC homebuyers, whether Millennials or not, can get started in the home buying process in our section on Columbia SC Home Buyer Tips to your right under Columbia SC Real Estate Categories.
We post daily to Twitter, and also on our Facebook Page. We'd love you to find us there too.