The Columbia SC housing recovery seems to be seeing a bottom finally getting closer, but getting there remains dicey. Home sales are steady, more sellers are lowering their prices and the inventory of homes for sale is dropping.
Unfortunately, the inventory doesn’t include the so-called “shadow inventory” of both distressed properties and those still held by owners who are underwater, owing more than their home is worth, and at risk for default.
Columbia SC Housing Sales Up
No doubt, sales of existing homes are up, according to the National Association of Realtors’ (NAR) latest Trend Report.
Another thing affecting the Columbia SC housing recovery is inventory. Inventories are expected to increase in the coming months as lenders process and list the huge backlog of distressed properties freed by the recent multi-state attorneys general agreement.
The shadow foreclosure inventory is considerably higher than the total inventory on the market today. Unless properly managed, the disposition of such properties could easily undermine the progress that has been made to date, this also according to NAR.
Radar Logic agrees. “The Columbia SC housing price and sales trends observed in 2011 are consistent with sellers dropping their prices to meet bids from bargain-hunting buyers,” and that’s eating away at inventories, Radar reports.
Would-be Columbia SC home buyers are still experiencing difficulty accessing mortgage financing. While rates remain near record lows, lenders remain risk averse and underwriting standards remain extremely strict.
What is your opinion about the Columbia SC housing recovery? Is a bottom near? Or do we still have a ways to go?
There are certainly more than 5 benefits to owning a Columbia SC home. Yet some first-time buyers are skeptical of buying a home with the uncertainty surrounding the housing market.
The uncertainty many refer to when talking about the housing market involves the magic date when home values will start to increase again. Since no one knows when this may occur, the word uncertainty (when paired with the housing market) often reveals a negative connotation.
These are just 5 of the many reasons for buying a home this year:
Appreciation – Buying a home now (at current interest rates) can almost ensure your home’s appreciation in the future. Mortgage rates have never been lower and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. In addition, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
Property Tax Deductions – Real estate property taxes for a primary home and vacation home are fully tax deductible. The IRS provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
Preferential Tax Treatment – If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
Building Equity – Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
- Pay off the principal balance faster
- Lock in near-record-low interest rates
- Shorten the length of their home loan
- Own their home faster
- Pay substantially less mortgage interest
Home equity is the largest single source of household wealth for most Americans.
Pride – Homeownership offers many benefits to many different types of people. For some homeowners, playing their music as loud as they want and painting the walls the color of their choice is a perk. For others, homeownership will permit them to build an NBA regulation size basketball court on their own property. For others, home ownership may allow them to build the indoor swimming pool of their dreams. No matter who you are, homeownership is a purchase, commitment, and journey that’s sure to bring you pride.
When the uncertainty surrounding the Columbia SC housing market fades and the market rebounds, homeownership may in fact transform that pride of ownership into profit through selling your little corner of the world.
From peak levels five years ago, home prices are down more than 30 percent, combined sales of new and existing homes are nearly 40 percent lower, and new home construction has plunged more than 70 percent.
However, several factors are falling into place that will support gradual progress in the coming year as long as the economy doesn’t tip back into recession.
Most important, analysts increasingly believe that 2011 will mark the bottom in home prices. Most national price indexes adjusted for seasonal influences have stopped falling on a month-to-month basis.
The demand side of the housing outlook is somewhat of a paradox. Attractive home prices and super-low mortgage rates have made homes the most affordable in the postwar period. Yet, demand continues to languish. Sales of existing homes were up in October and have mostly bounced around the current level this year. NAR chief economist Lawrence Yun says that despite historic affordability and more credit-worthy borrowers, the share of contract failures is double that in October 2010. Cancellations last month were reported by 18 percent of NAR members, says Yun, up from 9 percent last year.
Tight loan standards and weak job markets in recent years have sharply reduced people’s willingness and ability to start a household, which continues to weigh heavily on home demand. Since 2006, the rate of household formation has slowed dramatically. The current number of U.S. households is about 4.9 million below what the trend prior to the recession would have predicted.
The Barclays outlook expects prices to end 2011 close to 2 percent below a year ago and then increase modestly by about 1.5 percent in 2012. Those projections are similar to most, but with one key assumption: The U.S. doesn’t relapse into a recession, caused by the failure of policymakers in Europe to prevent a full-blown financial crisis or by actions of U.S. policymakers that would impose excessive budget tightening next year. In a recession scenario, the analysts project an additional 7 percent drop in house prices, accompanied by a 12 percent jobless rate.
Barring that, 2012 is set to be the first year of the housing recovery, but it may not feel like one until mortgage restrictions ease and the labor markets are strong enough to offer more support.