The Columbia SC housing market is doing better than expected. According to recently-released Commerce Department statistics, new home sales across the country enjoyed a 25% percent increase in July, 2015 compared to the same month a year ago.
Columbia SC Housing: A Seller's Market
It's a seller's market, evidenced by these characteristics:
- Higher sales prices across the board for all single-family homes. In the classic definition of a seller’s market, home sellers have the upper hand in that there are more buyers in the market than sellers. Higher prices result result from the excess of housing demand versus housing supply.
- Sellers are receiving multiple bids for their properties. Home sellers and real estate agents report some homes are receiving “dozens” of offers as prospective buyers jockey for position to buy before somebody else does.
- Sellers are being offered added incentives by buyers to take their offer. Potential purchasers are offering enticements to home sellers in the hope they will accept their offer over others competing for the same home in the Columbia SC housing market. Reports of buyers offering round-trip vacations, timeshare weeks and other incentives aren't uncommon.
Another strong sign of the recovery is that roughly 1 in 5 homebuyers are paying in cash, down from a high of 40% in 2013. What this means to the Columbia SC housing market is that fewer investors are buying, leaving room in the market for serious homebuyers looking for primary residences.
Finally, industry experts say that the current uptick in the market seems to be fueled by buyers that can afford to buy homes, an indication that the Columbia SC housing market is enjoying a recovery that is real and tangible, not an artificial inflated boon as seen in other times.
For more articles pertaining to Columbia SC area housing, check out the Columbia SC Real Estate section of our site to your right below Columbia SC Real Estate Categories.
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In our Columbia SC Real Estate News for August 2015 We're Taking an In-Depth Look at Millennials and Why They Can't be Blamed for Low Home Ownership Rates:
Millennials Are Not Why Columbia SC Home Ownership Rates Are Down
Columbia SC home ownership rates are the lowest they’ve been in 48 years, and there are several factors involved, including a strong rental market and a lack of traditional household formation. But let's look at why millennials are NOT to blame for the lower rate in Columbia SC home ownership.
Some stats about Millennial homebuyers — those aged 34 and younger — that show that they are not only buying homes, but also what trends they're following as they do.
According to a study of generational trends (namely, Millennial home buyers) by the National Association of Realtors, 65% are married couples, 14% are unmarried couples, 12% are single females, 8% are single males and other combinations create the last 1%. So, being unmarried isn’t keeping Millennials from joining the ranks of Columbia SC home ownership.
Millennials are also working more now than they were even compared to last year, with unemployment down to 5.3% as of June 2015, as opposed to last year’s 6.1% in June, according to the US Department of Labor.
Stats and trends show that Millennials are moving out of the rental market and buying the homes they once rented. Forty-nine percent are buying in the suburbs, 21% in urban areas, 17% in small towns, 13% in rural districts, and 1% are buying in resort towns. This is a more diverse buying pattern then those from 35-49, who are buying 60% of their homes in the suburbs.
Not only are Millennials buying homes, but they’re relying on real estate agents to make the deal happen. The study shows 90% of Millennials used an agent to close their deals, with only 5% going through a builder and 4% buying directly from the previous owner.
Technically, if you wanted to blame a generalized age group for the dip in use of real estate agents, Gen X, those in the 35-49 age range, could qualify, since only 88% of those homebuyers used an agent.
Millennials are definitely joining the ranks of Columbia SC home ownership, but let's look deeper into the trends of this age group to see why more are not buying a home.
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Why the Columbia SC Housing Market is Changing for Millennials
According to the same recent study by the NAR, Millennials prefer walking over driving by 12 percentage points. Millennials want to live within walking distance to shops and restaurants, and have a short commute to work. They also favor expanding public transportation and alternatives such as biking. This is the largest margin in favor of walking for any generation, ever.
The Columbia SC housing market may be seeing a drop in overall numbers of those owning homes now versus past years because of the disinterest in traditional single-family homes by these Millennials prefering to walk rather than commute to and from work and recreation.
Nearly half of Americans participating the recent survey by the NAR said they would prefer to live in neighborhoods that have small yards but are in easy walking distance to stores and restaurants, vs neighborhods with large yards but where driving is required to get to amenities.
Around 60 percent of Americans live in detached, single-family houses, but one in four of these individuals would rather live in an attached home in a more walkable neighborhood.
Even though the job market is improving, it seems that more and more Millennials are living with their parents today than they were at the height of the Great Recession. We'll look deeper into this in a moment.
It's no secret that Millennials have had a tough time getting started with careers, families and saving for retirement. And this struggle has carried over into home ownership as well.
Everything from the recession, to the rising cost of higher education, to the increasing scarcity of better-paying jobs has taken its toll on people born in the last two decades of the 20th century.
Many Millennials feel there is no hurry to own their own Columbia SC home, because of how the economy has changed. Our current economy has shifted to a knowledge-based or connection-based economy, and we are seeing people now work well into their 70s, 80s and beyond. So many Millennials feel they have plenty of time to become home owners.
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More Millennials Live With Parents
According to a new Pew Research Center analysis of U.S. Census Bureau, which found that the share of young adults living in their parents' homes has increased from 24 percent in 2010 to 26 percent in the first quarter of 2015. During the same period, the unemployment rate for adults ages 18 to 34 dropped from 12.4 percent in 2010 to 7.7 percent this year.
Despite the fact that there are 3 million more Americans in the 18-34 range now than there were in 2007, the number who are living independently has fallen from 42.7 million in 2007 to 42.2 million today.
This trend could be one reason why the economy, and namely, the Columbia SC housing industry, isn't growing stronger than it is.
The growing young adult population has not fueled demand for Columbia SC housing units and the furnishings, telecom and cable installations, and other ancillary purchases that accompany newly formed households according to the Pew Research Center.
Millennial women, by the way, are more likely to leave the nest than millennial men, and fewer women tend to buy a home on their own than do men.
So what do we glean from all this Millennial data?
Trends have changed. Potential Columbia SC homebuyer desires have changed. Has the real estate market failed to change with the demand? Something to think about!
Columbia SC housing industry experts say the future of housing for the remaining five months of the year revolves around one word — affordability. Affordable home prices and affordable rents will determine the Columbia SC housing market’s direction.
Although home prices are still on the upswing, the pace is slower that it was during the first six months of 2014. However, mortgage interest rates are rising and the lack of Columbia SC housing inventory is likely to keep prices at a higher level than anticipated.
Columbia SC Housing Market to Remain Lukewarm
Despite renewed optimism in the Columbia SC housing market, the production of new homes has not grown substantially this year. In addition, there is little expectation that that will change between now and the end of the year. Homebuilders are being affected by tighter lending and credit requirements and a shortage of skilled construction and subcontractor labor. These and other factors are reasons that homebuilders aren’t building many spec houses anymore, concentrating on permanent construction projects for contract purchasers.
For the rest of the year, Columbia SC housing market analysts expect a slight rise in new construction, but it will likely be "too little, too late" to cure the inventory shortage.
On the rental side of the Columbia SC housing market, tenants probably won't experience much relief either. Demand for rental units are rising, as more people have entered the rental market as a result of the mortgage crisis of a few years ago. While multifamily housing starts has increased this year, supply has not met demand.
Rental occupancy levels are at record highs, putting landlords and rental management companies in the "catbird seat." And despite some migration from the rental market to the Columbia SC housing home buying arena, those crossing over represent the exception not the rule. It’s expected the remaining five months of 2015 will not see much of a change.
Occupancy is at a record high, and that gives landlords strong pricing power. Renters do not appear to be turning into buyers, at least not in sizable numbers, and the second half of this year will see no change in that. Higher than normal rent has made it more difficult for prospective homebuyers to save money for a down payment, pushing the length of time tenants will stay in the rental market longer.
One area to watch closely over the next few months is mortgage lending activity. As mortgage lenders grapple with new regulatory challenges it will likely cause them to be more cautious. Yet, as interest rates continue to rise, lenders will want and need more mortgage business. Experts look for independent mortgage lenders to gain a larger share of available business by being slightly more lenient, flexible and competitive in their credit policies and practices. Such activity will almost definitely impact the Columbia SC housing market… the question, of course, is how much.
Stay abreast of the latest in Columbia SC housing news, and all the news and events that affect the Columbia SC housing market by visiting our site often, and remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
The Columbia SC housing forecast for the second half of 2015 fails to show any positive data, with trends predicted to go downhill.
According to the latest market report from analytics firm Clear Capital, nationally, the data is more of the same. Data through June looks similar to data through May 2015, with no change in quarterly growth at 0.6% and a slight drop of 0.1% in yearly growth, from 5.3% to 5.2%.
Columbia SC Housing Nearing Summer's End
What’s worse is that the best of the year is already past since the spring and summer seasons typically reflect the peak of the Columbia SC housing demand cycle. And 0.6% quarterly growth nationwide is a foreboding sign of how the remainder of 2015 may play out, according to the report from Clear Capital.
In January 2015, Clear Capital forecasted total 2015 national growth would come in at 1.3%, more than five percentage points from where we ended 2014 at 6.7% national growth.
Here we are six months later, and there is very little evidence for Clear Capital to change their view that the year will end up with price growth coming in just around the rate of inflation. Their adjusted forecast calls for year-end national growth of 2.6%, falling within their initial projected range of between 1% to 3%.
Meanwhile, May home prices nationwide, including distressed sales, increased by 6.3% in May 2015 compared with May 2014, according to the home price report from CoreLogic.
This change represents 39 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, increased by 1.7% in May 2015 compared with April 2015.
Stay abreast of the latest in Columbia SC housing news, and all the news and events that affect the Columbia SC housing market by visiting our site often, and remember, we post tips daily to Twitter, and also on our Facebook Page. We'd love you to check us out there too.
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In our Columbia SC Real Estate News for June 2015:
Buyers Still Positive On Columbia SC Housing
Buyer's views toward Columbia SC housing have not varied much over the past year, and they are still positive on homeownership as a good financial investment.
According the Federal Reserve Bank of New York's 2015 housing survey, U.S. households, on average, expect home-price growth to continue at a 4.4% pace for the next year, comparable to the average year-ahead expectation reported in last year's survey.
Last year's survey was the first in the series, with this year's survey getting administered to 1,205 U.S. heads of household in February 2015.
Survey respondents were asked for the current value of a typical home in their zip code, and what they expected the value of that home to be in one year and in five years.
With regard to longer-term expectations, the average expected annualized change in home prices over the next five years was 2.9%. These figures were slightly lower than the corresponding figures in the 2014 survey, where the mean expected annualized change in home prices over the longer horizon was 3.1%. Overall, respondents expected home price growth to continue, but at a slower pace at a horizon beyond one year.
The survey found that more than 60% of both renters and owners think that buying property in their zip code is a (very or somewhat) good investment, while only about 10% think it is a bad investment.
When it comes to renters answering this question, there was little difference in how they answered compared to 2014.
Here in Columbia SC, owners seem to have become more bullish since last year's survey. The proportion of owners who think that Columbia SC housing is a good investment increased from 58.5% in the 2014 survey to 63.2%, while the proportion thinking that Columbia SC housing is a bad investment declined from 11.9% to 9.8%.
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5 Things About the Current Columbia SC Home Buying Season
Many analysts are saying the Columbia SC housing market has normalized amid the pickup in activity since the recession doldrums. But all is not well for people trying to buy–especially if they're first-time buyers or on the lower end of the price spectrum. Here's what you need to know to compete as 2015's spring Columbia SC home buying season swings into the home stretch.
Inventory is Still Short
There are a lot of potential buyers in the market, but supply of available homes for sale is just not enough to satisfy demand, which is causing prices to be on the high side. As of the end of April, the number of available homes for sale—both newly constructed and previously owned—was well below the six-month supply considered a balanced market: 5.3 months for pre-owned homes and 4.8 months for new ones, according to NAR.
Prices Are on the Rise
Inventory constraints coupled with demand for real estate are pushing prices up. In many locations around the Columbia SC area, homes are selling at or above their list price. Don't expect the price gains to go away. Freddie Mac predicts an average home price gain of 4.5% in 2015 (on a national basis), while the National Association of Realtors is now forecasting that homes will rise by 6.7% this year.
Competition is Easing from Investors
For buyers the good news is, in 2015 there's less competition shaping up from investors in general. In the depths of the housing crisis, institutional investors were the big winners, snapping up single-family homes by the thousands. But they're less of a force today. In the first quarter of 2015, a total of 14,621 single-family homes were sold to institutional investors nationwide (defined as entities that purchase at least 10 properties per year), according to RealtyTrac. That's about 3.4% of all sales, down from 6.2% a year ago, and the lowest share for institutional investors in four years. All-cash deals are also down: of non-owner-occupied buyers, 44.7% were all-cash, compared to 61% a year ago and also the lowest level in four years.
Lower Priced Homes are Moving Fast
Markets are moving slightly faster than they were last year, so it's going to be a little more difficult overall for homebuyers to find a home they want in a reasonable time frame. Homes priced at the lower end of the market are moving quickest: only 50% of homes priced in the lower one-third were still on the market after two months, compared with 65% of higher-priced homes.
Financing Eases, But Mortgage Rates Are Rising
In the worst days of the housing crisis, it was tough to get credit. These days credit availability is at its highest level since the housing downturn, but watch out: interest rates have stayed at historic lows for months now, and Freddie Mac is predicting increased volatility. This past week, rates rose to the highest level in 2015. (See our next article below).
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Where Columbia SC Mortgage Rates Are Moving
With summer now in full swing (even though the calendar hasn't officially welcomed it yet), more potential home buyers are looking around. There is good news as Columbia SC mortgage rates remain at near historic lows, although they are rising, according to Freddie Mac.
Although existing home sales slipped 3.3% to a seasonally-adjusted pace of 5.04 million units, sales are up 6.1% on a year-over-year basis. The S&P/Case-Shiller 20-city home price index also posted a solid gain of 5% over the 12-months ending in March 2015.
The average 30-year fixed mortgage sits at 3.87 percent this week, an increase from 3.84 percent the previous week. The recent boost has brought Columbia SC mortgage rates to their highest levels of 2015.
15-year fixed rates this past week averaged 3.11 percent with an average 0.5 point, up from last week when it averaged 3.05 percent. A year ago at this time, the 15-year fixed rate averaged 3.21 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 2.90 percent this week with an average 0.5 point, up from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 2.96 percent.
1-year Treasury-indexed ARM's averaged 2.50 percent this week with an average 0.3 point, down from last week when it averaged 2.51 percent. At this time last year, the 1-year ARM averaged 2.41 percent.
However, a year ago, 30-year rates averaged 4.21 percent. The rise in Columbia SC mortgage rates was due to positive housing data as U.S. home sales climbed 7 percent in April. Overall lower mortgage rates are playing a role in bringing out local home buyers. The historic low for 30-year rates was 3.31 percent in November 2012.