2014 was an encouraging year for the Columbia SC housing sector. Housing nationwide found itself on a bit of a roller coaster.
2014 kicked off with the "Polar Vortex" blamed for slowing home sales in the early part of the year. As we close the door on 2014, the National Association of Realtors says sales of previously owned homes fell short of 2013's total, while the latest monthly data on new homes show sales were up just 1.8% from a year earlier. Meanwhile, price gains for previously owned homes have slowed significantly. Still, builder confidence in the market for newly constructed, single-family homes has been high for six straight months.
Economists say the Columbia SC housing market is showing mixed signals because it's normalizing, leveling off after a much more rapid recovery last year that was simply unsustainable.
What to Expect for Columbia SC Housing in 2015
Columbia SC home prices didn't increase as fast in 2014, and they are expected to stick to that trend into the new year. Easing housing inventory levels and the exit of investors from the market are helping to put the brakes on home-price escalation. This change represents a fundamental shift in the market: We seem to have moved out of the rapid recovery phase and into a new normal. Gone are the double-digit gains of 2013. The National Association of Realtors predicts an annual gain in home prices of 4 to 5 percent in 2015.
The home buying process should get a little less hectic in 2015, thanks to eased inventory and credit plus the exit of investors from the Columbia SC housing market. Since the recovery began in earnest in late 2012, buyers have really taken it on the chin, forced to contend with low inventory, tight credit, bidding wars and intense competition from investors and all-cash buyers.
Mortgage Rates Seen Rising in 2015
The Mortgage Bankers' Association predicts that rates will rise to 5% by the end of 2015; Freddie Mac's chief economist Frank Nofthaft expects a more cautious average of 4.5% in 2015. The MBA says there is plenty of reason to believe a short-term fund rate hike could come by mid-2015, pushing mortgage interest rates up with it. Still, last year economists predicted that mortgage interest rates would hit 5% by the end of 2014—and yet the average rate for a conventional 30-year, fixed-rate mortgage stood at just 3.93% last week, compared to 4.42% one year earlier. For most of 2014 interest rates were flat or declined. A great reminder that economists can make their predictions, but we wouldn't recommend anyone bet the farm on their forecasts.
Rents likely will continue to keep rising in the new year, and many housing analysts predict that an increase in rental costs in 2015 will outpace annual home-price gains. The rental market will likely remain a “landlord’s market” in 2015, with vacancy rates expected to stay below 5 percent in the new year.
Columbia SC Housing Likely to See More Sellers
More people are expected to try to sell their homes in 2015 (and Realtor.com predicts that existing, or previously owned, home sales will grow 8% in 2015). The entry of these previously owned homes onto the Columbia SC housing market could suppress the demand for more expensive newly constructed homes. Many Millennials forming their own households will need to save for a down payment before buying, so they'll rent instead of buying new homes. The vacancy rate for single-family homes is still near its recession high, which is likely to further depress construction of new single-family homes. So builders will continue to meet the demand for apartments–and multifamily housing could have another strong year, and builders are expected to shift to building less expensive homes.
Foreclosure filings have been on the decline this year and are expected to continue their descent well into 2015. The only uptick has been in foreclosure auctions, which are up 5 percent in November compared to one year earlier. Foreclosures will likely fall to pre-crisis levels in 2015.
The Columbia SC housing market is expected to be driven more by underlying economic fundamentals–job growth, incomes, household formation–than by macro-economic factors such as national price crashes. Mortgage interest rates and price recovery have driven the Columbia SC housing market for a long time. Now we're seeing that those factors aren't nearly as important as local economics.
Stay tuned as we wait to see how many of the 2015 Columbia SC housing market predictions actually come true, and how many of them we'll be looking at this time next year and saying, "Don't believe everything you hear from economic forecasters."
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The burden of Columbia SC household costs fell for the third consecutive year, according to the U.S. Census’ 2013 American Community Survey. Nationwide last year, 39.6 million households spent more than 30 percent of their income on housing, which is a decrease from 40.9 million in 2012 and down from the peak of 42.7 million in 2010.
Columbia SC household costs are mostly dropping among home owners, while they continue to strain renters, according to a recent analysis by the Harvard Joint Center for Housing Studies of the data. In 2013, 26 percent of home owners were considered burdened by household expenses (i.e.: spending more than 30 percent of their income on housing), compared to half of all renters at 49 percent.
Why Columbia SC Household Costs Are Escalating For Renters
The number of renter households is on the rise, which partially explains why Columbia SC household costs for renters are escalating. But renters are also plagued by rising rents that are not matching incomes. Median renter costs were up about 5 percent in 2013 compared to 2001, even though median incomes were nearly 11 percent lower, according to the report.
This has led to more renters being severely burdened by Columbia SC household costs in 2013, paying more than 50 percent of their incomes toward housing costs. 11.2 million renters were in this category.
The number of home owners burdened with higher Columbia SC household costs is dropping. After surging during the housing bubble, inflation-adjusted owner costs have dropped about 2.5 percent below their 2001 level. Owner burdens are also down due to a significant reduction in the overall number of home owners in 2013 than 2012. This decline in the number of home owners for the third straight year suggests that many burdened owners dropped out of ownership, moving into the costly rental market.
Get more timely information about Columbia SC household costs and news affecting those costs in our section on Columbia SC Real Estate News to the right under Columbia SC Real Estate Categories.
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Columbia SC housing is expected to strengthen along with the economy in 2015, according to Freddie Mac's U.S. Economic and Housing Market Outlook for November.
Frank Nothaft, Freddie Mac's chief economist, said recently that “the good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better.”
Predictions for Columbia SC Housing for 2015
Mortgage rates: Interest rates will likely be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dipped below 4 percent again. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of 2015.
Home prices: By the time 2014 wraps up in a few weeks, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent last year. Appreciation is expected to drop further to an average 3 percent in 2015. Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers, according to Freddie economists. Historically speaking, that's moving from 'very high' levels of affordability to 'high' levels of affordability.
Housing starts: Homebuilding is expected to ramp up in the new year, projected to rise by 20 percent from this year. That will likely help total home sales to climb by about 5 percent, reaching the best sales pace in eight years.
Single-family originations: Mortgage originations of single-family homes will likely slip by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancings are expected to make up only 23 percent of originations in 2015; they had been making up more than half in recent years.
Multi-family mortgage originations: Mortgage originations for the multi-family sector have surged about 60 percent between 2011 and 2014. Increases are expected to continue in 2015, projected to rise about 14 percent.
Consumers are more upbeat and businesses are more confident, all of which should lead to faster economic growth in 2015. And with that, the economy is expected to produce more and better-paying jobs, providing the financial wherewithal to support household formations and Columbia SC housing activity.
Stay tuned here, we'll update you as the calendar turns to 2015 on Columbia SC housing and the trends affecting the numbers for the new year.
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With rents climbing faster than most American's paychecks, the latest trend in Columbia SC housing is finding a roommate to split the bills, and it isn't just for kids straight out of college anymore.
The percentage of adults living with someone other than a spouse or partner hit 32% nationwide in 2012, up from 26% in 2000, according to Zillow's analysis of the latest Census Bureau data.
Judging by the ongoing decline in homeownership rates and tightened supply of rental vacancies, the trend appears to be gaining momentum.
People start pairing up when rents are climbing and incomes aren't keeping up — and in recent years, rents have really been on a tear. They rose 6.5% over the 12 months ended in September, according to Trulia. Meanwhile, wages have remained more or less flat.
Benefits of Sharing Costs With Columbia SC Housing
Working adults in doubled up households tend to earn less, according to Zillow. So sharing their Columbia SC housing enables them to afford and compete for more attractive housing.
Many roommates enjoy not only the savings of splitting costs 50/50, but they also enjoy the companionship that comes with sharing their Columbia SC housing.
Renters who are willing to live together and share costs are also able to afford nicer places as opposed to footing the cost of everything themselves. The same holds true for some who decide to invest in Columbia SC housing by purchasing a home rather than renting. But buying a home together requires careful consideration, as well as legal advice. Co-owning Columbia SC housing can get complicated, much more so than just renting.
We have more articles concerning Columbia SC housing in the Columbia SC Real Estate section of articles, as well as additional home buying tips in the Columbia SC Home Buying Tips section, both under our Columbia SC Real Estate Categories to your right.
This week's "Slap in the Face" Award goes to our devoted public servants in Washington, who've decided the Columbia SC housing market isn't moving fast enough. To correct this, they're lowering lending requirements, and some mortgages will not require a down payment… again.
Really? We mean, REALLY?