The Columbia SC real estate market has probably changed quite a bit since the last time you were part of a home sale closing, if ever. Not only has the housing market changed dramatically in recent years, but so have mortgage lending requirements. In addition, as a homeowner your needs and desires for your next home have probably changed, too. So, if you’re looking to move up or move out of your present home you’re likely in the middle of a well-known dilemma: Should you sell your current home first or buy your new one? Let’s take a closer look at that situation and consider a few ideas.
Columbia SC Real Estate – Making the Right Move
A logical place to start to analyze the problem of whether to sell first or buy first is to examine just how much risk you’re willing to take. If you fancy yourself a veritable Las Vegas gambler that goes “all-in” every chance he gets, you may decide to assume a greater risk than some people. So, if you elected to buy your new home before you sold your existing home, the possibility of having two house payments at the same time may be less stressful for you than for others. Conversely, if you felt that situation would lead to sleepless nights you’d probably be more comfortable – and well rested – by taking a more conservative approach. That will entail selling your current home first before you started your new home search.
In addition to your risk tolerance, there are some other factors that could potentially sway your decision. Because Columbia SC real estate prices have risen while housing inventory from which to choose continues to be thin, it’s possible you could sell your existing home but not be lucky enough to find a new home immediately. What could make matters worse is, if the added stress and pressure to rush to find a new house led you to settle for something less desirable than you wanted.
Columbia SC real estate experts suggest you ask yourself these important questions to more fully understand the timing of your current home’s sale and your next purchase.
Can you afford two mortgage loans at the same time?
Carefully examine your income and obligations to determine, are you able to comfortably afford two mortgage payments at the same time? If the honest answer is “no,” then do yourself a favor and sell your current home first. A mortgage lender will ask the same question and perform the same financial analysis. Remember, just because you can afford it, doesn’t mean you should.
Some lending institutions offer bridge loans – short-term loans designed to allow flexibility between selling one home and buying another. The normal term is six months to a year.
Another consideration is where your down payment will come from. Do you have enough money in a savings or investment account you plan to liquidate? If not, are you planning to use the equity in your existing home? While some lenders may be willing to provide you with a 100% conventional loan – enabling you to buy the new home without first selling your current one – some lenders may not.
How soon do you want or need to move?
Often the biggest deciding factor of what to do first in the selling-then-buying versus the buying-then-selling conundrum is how quickly they want or need to make the move. If you’ve taken a new job that requires you to relocate out of state, it may be best to put your home on the market first. That way, as you make plans to move and begin your new home search if your home sells it will make your relocation easier and less stressful. However, if you're simply shopping for a larger home or want to move into a nicer neighborhood it could be better to not sell your home immediately. Wait until you find a new one that best fits your needs. This is where the advice of an experienced Columbia SC real estate agent can be invaluable.
Are you aware of the newest regulations?
If it’s been awhile since you’ve bought a new home with a mortgage, you’ll need to be aware of some new federal regulations that took affect late last year. The TILA-RESPA Integrated Disclosure rules now require mortgage lenders to give new borrowers two forms – one at the beginning of the loan application process, and one upon loan approval. The importance of these forms is this: The Closing Disclosure form must be given to the borrower no less than three days before the loan closing. You can no longer expect to close on the sale of your existing home one day and close on the new home purchase the next.
The Closing Disclosure requires the lender to have all the integral parts of the mortgage loan finalized and approved prior to the three-day period. The result often means selling one home and buying the next can be a little “iffy.” Closing delays are a likely possibility. Know what to expect and rely on the advice of your mortgage lender and Columbia SC real estate agent. It can help make the process flow smoother, without snags or delays.
Do you need a negotiating advantage?
Some experts say that purchasing your next home before selling your existing one has distinct benefits. Make an offer to purchase a home without the often-used contingency on the sale of your current home. It will likely be considered more favorably by most sellers. So, if you can swing both loan payments or can get a bridge loan or other financing, go for it!
Do you have somewhere to move while you wait to buy a new house?
As we’ve discussed, a tight housing market with low inventory gives you little from which to choose. As a result, you could find yourself without a home if you sell prior to buying something else. Before making a move requiring you to find a new home quickly or renting a place, think it through. Don’t panic or rush into buying a home you don’t really want. Take your time and make a plan. Remember, too, that it’s okay to rent while you’re looking to buy something new. Be aware that most rentals require at least a six-month lease – and many require a year.
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Buying Columbia SC real estate is an emotional process. Many buyers see a house they fall in love with and decide in their heart and mind that's the home they want to buy. If you find what appears to be the perfect home for you and your family, it’s a good idea to take a more detailed, in-depth look at the home’s exterior. The old adage, “Don’t judge a book by its cover” doesn’t apply in this case. For homes in the Columbia SC real estate market, it’s important to give the outside of the home a thorough inspection. By doing so, the “cover” may, indeed, give you a better idea of the entire “book.” Let’s take a look at some of the exterior considerations to keep in mind when looking for a home to buy.
Columbia SC Real Estate – Check the Outside
Trees and Foliage
Take a closer look at the trees surrounding or near the home. Pay particular attention to how close the trees are to the home’s foundation. As those trees continue to grow, the roots can expand and cause problems to the foundation. In addition, other areas like concrete or paved walkways and driveways can be affected. Furthermore, if an older tree is removed it could create a void when the roots decay, resulting in a drop in the foundation.
To ensure you can avoid potential problems it may be a good idea to seek the opinion of a foundation expert during the inspection process. Enlist the aid of an experienced tree expert of arborist to evaluate the health of trees that may affect your home.
In addition, those beautiful mature trees may have limbs that extend over the home’s roof. Have the home inspected for any signs of damage to the roof shingles or eaves. Squirrels, possums, and rodents often use tree branches to get into accessible areas of your home. When that happens, they can enter your attic through the smallest of openings in the fascia or soffit. If the home you’re looking to buy has foliage extending over its roof, consider asking the seller to prune the tree limbs. It’s also advisable to inspect the shrubbery that may be in direct contact with the house to make sure it doesn’t contain evidence of termites or carpenter ants that may have gained easy access. Naturally, to be completely sure, it’s always good to have a professional termite or wood-destroying insect inspection and treatment.
The Home’s Foundation
Check the foundation of the home for cracks. Some cracks are to be expected and most will be minor in nature. However, cracks allow moisture in the foundation and can cause deterioration – especially in climates subject to freezing temperatures in the winter.
Experts suggest that if you encounter foundation cracks you should have a contractor inspect them to determine the degree of severity. If you decide to move forward with the home purchase, the cost of the repairs – if necessary – could be a factor in the price negotiation.
Lastly, in areas prone to foundation problems, a potential purchaser should take note of the grade or slope of the soil around and against the house. The foundation should be exposed by a minimum of two inches and it should be sloped away from the house. This ensures that rainwater runs away from the foundation and doesn’t collect or pool against the home.
A Swimming Pool
If the home in the Columbia SC real estate market you’re interested in has a swimming pool, there are several questions you should ask:
How old is the pool lining?
Has the pool liner been resurfaced?
How old is the pool equipment?
For a more in-depth inspection, contact a professional pool company. While a swimming pool can seem like a wonderful amenity for a home, it can also become an expensive and problematic feature for prospective home owners.
What if You Find a Problem?
If you find an issue or two with the home’s exterior, it doesn’t necessarily mean you shouldn’t buy the house. Compile an analysis of the home’s plusses and minuses. Consider the problems objectively, taking into consideration the cost to remedy them. Then, armed with that information you can either request that the seller make the necessary repairs or use that in the negotiating process. In many cases, the seller may discount the sales price based on the estimated cost of substantiated repairs a buyer may have to make. In addition, some lenders may require certain repairs be made before they provide final approval of the financing.
What if Everything’s Good?
If everything regarding your exterior inspection checks out, you should still keep in mind the future maintenance of the home.
• Continue to keep foliage and tree branches pruned
• Determine what type of grass your yard has and care for it accordingly
• If you have a lawn sprinkler system, check it regularly
• Inspect you landscape lighting
Remember, Curb Appeal is More Than Just the Obvious
Curb appeal is important in evaluating Columbia SC real estate, but curb appeal is more than just an attractive mailbox or driveway. There are many other components that should be considered and inspected to make sure your prospective home is all you want it to be. Be cautious, inquisitive and have an expert inspect the home. A little knowledge beforehand can save a ton of frustration and expense after the fact.
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The Columbia SC real estate market contains a relatively tight supply of homes for sale. During market conditions in which demand exceeds supply, you'd ordinarily assume that the chances of selling your home would be pretty good. However, homeowners selling older or outdated homes are finding it a little more difficult to sell. To combat this, smart sellers are turning to smart technology to attract prospective buyers. This article will examine some of the smart home technology available in the Columbia SC real estate market.
Making Columbia SC Real Estate Smarter
Selling your home is a competitive undertaking. No matter whether you're in a seller's market or a buyer's market, the homes that get the most attention are the ones that offer the newest, most up-to-date features. If you're over the age of, say, 50 you may remember how "cool" it was for the new refrigerator in your home to have a built-in ice-maker. How about a two-car garage with an automatic door opener? Even homes equipped with motion-detector floodlights were considered "in" just a couple of decades ago. That's why some sellers are electing to ramp up their homes with a little hi-tech to garner attention. They want to show prospective purchasers that their homes are a little more "state-of-the-art" than some homes in the same age range or price range.
According to a survey published in January by Harris Polls for a nationally-known real estate firm, roughly half of all American homeowners either enjoy some type of smart home technology or have plans to invest in it during the remainder of the year. In addition, 70% of survey respondents said they were so satisfied with the purchase or installation of their first smart home product that they were likely to purchase another one.
One of the popular misconceptions about smart home technology is that retrofitting an out-of-date home is too difficult a task or too costly. The truth is, one of the attractive features of some of the technology is the ease of installation and the comparatively affordable cost. More than 50% of current homeowners agreed they would probably install smart home technology because they felt it would help sell their home quicker. To quantify that response in a dollar amount, 65% of respondents surveyed said they would likely pay $1,500 or more to bring their home into the 21st Century. Experts say most homes won't require that much of a smart home investment.
Real estate professionals say a few hundred dollars is enough to add enough smart home technology to make a difference. Citing the gradual lowering of the prices of some of the technology over the past few years, they say it's easily affordable for most sellers interested in positioning their homes for sale. Items such as smart door locks or security cameras can be purchased for less than $500. And smart thermostats are popular with buyers that like the "set it and forget it" advantages of saving energy – and money. More complete home automation systems can be a little pricey, but often pays for itself because of the attractiveness to a potential buyer.
Smart home technology experts in the Columbia SC real estate market suggest these five areas as "smart home starters:"
- A strong Internet connection and Wi-Fi network
- A smart doorbell • Smart door locks
- Smart climate controls
- Smart lighting and lighting controls
Smart technology is no stranger to newer homes and newly built homes. Now, as a result, homeowners choosing to include it into existing homes is becoming increasingly popular, both for the convenience of their owners and in an effort to provide an advantage when the time comes to sell.
Surprisingly, the rate of older American homeowners acquiring some type of smart home technology outpaces younger owners. Forty percent of homeowners aged 65 or older who own smart home products also have smart climate control technology. Comparatively, only 25% of millennials (aged 18-34) have those products.
Real estate agents remind sellers that buying a home is very much an emotional decision. If prospective buyers are able to "connect with the house" through various features that help make the home stand out above the rest, they are more likely to move it to the top of their short list. Smart technology can – and does – give the buyer the impression that the house is modern and is likely well-maintained.
See more articles pertaining to Columbia SC real estate in the Columbia SC Real Estate section of our site below Columbia SC Real Estate Categories in the column to your right. As always, you can find information here on a variety of topics ranging from home buying and home selling tips to home improvements, home inspections, mortgage financing, homeowner's insurance and of course, all the latest Columbia SC real estate news that affects all of these categories.
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Higher Columbia SC real estate prices have ushered in the return of the house flipper. Flippers are loosely defined as investors who buy homes, maybe perform some minor or major improvements and try to immediately sell the properties –– usually at a much higher price than they paid for it. In 2015, the number of active home flippers in the market reached the highest level in almost a decade. Let's take a closer look at the future of flipping.
Columbia SC Real Estate Flips Popular
According to RealtyTrac, there were nearly 180,000 single-family homes and condominiums flipped in 2015. Technically, a flip is defined as a home that is bought and resold within a 12 month period. Flip transactions comprised 5.5% of all sales in 2015 – the first increase in the flipping share in more than four years. RealtyTrac reports that flipping activity increased in 75% of the nation's housing markets. In addition, profits are setting records, too.
Columbia SC real estate experts attribute the growth in flipping to the renewed confidence in the housing market's ongoing recovery. RealtyTrac says not only is the share of home flips rising again, but even smaller investors are participating in the buy and sell activity.
In some markets across the U.S. there are still a number of distressed properties on the market for sale. And, investor demand fueled by the unstable stock market has reopened this avenue for investment growth and profit gain. Real estate agents report multiple offers on the best investable properties as soon as they hit the market. If there's money to be made in a particular house, the flippers are very interested and are acting fast.
One concern on the horizon is that home prices could be rising too fast – even for the flippers' tastes. the main reason for the increase in prices during 2015 and so far this year is the basic law of supply and demand. The supply of homes on the market is low – especially near the lower end of the housing market – and the demand is high. Everybody, not just the flippers, wants a good deal. The prices for homes sold in January were nearly 7% higher than January 2015 and represented a higher annual gain than the month of December, according to CoreLogic. The fear is that house flipping will cause prices to rise even higher – artificially higher – most notably in markets experiencing the lowest inventory.
Some economists warn that as home flipping increases, it's usually an indication of potential problems in the housing market. Such was the case in the housing boom of a decade ago. The difference then, however, was that the flippers were utilizing cheap and available credit to buy their properties, with little of their own money invested in the homes. Because that type of credit and lending is no longer available as it once was, flippers instead are using a larger amount of their own cash into their deals, even with investor financing.
One leading economist said, "More inexperienced home flippers with a smaller financial cushion could be a sign of an over-speculative market, but the data indicate that flippers in 2015 continued to operate within relatively conservative margins." He went on to say that, "Homes flipped in 2015 were on average purchased at a 26 % discount below estimated market value and resold by the flipper at a 5% premium above estimated market value."
Even more concerning is the ever-weakening home affordability for the first-time home buyer or owner occupant looking to trade up. With first-time buyers comprising a much smaller share of total home buyers today than ever before, the risk of a recurring housing price bubble could continue to dissuade them from buying.
In some markets – especially urban areas – investors have to put more of their money into the property to finance it and renovate homes that are often in critical disrepair. And while the properties can be bought for relatively low sales prices and investors stand to make handsome profits once the houses are renovated and sold, investors must be careful to buy the right property in the right market. The failure to do so will result in not having the buyers they need.
Immediately following the recent housing crash, large institutional investors swooped in and purchased thousands of properties in distress. They were able to transform the overwhelming majority of those properties into single-family rental homes. Institutional investors today are buying fewer properties. Smaller investors are taking their place. And those small investors have a penchant to buy and sell – flip the homes – rather than hold onto them in a Columbia SC real estate investment portfolio.
The total number of investors completing at least one flipped transaction in 2015 was at the highest level in more than eight years. The number of flips per investor was at the lowest level since 2008 according to RealtyTrac.
As home prices continue to rise, flippers in turn are seeing their returns increase. Of the homes that were flipped in 2015, the average gross profit was $55,000 nationwide. That amount represents the highest gross profit levels in a decade (since 2005,) RealtyTrac reports. The return on investment neared 46%, an increase of 2% over 2014 and an 11% increase compared to 2005, when flipping was widespread.
See additional articles pertaining to Columbia SC real estate in the Columbia SC Real Estate News section of our site below Columbia SC Real Estate Categories in the column to your right. You can find information here on a variety of topics ranging from home buying and home selling tips to home improvements, home inspections, mortgage financing, homeowner's insurance and of course, all the latest Columbia SC real estate news that affects all of these categories.
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The Columbia SC real estate market has begun the year with existing home sales at the highest annual rate in six months. In a recently-released report by the National Association of Realtors (NAR) total existing home sales (by transactions) increased by .4% adjusted seasonally for an annual rate of 5.47 million in January. December's transactions were 5.45 million. Total existing-home sales are defined as the sales of single-family residences, condominiums, townhomes and co-ops.
Columbia SC Real Estate Sales: Good So Far
The recent report reinforced the latest sales numbers that show sales 11% higher than this time a year ago. The totals represents the largest year-over-year increase since July 2013 when year-over-year sales reached 16.3%.
The slight increase in transactions is partly due to the spike in sales attributed to loan closing delays in November 2015. The delays were the result of implementation of the new Consumer Financial Protection Bureau's TILA-RESPA Integrated Disclosures regulations in October. The new disclosures are designed for lenders to be more transparent in their dealings with borrowers. In addition, the regulations were intended to simplify and streamline some of the consumer disclosure documents to make it easier for borrowers to understand various lending programs. Among other documents, the new guidelines include cost estimates that must approved by the borrower in writing before the application process can continue. This disclosure must be given to the borrower within three business days of the loan closing. If the borrower wants to make any changes during the three-day window, the three days start over. As expected, coupled with the additional paperwork, software implementation and training challenges, the new disclosure rules caused closing delays in the Columbia SC real estate market.
Despite the strong start to 2016 in the Columbia SC real estate market, economists warn the biggest obstacle for continued growth is a lack of inventory. Simply stated, supply and demand need to mirror each other in a good real estate market. When demand exceeds supply – in this case where there are more buyers that homes on the market – a seller's market is created, often driving sales prices even higher.
Lawrence Yun, chief economist for the NAR had this to say about the increase in existing-home sales. "The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints," Yun said. "Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession."
With spring and the official start of the "home buying season" just around the corner, housing supply isn't meeting market demand. Inventory of available homes on the market reached 1.82 million in January, increasing 3.4%. The inventory is 2.2% lower than it was in January 2015. Unsold inventory or MOI (months of inventory) is also tracked as part of the NAR report. Currently the MOI is at a 4-month supply and represents a slight uptick from 3.9 months at the end of 2015. What that means is if buyer demand remained the same and no new single-family housing units were added to the market, they all would be sold in four months.
"The spring buying season is (nearing) and current supply levels aren't even close to what's needed to accommodate the subsequent growth in housing demand," says Yun. "Home prices ascending near or above double-digit appreciation aren't healthy – especially considering the fact that household income and wages are barely rising."
For all types of housing analyzed in January, the median existing-home sales price was $213,000. That's an increase of 8.2% compared to January 2015. In addition, the price increase in January was the biggest since April 2015. The increase marked the 47th consecutive month with year-over-year price gains. Real estate analysts say this trend is likely to continue, given the tight supply and steady demand – a combination that usually bodes well for sales price increases.
In other Columbia SC real estate news, the percentage of first-time home buyers remained stagnant at 32% in January. That percentage was unchanged from December, but is up 4% from 28% a year ago. For the year ending 2015, first-time buyers comprised 30% of all buyers, a slight increase from 29% in 2014 and 2013.
Purchases paid in cash made up 26% of all transactions in January, an increase of 2% over the previous month. All-cash sales were 27% of all transactions this time last year. Individual real estate investors – who account for a large number of all-cash sales – bought 17% of the homes in January. The 17% investment share matched the highest level since January 2015. Economists and real estate analysts attribute some of this activity to investors disillusioned with the stock market and seeking real estate as a means of growing capital as prices continue to rise steadily.
So, what does all this mean for the coming months? Most economists say more of the same. With interest rates near all-time lows and good mortgage availability, home buyers who find a home to their liking will probably continue to buy. And prices will probably remain at or near their current levels. The big question looming is two-fold. Will existing inventory satisfy demand long enough for new housing starts to kick in? And what about economists who say 2016 will suffer a mild recession? Those answers remain to be seen. In the meantime, the Columbia SC real estate market is enjoying the good start. Only time will tell if it will continue.
See more articles pertaining to Columbia SC real estate news in the Columbia SC Real Estate News section of our site below Columbia SC Real Estate Categories in the column to your right. As always, you can find information here on a variety of topics ranging from home buying and home selling tips to home improvements, home inspections, mortgage financing, homeowner's insurance and of course, all the latest Columbia SC real estate news that affects all of these categories.
Remember, we also post tips daily on Twitter and Facebook. Check us out there too.