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2014: Year of the Repeat Columbia SC Homebuyer
As prices continue rising in the new year—albeit at a slower pace—investors will begin to ease back from the market, but repeat homebuyers will be there to pick up the slack, according to Trulia's predictions for the Columbia SC housing market in 2014.
Other changes to the Columbia SC housing market in the new year include lower affordability, "less frenzied" home-buying, and a shift in the rental market from single-family homes to urban apartments.
The biggest obstacle for potential homebuyers is saving enough money for a down payment. This hurdle was the most commonly cited challenge in a Trulia survey of current renters wishing to own their own home. Fifty-five percent of survey respondents cited this obstacle, and among young adults (ages 18 to 34) the rate was even higher at 58 percent.
The second most common barrier to homeownership is lack of stable employment—cited among 36 percent of all survey respondents and 43 percent of young adults.
The pace of Columbia SC home price appreciation will slow in the new year, but rising prices, combined with rising mortgage rates, will take a toll on affordability.
Continued price increases will likely lead more Columbia SC homeowners to list their homes for sale, leading to an increase in inventory in 2014.
At the same time, traditional homebuyers will face less competition from investors, and mortgages "should be easier to get" as the new regulatory environment takes shape removing the uncertainty that has made lenders wary.
During the recession, single-family home rentals increased 32 percent, but some believe that several factors will lead to a decline in this trend in 2014. Fewer foreclosures, fewer investor purchases, and loosening credit standards will all contribute to the decline.
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2014 Mortgage Fee Hike Postponed
Planned fee increases that would have added to the cost of millions of mortgages will be postponed, maybe even cancelled altogether.
Currently, borrowers seeking loans backed by Fannie Mae and Freddie Mac are set to pay higher upfront fees starting April 1. The fees, ordered by the Federal Housing Finance Agency in December, are meant to help safeguard banks against risky borrowers who might default.
Housing experts say they will add thousands of dollars to the cost of all mortgages insured by Fannie and Freddie, with the biggest hits taken by borrowers with less than perfect credit histories.
The mortgage industry has been bracing for substantial increases in the price of loans in 2014. It is already costing a bit more to borrow money to buy a home lately, as fixed mortgage rates have drifted to the highest level in three months.
The incoming chief of the FHFA, Mel Watt, said he intends to postpone the fees — and perhaps even cancel them — until more analysis is done. The FHFA oversees Fannie Mae and Freddie Mac.
Even with the reversal, however, mortgages will probably get more expensive over the next few months anyway as the Federal Reserve cuts back on its purchases of mortgage backed securities, a program designed to keep interest rates low.
Stay tuned and we'll keep you updated at this website on mortgage rates, and the cost of getting a mortgage when buying a Columbia SC home.
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New Year Starts With Disappointing Numbers
With a new year starting that will surely bring higher interest rates and tighter lending standards, the housing market is already showing signs of a slowdown, as pending home sales for November increased only slightly from the previous month.
The Pending Home Sales Index from the National Association of Realtors is based on contract signings for the purchases of existing home sales. The index inched up 0.2 percent to 101.7 in November, from a downwardly revised 101.5 in October. Most economists were expecting an increase of 1 percent.
The index is 1.6 percent below November 2012 when it was 103.3. The data reflects contracts but not closings.
Total existing-home sales this year are expected to reach 5.1 million, a gain of almost 10 percent over 2012, but should stay at that level in 2014, and then rise to 5.3 million in 2015, according to the NAR.
The national median existing-home price for all of this year will be close to $197,300, up nearly 12 percent from 2012. This median price is projected to rise at a more moderate pace of 5 to 5.5 percent in 2014, and grow another 4 percent in 2015.
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No, NOT Another Housing Bubble
All the news of late has been talking about another housing bubble, including our report here last month. The double-digit home price increases and the return of bidding wars have led to a lot of "bubble" talk lately.
But today, we're going to tell you why we are NOT in another housing bubble, nor are we about to be. Read on!
First, prices, as measured by Case-Shiller, are still down 27 percent from their peak seven years ago. But Case-Shiller calculates nominal prices, not real ones. And the consumer price index (inflation) is up 15 percent since 2006. So real house prices are about 37 percent below 2006 levels and are just now returning to where they were 13 years ago.
It takes a larger percentage increase to offset a percentage decline. Take a $100,000 house at the peak. If it fell the real national average 42 percent during the bust, it would have been worth $58,000 at the bottom early last year. But to get back to $100,000, it would take a 72 percent increase from the bottom.
Even now, after the sharp bump off the bottom, prices would have to jump 60 percent to get back to their bubble-era peak.
You also have to remember that some land-constrained individual markets are prone to booms and busts and probably always will be.
One could argue that the bubble of the 2000's was so insane that we don't have to get back to those levels to have another bubble. And that's true, but there are plenty of other indicators that say we aren't in one.
For instance, is it better to rent or to buy? It's still better to buy, according to S&P Indices calculations. The essential question regarding any bubble is: Does the investment make sense? Can homebuyers actually afford their mortgages?
Homeowners are spending a historically low amount of their income on their mortgages—just 13 percent, according to Zillow. From 1985 to 1999, that number was 20 percent. In the bubble it was nearly twice what it is now. In 1979 it approached three times today's levels.
The economy can't get back on its feet until housing starts really moving again. Low interest rates make it possible for buyers to afford higher prices. As interest rates start to rise in the next year or so, that will counterbalance the surge in prices, as will an increase in inventory, as underwater homeowners are able to sell their houses without losing money.
To really have a housing bubble, you have to have lots and lots of transactions. And while sales are up (remember, that’s a good thing!) they’re still at 1999 levels, even though we have 10 percent more households since then. Transactions of new and existing homes would have to pop 55 percent to reach peak bubble levels—roughly 3 million more deals a year.
That's not happening anytime soon.
Bear markets don't last forever, and not every recovery is a bubble.
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Protect Yourself Against Moving Scams
Hiring a moving company can be complicated, and even an honest mover can disappoint a consumer unless they know their rights. And those rights can vary depending on whether you're moving between states or within one. Don't be duped by low-ball estimates and then the mover grossly inflates fees after loading your possessions onto their truck. Consumers need to protect themselves, and here's how:
Get Recommendations
Try not to rely on newspapers, phone-books, or online ads for the names of movers. Instead, get recommendations from friends, family, or reliable real estate agents. Plan to obtain estimates from at least three companies. Avoid movers that can't provide an address or licensing information. Ask if they have marked trucks, and use a mover that does. Never hire a company that relies solely on a phone or online estimate, or one that requires a large deposit.
Check for Complaints
Along with licensing information, the federal website and some state sites list complaints against movers. Also check the BBB (www.bbb.org), and search with the company's name to find reviews and complaints on online forums and complaint websites.
Verify Licensing
New Jersey officials conducted a sting operation last year that resulted in fines against 25 unlicensed moving companies with listings on Craigslist, Angie's List, and other websites. Several movers had outstanding warrants; two were wanted by U.S. Immigration and Customs Enforcement. Interstate movers are licensed by the Federal Motor Carrier Safety Administration, which offers information on how to screen them, at protectyourmove.gov. The site also has a list of state regulators who oversee in-state movers. (Click on "State/Local Resources" when you get to the site.)
Know Your Rights
The federal government and some states require movers to provide booklets explaining your rights. Although the federal "Your Rights and Responsibilities When You Move" doesn't apply to in-state movers, it's a must-read for all. Find the title under "Are You Moving?" at protectyourmove.gov. Also check the consumer information on the American Moving & Storage Association’s website ( www.moving.org ).
Making Complaints
If there's a problem after the move — you notice items are damaged or missing — contact the mover immediately. The mover should have given you a copy of its procedures for handling complaints and inquiries. If you think you've been defrauded or the mover violated the law, contact your state attorney general or consumer protection agency. If you think the mover is illegally holding your possessions and trying to rip you off, contact the police. If ultimately you need to sue in small-claims court, send your mover a demand letter with your complaint and what you're seeking.
Moving companies can leave you fighting for your possessions if you don't become pro-active in the process of finding a reputable mover.
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Home Sales Up Despite Slim Inventories
Pending home sales — the measure used by the National Association of Realtors to indicate completed sales about two months ahead — rose only slightly from March to April, a mere 0.3 percent. But those rising prices are helping keep homes off the market as many homeowners in negative equity and banks holding foreclosed properties opt to stay on the sidelines.
Based on contract signings for the sale of existing homes, the Realtors' Pending Home Sales Index is up 10.3 percent from a year ago to the highest level since April 2010, right before the expiration of the homebuyer tax credit.
Total existing home sales are expected to rise just over 7 percent to about 5 million this year, according to NAR. The national median existing-home price should increase close to 8 percent and exceed $190,000 in 2013.
"Because of inventory shortages, higher home sales will push up home values to the highest level in five years," said Lawrence Yun, NAR chief economist.
The Pending Home Sales Index in the Northeast jumped 11.5 percent to 92.3 in April and is 17.7 percent above a year ago.
In the Midwest, the index rose 3.2 percent to 107.1 in April and is 15.1 percent higher than April 2012.
Pending home sales in the South slipped 1.1 percent to an index of 119.2 in April, but are 12.3 percent above a year ago.
With significant inventory constraints, the index in the West fell 7.6 percent in April to 94.6 and is 2.6 percent below April 2012, blamed strictly on the low number of homes for sale to satisfy rising demand.
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Pending Home Sales Rise 4.5%
Pending home sales in January were up 4.5 percent month-over-month, and that was above expectations for a rise of 1.9 percent.
Pending home sales were up 10.4 percent on a year-over-year basis, beating expectations for a rise of 8.2 percent.
January’s number was also revised up to reflect a 1.9 percent decline, from the initial reading of a 4.3 percent decline.
Regionally, in the Northeast the pending home sales index (PHSI) were up 8.2 percent on the month, in the Midwest sales were up 4.5 percent on the month, in the South sales were up 5.9 percent, and in the West it was up a marginal 0.1 percent, and down 1.5 percent from a year ago.
In a press release, Lawrence Yun, NAR’s chief economist said, “Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It’s also why we’re experiencing the strongest price growth in more than seven years.”
These recent pending home sales figures show that existing home supply is tight, especially in the West which is why home price increases in the region are increasing the most. Yun said he now expects 5 million home sales in 2013, down from 5.1 million.
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Home Buyers Wants Have Changed
What home buyers want when looking for their perfect abode have changed, according to a new study by the National Association of Home Builders.
The study found that home buyers are overwhelmingly much more cautious and sensitive to prices than before, but what’s really interesting is what tops buyer’s lists of must-haves in their new home.
It’s probably not a surprise to learn that energy efficient homes are priority number one for the vast majority of home buyers. The NAHB found that Energy-star appliances are essential number one in the eyes of many buyers, followed by energy efficient laundry rooms.
High-end amenities were cited by 62% of home buyers as being more important to them than available living space – in other words, most people are more than willing to sacrifice that extra bedroom or go with a smaller living room in order to get their hands on the latest hi-tech gizmos like wireless home security and Wi-Fi controls for their utilities.
Home buyers also want style over substance, preferring French doors over regular doors, and they want luxuries like a double sink in the kitchen, and a hot tub and shower in the bathroom.
Luxuries like a golf course community and an elevator have gone out the window in the eyes of many home buyers. Consumers don’t see the need for laminate countertops, nor do they have a use for wine cooler refrigerators anymore. Mind you, they’d like some outdoor space – but an outdoor kitchen is probably a little too excessive for most.
What most people are looking for is access to the right kinds of amenities and they prefer to live outside of cities and live in the suburbs. Watch a video on the NHB report.
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Bernanke: Housing Market Has Hit Bottom
Federal Reserve chief Ben Bernanke gave a cautiously optimistic view of the U.S. housing market recently, saying evidence suggested the market had hit the bottom over the last year and was recovering.
Mr. Bernanke was testifying before the House Financial Services Committee when he said the Fed’s bond buying program appeared to be having a positive early impact on the housing market, helping homeowners refinance existing loans or buy new homes.
Bernanke said house prices had dropped 30% nationwide from their peak since the beginning of the financial crisis, but said prices of homes had crept up over the last year.
The number of foreclosures, while still too high, are declining as are the number of homeowners who are underwater, a term meaning they owe more on their mortgages than their homes are now worth.
Bernanke said the continuing improvement in the housing market would have a positive impact on the employment picture, both by directly creating more jobs in home construction and factories that make home goods, and also indirectly by improving peoples’ sense of wealth.
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2012 Home Sales – Best in 5 Years
The National Association of Realtors reports that December sales of previously owned homes came in just slightly below November’s sales pace, but up 12.8% from a year ago. That brought full-year sales to 4.65 million, up 9% from 2011 and the best year for home sales since 2007, when there were 5 million homes sold just before the start of the recession.
Sales are being helped by a combination of strong market fundamentals, near record low mortgage rates, lower unemployment and a rebound in home prices, all of which are bringing buyers into the market who had been waiting for it to bottom out. According to NAR, the mortgage rates and years of depressed home prices have also combined to create the most affordable housing market on record.
And the NAR predicts strong sales should continue into 2013 and beyond. It has a forecast for 5.1 million existing home sales this year, and 5.4 million next year.
The rebound in the market for previously-owned homes is also showing up in the market for new homes, where sales rebounded to their highest levels since 2009, while housing starts reached the highest level since 2008.
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Locking in Interest Rates – Best Policies to Follow
No one can time the market as to when interest rates should be locked in. The question most often asked about rates, “what’s going to happen in the next few months with interest rates?”
No one knows, and if anyone tells you they know what will happen to rates in the future, consider whether you really want to listen to them or work with them. They think they know things they can’t possibly know.
Consider the following when deciding whether or not to lock in your mortgage rate:
1 – Lock in your rate when you have a good deal and you know roughly when you can close on your property. 30 to 60 days should be the longest lock period you consider.
2 – Lock in with a lender who offers you a float down. If rates get better, you can take advantage of the lower rates.
3 – Consider locking in with a lender who offers a liberal rate-lock extension policy. Understand that rate lock extensions are not free. Some expire beyond the ability to extend. Try to find a lender who will allow you to extend your lock if, for some reason, your deal takes longer to close than you had anticipated.
4 – Don’t think too long. Rates always go up faster than they fall, sorta like gasoline prices. If you find a rate that suits your budget, lock it in!
We know what moves interest rates, and we can even look back and determine what caused rates to increase after the fact. But we can also know who won the Super Bowl on Monday morning, but we don’t know who will win before it’s played.
Lock in your interest rate using the above guidelines as soon as your are able to.
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Keep Your House Free of the Flu Bug
With most of the country experiencing its worst flu year in decades, we need to be more conscience of things it takes to stay clear of the dreaded bug.
Vaccination is the best way to protect yourself from the flu. There are additional steps you can take to keep yourself and your family healthy this flu season.
Hand-washing is key, and vigorous hand rubbing is more important than water temperature or type of soap. Also, place paper towels or napkins at the sink you can use and toss, don’t use hand towels that just absorb and pass along germs.
More Anti-Flu Tips:
• Line trashcans with plastic bags from the grocery so you can throw away used tissues without touching them.
• Clean door handles and faucets with inexpensive rubbing alcohol — 70% or 90% — rather than commercial anti-bacterial wipes.
• Don’t forget to sanitize TV remote controls, especially if a sick person has touched them.
• Crack a window or door to let in fresh air, rather than just breathing the same stale, germy air.
• Wash sheets on sickbeds at least twice a week in the hottest water that they can stand and add a splash of chlorine bleach.
• Avoid close contact with people who are sick. When you are sick, keep your distance from others to protect them from getting sick too.
• Avoid touching your eyes, nose or mouth. Germs are often spread when a person touches something that is contaminated with germs and then touches his or her eyes, nose, or mouth.
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Hurricane Impact Could Exceed $20 Billion
Hurricane Sandy swept through 12 U.S. states, causing floods and fires, and an estimated $10 billion to $20 billion in potential losses according to estimates from research firm Capital Economics.
Mortgage Bankers Association CEO David Stevens said he expects loan application numbers and rates to be affected for the period that includes Hurricane Sandy. But overall, he views the storm as a “temporary blip” that will have no long term affects or significant impact on the mortgage finance system. Some industries, including home construction and repair, will no doubt see a boost in the aftermath.
Last year’s Hurricane Irene, which was less severe, ended up costing the Northeast region $10 billion while 2005’s Hurricane Katrina led to $100 billion in cleanup expenses around the Gulf Coast, according to data from Paul Ashworth, chief U.S. economist for Capital Economics.
Despite the negative impact of the hurricane, Capital Economics contends Sandy’s overall effect on economic output “is likely to be small,” although the economy will take a hit early on.
The financial impact will be short-term and over before the end of this quarter, Capital Economics said. When factoring in the expected boost to GDP on cleanup activity, the overall impact is modest. Much of the clean up spending will be born by insurers and large global reinsurance firms, many of which are based in Europe.
The states impacted by Sandy represent 23% of the nation’s gross domestic product, with the New York metropolitan area alone accounting for 10% of GDP.
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Pending Home Sales Up in September
Forecasting increases in home prices and completed transactions for the year, the National Association of Realtors is starting to report slow, but positive improvement for housing.
According to NAR, pending home sales jumped 14.5%, compared to September 2011. In comparison, August pending home sales grew 10.7%, suggesting overall improvement in 2012.
NAR chief economist, Lawrence Yun, stated it is the pending home sales that continue to hold a higher ground. “This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013.”
While housing has a long road ahead before anyone can call it a full recovery, small, yet positive economic indicators in housing are slowly emerging, with the PHSI being one of them, given that it has risen for 17 consecutive months on a year-over-year basis. This September revealed a significant increase in contract activity versus the previous year in every region except the West, which struggles with a limited inventory.
It is predicted that over the next year, the conditions of housing will remain affordable, with the 30-year-fixed-rate mortgage remaining remarkably low until it’s gradual 4% rise toward the second half of 2013.
Additionally, NAR says that completed existing-home sales in 2012 will total close to 4.6 million (an increase of 9.0 percent), and are projected to rise about 9.0 percent next year to nearly 5.1 million. With notably lower housing inventory, the national median existing-home price is expected to increase 6.0 percent this year and 5.0 percent in 2013.
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August Home Prices at 2-Year High
U.S. home prices continued to increase in August with the Case-Shiller 20-city Home Price Index increasing 0.9 percent to its highest level since September 2010. The index rose in 19 of the 20 cities included in the index.
Economists had expected the 20-city index to be 2.0 percent ahead of August 2011, when in fact it was 1.3 percent ahead of that measured time period.
The median price of an existing single family home dropped 1.5 percent in August, according to the National Association of Realtors but was up 8.0 percent from August 2011. In July, the median price of an existing single family home was up 9.7 percent from one year earlier.
Home values play a significant role in the nation’s economy following the “wealth effect” which holds that households spend more as perceived wealth increases. Increases in household net worth due to real estate – rather than stock – values have, according to studies, a greater impact on consumption which is more than 70 percent of GDP.