We’ve assembled a Columbia SC home buying checklist for people thinking of entering the real estate market, looking to buy a house. Let’s take a look at these seven important tips.
1 – Home buying should be for the long haul. Not too long ago, buying houses and turning around and selling them (or “flipping” them) was a popular way to make money. Today, we recommend considering planning to live in the home you buy for at least 7-10 years. Of course, there’s no hard and fast rule. People move where their jobs take them – whether it’s across town or across the country – but give consideration to whether you’ll likely move within the next few years before you decide to buy. For some people, it may be better to rent for a few years.
2 – Do some soul-searching before you decide to buy. Your Columbia SC home buying checklist should include asking yourself a series of tough questions to make sure your heart is in what you’re about to undertake. Buying a home is the single largest purchase most people will make in their lifetime – make sure you recognize that, and treat it importantly.
3 – Ask yourself these questions: Will you choose to start a family soon? Do your needs require a home with a large yard for a growing family or your pet(s)? How do you feel about yard work? Do you like the city better than the suburbs?
4 – Take your time before you buy. Most people tend to jump right into to the home buying pool without testing the water first. Take your time. There’s no hurry. While interest rates are fairly low, the temptation may be to act quickly, but experts say the rates are expected to remain fairly affordable throughout 2017. Use the extra time you allot to make sure your credit score is in the best shape possible and that the other items you’ll need for loan qualification are in order (tax returns if you’re self-employed, source and verification of your down payment, etc.)
5 – Buy within your budget. One of the most important items on your Columbia SC home buying checklist should be to focus on what you can comfortably afford. Remember, mortgage lenders will use your debt-to-income ratio (DTI) to determine whether you qualify for home loan financing. Before you start the home shopping journey, take a look at your DTI. Take the total of all your recurring debt including your proposed monthly mortgage payment (PITI) along with other monthly debt like credit cards and car payments. Divide that total by your gross monthly income. Most mortgage lending experts say your DTI should be 36% or lower. The most important thing to remember is this: Take out the loan and the monthly payment you can comfortably afford, not necessarily the one you qualify for. Making a higher monthly mortgage payment is no fun if you can’t afford to buy steaks for the new backyard grill occasionally. Some experts recommend buying a home you can afford based on one income. That way, should you or your spouse lose their job or get laid off – or elects to become a full-time parent – you can still comfortably pay for your home.
6 – Consider the tax advantages. The tax benefits are a big part of any Columbia SC home buying checklist. Currently, the mortgage interest you pay on a primary residence is tax deductible. So, the tax savings are of huge consequence since you can deduct your home loan interest and your real estate taxes from your gross income. For example, if you earned $75,000 in gross income in 2016 and you paid $10,000 in mortgage interest and your property taxes were $2,000, you could lower your taxable income to $63,000 – saving you a bundle on income tax.
7 – Create a moving account. Another important item on your Columbia SC home buying checklist is to start a move-in fund. Of course, you’ll have to have a down payment, but don’t forget other things like closing costs, moving expenses and other necessities for your new home. If you’ve been renting, for example, you may need to purchase a lawnmower and other lawn care equipment – along with that backyard grill!
8 – You may choose to rent, if you’re not ready to buy. Let’s face it…sometimes it’s not a good idea to buy. Maybe after you review your Columbia SC home buying checklist you’ll realize it’s not the right time. If you’re not ready, don't force it. Rent instead. You’ll be happier, healthier and financially wiser to put it off a year or two until you feel more comfortable. Save your money. Find a better job. Get your finances in order. Do your homework. Then when you’re ready to buy you’ll be that much more prepared.
Read more about home buying advice in the section of articles on Columbia SC Home Buying Tips just below our Columbia SC Real Estate Categories in the column to your right.
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Now that a new President sits in the oval office, the Columbia SC economic outlook is on the minds of people in the real estate industry as we enter 2017. Let’s look at three component parts of the economy and how they relate to each other – and what to expect in the real estate market for 2017.
The Stock Market
Most of the “experts,” if there is such a thing, say they expect modest growth in the market with at least a chance of a correction occurring sometime during the year. Recently, more than a dozen Wall Street firms predicted the S&P 500 index of U.S. large-cap stocks will hit a record level of 2,363 – a growth rate of 5.5%. Analysts say President Donald Trump’s platform of lower corporate taxes, fewer business regulations and increased infrastructure spending has given investors reason to be more optimistic than in recent years.
The S&P 500 started 2016 at slightly over 2,000 and ended 2016 at 2,239 – a return of 9.84%. Actually, including dividends in the mix, the true return was approximately 12.25% – despite a dip in prices right before the end of 2016. The market’s positive attitude is largely the result of the new administration’s promises to be “pro-growth.”
Detractors point to the concern that stocks are overvalued and the bull market will be short-lived. In addition, a strong U.S. dollar could potentially be responsible for fewer jobs if American products are priced too high for global buyers. Nevertheless, just a few days into the Trump presidency, the feeling of optimism on Wall Street continues
Oil Prices
The Columbia SC economic outlook for oil prices in 2017 is for slightly more of the same experienced two years ago in 2015. It’s expected the average price of a barrel of oil will be $52 this year, as forecast by the U.S. Energy Information Administration. That’s nearly $10 more per barrel than the 2016 average price of $43. Crude oil averaged $52 a barrel in 2015.
At over $100 a barrel, oil prices reached an all-time high between 2011 and 2015. The advent of cheap fracking technology throughout the central U.S. was largely responsible for bringing the prices back down in 2015. The additional deposits enabled the U.S. to become an oil exporter – a first in more than nearly 40 years.
Gas Prices
During the first few weeks of 2017, Americans were paying an average of $2.34 per gallon of regular gas – the highest price since 2014 – according to the Automobile Association of America (AAA.) This time last year, the average pump price as $1.99 per gallon. While there is no direct connection between crude oil prices and gas prices, they certainly are related. AAA says that pump prices are affected roughly 2.4 cents per gallon for every $1 movement in the cost of a barrel of crude oil. The Columbia SC economic outlook for gas prices is for pump prices to average $2.10 per gallon in February and as high as $2.30 throughout the rest of 2017. The relatively cheap price of crude oil in 2016 enabled U.S. drivers to pay an average price of $2.14 per gallon of regular gas.
The Housing Market
So, what does all this mean for the housing economy in 2017? More of the same, according to the experts. And that’s a good thing – relatively speaking. CoreLogic, a real estate industry research firm, predicts home values will continue to rise throughout 2017 – at a rate of around 4.7%. Redfin, another online brokerage research firm, forecasts the growth in home prices slightly higher at 5.3%, citing homebuyer demand as being higher today than this time last year.
CoreLogic says home prices increased 7.1% between November 2015 and November 2016. Despite that impressive growth, the increase still ranks approximately 4% less than it was during its peak in 2006. The percentages are averages and area adjusted for inflation.
The Columbia SC economic outlook calls for continued tight inventory challenges. Fewer homes for sale in the marketplace leads to higher prices for those homes on the market – a classic example of supply and demand. When supply is scarce, demand is high and prices are, too. The tight inventory is expected to be especially impactful on first-time home buyers. In addition, as interest rates have increased slightly since the presidential election – and are expected to increase again, leveling off at between 4.2% and 4.7% in 2017 – the cost of mortgage financing will increase, too. However, relatively speaking, interest rates will still remain affordable – just not as affordable as they were 12-18 months ago.
In addition, contributing to the lack of housing inventory, recent research shows that U.S. homeowners with mortgages at lower fixed rates of 4.25% or less are likely to remain in their homes. These homeowners are less apt to sell their homes than their counterparts with higher interest rate mortgages. Although new construction is brisk, it appears to lack the firepower to produce a sufficient number of affordably-priced homes quickly enough to make an impact during 2017.
As usual, the combined effect of these components of the economy will be the determining factor in the Columbia SC economic outlook. If crude oil prices dropped, for example, creating lower gasoline prices, the resulting optimism could be encouraging for the housing industry. Builder confidence would rise, giving them greater opportunity to build more homes at volumes that would make them more affordable. Likewise, a leveling off of the stock market during 2017 would likely mean that U.S. Treasury bond yields would become a popular investment once again, giving the American consumer confidence interest rates would stabilize – making borrowing money more affordable – regardless of what home prices do or don't do.
The bottom line is this: The Columbia SC economic outlook is for gradual improvement in all areas mentioned. There seems to be an optimism in the new administration – although the jury is still out on what campaign promises will and won’t be delivered. As always, time will tell. In the meantime, there’s every reason to think that housing will be at least as good as it was in 2016 – despite the inventory challenges, higher prices and slightly more expensive credit.
You can find more articles pertaining to the Columbia SC economic outlook in the "Economy" section of articles just below Columbia SC Real Estate Categories in the column to your right. Remember to also check us out by finding us on Facebook and following us on Twitter.
If you’re planning to sell your home during 2017, there are several Columbia SC home selling recommendations you should be aware of. The following are common mistakes to avoid once you decide to put your home on the market.
Leaving out the required preparation. The excitement to get your home on the market as soon as possible is certainly understandable. The sooner you get it out there, the sooner you have a chance to sell. However, it’s important to take the necessary time to prepare your home for sale. So, the first of our Columbia SC home selling recommendations is to take the time and effort to plan what you'll need to do to get your home ready to put on the market.
The old adage, “You only get one chance to make a good first impression” is appropriate considering your house will be competing with a number of others on the market. As such, it's the time to put your home’s “best foot” forward. Performing repairs, repainting, decluttering, making landscaping improvements and staging the home are all potential moves you can make to position your home to show better – and sell faster. An experienced real estate professional can assist you by making recommendations in the following areas:
Cleaning up and decluttering your home.
A prospective buyer needs to envision himself and his family in your home. Make it easier for him by removing personal items and mementos, and decluttering various rooms, allowing him to better visualize his family’s belongings in the home, not yours.
Perform repairs and upgrades.
Take a critical look at your home. If there are painting needs, cracks or other unsightly areas needing attention, perform that work. It will make potential buyers notice how well the home has been maintained – likely implying that everything has been well cared for and in good shape.
Staging your home.
Home staging can be a vital tool in helping it sell. See an expert and discuss the cost versus the return on investment. Your real estate professional can assist here.
Have professional photos taken.
These days, more buyers than ever are doing their initial research online. It’s important you have professional photos to present in their online search. Again, the first impression is the one prospects will remember. Give them the best representation of your home by showing them great photos – and they’ll likely include it on their list to view in person.
Overpricing the home for the current market.
Among the list of Columbia SC home selling recommendations, this one of the most important. Pricing your home correctly is one of the biggest factors in whether it sells, and how fast. Conversely, overpricing your home for the market is one of the biggest and most deadly mistakes a seller can make. An overpriced home generally stays on the market considerably longer than necessary. The longer a home sits on the market, the less interest it'll receive from other buyers or agents. That usually results in low-ball offers.
We suggest two considerations to price your home correctly. First, review comparable sales in your market area. Look at what’s sold and where. Secondly, discuss your pricing ideas with a professional real estate agent to get their input and suggestions. Be objective – forget the emotional attachment to your home – you’ll rarely find a buyer willing to pay what your memories are worth, so don’t include their value in the sales price. Remember, your agent is the expert and they know what the market will bear – and what it won’t.
Being present for open houses and home-showings.
Again, as excited as you may be to show your home and be present when potential buyers visit, avoid the temptation. When the seller is in the same room with a prospect, it can actually be a deterrent for most purchasers. They may not ask the questions they really want to ask. It’s the same feeling many shoppers have when an overzealous sales clerk – who just wants to be helpful – follows you around in the store and actually is less help than he or she intends. Don’t be the anxious sales clerk. Let your agent handle the showings, the open houses and the walk throughs. If they need you, they can always call.
Failing to work with an experienced real estate professional.
As mentioned, working with a professional who knows the market and what sells your home quickest and best is a tremendous advantage. What’s more, working with an agent who knows the pitfalls of selling can save you time and money. An experienced real estate professional can help you every step of the way – from home preparation to pricing and marketing – it’s what they get paid for, and what they do best.
Interview prospective agents carefully. Ask questions about the homes they’ve sold and the total volume of sales. Be specific in asking questions about your particular home in your neighborhood to determine how familiar the agent is with what potential sellers are looking for. In addition, find a personal connection on which you can build. Make sure you and your agent can communicate, so you’ll be on the same page with one common goal in mind – to sell your home as quickly as possible and for as much money.
These are but a few Columbia SC home selling recommendations to consider, but if you take these into account we think it will make the sale of your home easier and more enjoyable.
See more articles pertaining to Columbia SC home selling recommendations in the two sections of articles on Columbia SC Home Selling Tips and Columbia SC Homes for Sale just below Columbia SC Real Estate Categories in the column to your right.
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Columbia SC mortgage rates continue to be in the news. With the recent rise in interest rates by the Federal Reserve, and the likelihood of additional increases on the horizon, the obvious question remains, “Is it still a good time to purchase a home?”
Let’s look at what’s transpired in recent months since the presidential election in November. The average interest rate for a 30-year fixed-rate mortgage increased from 3.68% to 4.2%, based on Freddie Mac's mortgage rate survey report. However, despite the increase, even a 4% rate is very low compared to historical averages. To put that into perspective, for roughly 30 years from 1971 to 2001 mortgage interest rates were above 7% most of the time. In October 1981, they peaked at 18.16%. It wasn’t until 2008, just over eight short years ago, that interest rates began to drop consistently below 6%.
While Columbia SC mortgage rates are expected to continue to rise slightly this year, most agree that aggregate increases will be less than 1% – meaning rates should remain below the 5% level. With that in mind, relatively speaking, mortgages will still be affordable for most home purchasers. And, as mentioned above, compared to where interest rates were just a decade ago, a 4% to 5% interest rate will seem like a bargain!
Since 2009, the Federal Reserve has purchased significant amounts of mortgage-backed securities. The recent strength of the stock market – as a result of the presidential election results – has meant those purchases have temporarily been suspended. In addition, the Fed has indicated they may raise the federal funds rate at different intervals this year. The fed funds rate is the rate at which banks loan money to each other. However, there is a loose relationship between the fed funds rate and the longer-term mortgage interest rates.
A small increase in the Fed’s actions may translate to a slight increase in mortgage rates and their monthly payments. As an example, on a $200,000 30-year fixed-rate mortgage at 4% the payment would be roughly $955 per month. At 4.5% the payment would be approximately $1,013. A 5% mortgage rate would equate to payments of roughly $1,074 per month.
As you can see, the impact of slightly higher rates isn’t really a significantly higher monthly payment. It likely would only impact those homebuyers who were watching their budgets carefully, or those that would be on the borderline of loan qualification.
A greater concern than Columbia SC mortgage rates seems to be the rising home prices continuing to occur throughout the U.S. The median sales price of a home in 2016 rose 5.5% from the previous year. Experts expect a 5.3% increase this year. And therein lies the real issue. The “double-whammy” of higher interest rates combined with higher sales prices may be the deterrent to may home buyers – especially first-timers.
Let’s take a look at six factors that may have more impact than interest rates on your monthly mortgage payment.
Your Credit Score
Higher credit scores translate to lower interest rates for applicants with good credit. A score of at least 740 will likely get the best rate from most mortgage lenders.
Your Down Payment
A popular misconception is that you have to have a down payment of at least 20% in order to buy a home. However, if you do have 20% to put down you can avoid having to pay private mortgage insurance (PMI), a type of insurance that protects the lender against the borrower defaulting on their mortgage payments. According to Freddie Mac, the PMI premium can run anywhere from $30-$70 per $100,000 of your mortgage amount. Naturally, with a larger down payment, the monthly payment amount is less since you’re financing a lower loan amount. That's always true, regardless of what Columbia SC mortgage rates do or don't do in the future.
Points
"Points" are actually percentage points of the loan amount – 1 point equals 1% of the loan amount – so, if you’re borrowing, say, $200,000, a point would be $2,000. You can pay points to lower your interest rate. Since points are prepaid, be sure you “do the math” and determine whether buying down the interest rate is the best financial decision for you at the time – and to make sure it’s saving you interest in the long run.
The Term of the Loan
While a 30-year fixed-rate mortgage loan is the most popular selection, if you can afford the increased payment it may be worth looking at a shorter term. A 15-year term will not only be issued at a lower interest rate, but you’ll save more than 50% in total interest repayments over the life of the loan. Even borrowers who opt for a 20-year or 25-year term are pleasantly surprised at the interest savings they can enjoy by paying slightly more money each month. Ask your mortgage lender for an amortization schedule with different terms for comparison and see which term fits your financial capabilities best.
Closing Costs
Closing costs and fees vary from one lender to the next. It’s worth shopping around to find the best deal on closing costs. In addition, some fees are negotiable, so ask questions and make the best deal you can. Lastly, remember who pays the closing costs is strictly between you and the seller of your home. So, be prepared to negotiate with the seller for him to pay part – or all – of the closing costs as part of the contract.
Home Sales Price
Naturally, a higher price tag for a more expensive home translates to higher monthly mortgage payments. Make sure you are looking for homes in your affordable price range. What’s the joy in buying a home if you have to struggle to make the monthly payments – even if you qualify for a higher amount? Consider selecting and buying a less expensive home, even if you have to do without certain features or extras. You’ll sleep better at night.
You can find more articles pertaining to the Columbia SC mortgage rates in the "Columbia SC Mortgage Info" section of articles just below Columbia SC Real Estate Categories in the column to your right.
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The Columbia SC real estate outlook includes an update on what millennials have been doing lately. In recent years, millennials have been largely thought of as a generation of renters. They’ve unfairly received this moniker because of a number of factors, none the least of which is that home prices throughout the U.S. have consistently grown faster than wages. However, an improved and lowered cost of living combined with better job growth and rising incomes has led and will lead to many millennials beginning to buy houses.
According to real estate market research findings, last year nearly half of the total number of homebuyers were first-timers – and the majority of those were younger Americans aged 18 to 35 – millennials, by definition. All indications are for 2017 the percentage of millennials entering the housing market will continue to increase.
During the third quarter of 2016, the U.S. Census Bureau reports that home ownership was at 63.5%, slightly higher than the second quarter in which the 62.9% home participation rate was the lowest in 51 years.
Let’s examine four areas in the Columbia SC real estate outlook designed to attract millennials as they enter the home-buying market.
More and better amenities.
Millennials have come to expect and appreciate added extras in the apartment complexes in which they were living. It’s natural for them to want to have some of the same perks in the home or neighborhood in which they are thinking of moving. Examples are having larger bandwidth capabilities for social media and streaming music and videos and equipping homes with programmable thermostats and built-in USB outlets.
More search technology.
Millennials have also relied heavily on available resources in this information age. Today’s prospective homeowner almost always begins his search online. As such, they will continue to expect to be able to perform a variety of services remotely – either via an app or some other process – allowing them to negotiate and sign documents without leaving their homes or jobs.
Greater full-service offerings.
Given the number of millennials entering the housing market, the traditional role of a real estate agent is starting to change. The information age has provided consumers with a wealth of information about homes for sale. The missing piece seems to be how to aggregate or compile that information. Many real estate firms have chosen to provide better full-service offerings by not only assisting in finding or selling a home, but in addition, putting the client in contact with contractors or others to make the moving process smooth and easy for all involved.
Say goodbye to the “hard sell.”
With the focus more on full-service, as mentioned above, one of the changes in the Columbia SC real estate outlook will likely be that real estate agents will be able to concentrate less on the actual sales process and more on building relationships with their clients. Some real estate firms actually have prospective clients – both buyers and sellers – meet with a customer service manager first before they’re assigned to an agent. The firms report that this first point of customer interaction enables the prospective buyer or seller to do their fact-finding from a completely impartial source – without feeling like they were being “sold” anything. It’s more of an information exchange designed to make their prospective clients feel at ease in the early stages of the process.
As the Columbia SC real estate outlook continues to evolve and more millennials and other prospective purchasers enter the home buying arena, more changes are likely to occur. New homes currently under construction will probably have more open areas where families can be together in the same room enjoying the same activity, but yet be able to stay connected to their friends and others via their smartphones or tablets. In addition, homes will likely be built with smart-car garages equipped with electrical outlets for hybrid automobiles. Energy-efficient homes will become the norm as builders will attempt to woo millennials interested in being more environmentally conscious and more focused on sustainable, clean energy solutions.
The challenges in the Columbia SC real estate outlook continue to be basic housing shortcomings we’ve heard and read much about in the last 18-24 months. The number of available affordable housing units for sale still continues to lag behind normal levels. With this low inventory comes the added pressures of existing homeowners who would have normally been ready to sell and move up into a bigger, better or newer home, who have decided not to sell – simply because there are fewer homes available for them to choose from, too. Added to that dilemma is the continued rise in home prices. Most experts expect home prices across the U.S. to increase between 4.50% to 5.5% during 2017. So, the homes that are available for purchase will likely be more expensive than ever – the limited supply will probably continue to fuel what will be a seller’s market.
In addition, interest rates – mortgage rates in particular – are expected to rise during 2017. We’ve seen a slight uptick in rates since the presidential election, as a result of the growth of the stock market. Analysts say interest rates will continue to rise throughout 2017, but longer-term mortgage rates will probably not exceed 4.5%. While those rates are higher than the near-record rates of the previous 12-18 months, comparatively speaking an interest rate of even 4.5% to 5% is still a very good, affordable way to borrow money for the purchase of a home.
Despite the challenges on the horizon of the Columbia SC real estate outlook, 2017 looks like it has the potential to be a good year. The coming spring selling season will be the first test. If that’s successful, it could set the stage for a continued optimistic feeling on which the rest of the year will be based.
See more articles pertaining to the Columbia SC real estate outlook in the section of articles on Columbia SC Real Estate just below Columbia SC Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there, too.