The GGAR (Greater Greenville Association of Realtors®) stats for the housing market through the end of February, 2021, reveal that a few key market trends continue to greatly impact our market. Correctly interpreting those trends is the first step to finding your dream home or selling your existing home for top dollar--or both.
Trend #1: Mortgage rates are “still at historically low levels.”
February mortgage rates crept higher, but are hovering around 3%. Sam Khater, Freddie Mac’s chief economist predicted that interest rates would remain in the 3% range for the duration of 2021.
What It Means: Low interest rates give buyers more options.
Let’s assume that you are a 1st-time home buyer who’s been pre-approved for a 30-mortgage up to $250,000. You have $50,000 to put toward a down payment. Using Bankrate’s online mortgage calculator allows us to see how significant a slight change in interest is.
Buyers can purchase a more expensive home without increasing their mortgage payment.
Let’s assume you decide to purchase a home for $230,000. You make a 20% downpayment of $46,000. If the interest rate on your 30-year mortgage is 3.1%, your monthly principal and interest payment would be $785. If you were able to garner a 2.75% interest rate, you could purchase a $240,000 home, pay 20% down, and have a monthly P&I payment of $783.
Buyers can purchase a home that meets their needs for less than they expected their mortgage payment to be.
Let’s assume that the $230,000 in the first example is your dream home. You know that the P&I payment will be $785 if you use the lender that offers a 3.1% rate. After talking to several lenders, you find one that offers an interest rate of 2.9%. This yields a $765 monthly P&I payment. You finance through that lender, save yourself $20 per month, and purchase your dream home.
Trend #2: Very low inventory, especially in lower price ranges.
February housing inventory levels did rebound a bit from the incredibly low January supply of 1.9 months, but still stood at 2.3 months, which indicates a very strong seller’s market. The supply of homes priced at $150,000 and under dropped to 1.5 months. The supply of homes priced between $150,001 and $250,000 was only slightly higher--1.9 months
What It Means: Inventory levels affect buyers and sellers in opposite ways.
Very low inventory supplies make things easier for sellers and more difficult for buyers.
The good news for sellers
Homes sell quickly. February’s average DOM (days on market) stood at 46, compared to 50 in January and 65 a year ago.
Sellers receive very close to the asking price. February’s sellers in Greater Greenville received 98.8% of the asking price. If their home was priced between $150,000-$250,000, they received an average of 99.2% of their asking price.
The tough news for buyers.
The competition for homes--especially those priced under $250,000 is fierce. Buyers must be pre-qualified and ready to act before they start actively looking for a home.
The price of the average home is rising significantly. It’s classic economics. Shrinking supply paired with steady demand results in rising prices. The February 2021 average home price of $289,093 is 15.3% higher than it was 1 year ago.
Trend # 3: Decreasing Housing Affordability Index
According to GGAR’s January 2021 report, our local market had a Housing Affordability Index of 100. This meant that a family earning the median income earned exactly what they needed to earn in order to qualify for a mortgage, assuming they had a 20% down payment. This number dropped to 99 in February.
What It Means: Homes in Greater Greenville are becoming less affordable.
For the 1st time in the 5½ years I’ve been a Realtor®, the Housing Affordability Index for Greater Greenville has fallen below 100. In February 2021 a family earning the median income did not earn quite enough to qualify for a mortgage. This is perhaps the most disturbing trend. It signals that the average earner will find it increasingly difficult to afford a home. If the number continues to drop, fewer and fewer families will qualify for a mortgage.
Buyers and sellers who correctly interpret the meaning of local housing market trends have a competitive advantage over people who enter the market blindly. At Walker’s Riverside Properties, we would love to discuss Greater Greenville's housing market trends with you. Then we’ll help you develop a strategy that will guide you seamlessly through the buying or selling process and allow you to meet your real estate goals. Mick can be reached at 864-420-7771. Sandy’s phone number is 864-420-7772.