The Greater Greenville Association of Realtors (GGAR) just released the 2021 market figures for the Greater Greenville housing market. Let's explore a couple of crucial housing metrics, see how that affected 2021 and consider how they will likely influence 2022.
Plummeting inventory level
The rule of thumb is that 6-months' supply of housing inventory indicates market equilibrium in which buyers and sellers are in equally-strong positions. In almost 7 years as a realtor, I've not seen an inventory supply higher than 5 months. The housing supply in Upstate, SC, has been dropping for several years. In 2021, our housing market averaged only 1.4 months' supply, with May seeing a rock-bottom level of 1.1 months' supply. In just a handful of years, the number of homes available to purchase has dropped from between 6,000 and 7,000 to 2281 at the end of 2021.
Plummeting inventory levels and high demand paired in 2021 to dramatically reduce the length of time a listing stayed in the market. Last year, DOM (days on market) decreased 41.3 percent to 27 days. Listings typically received lots of traffic, were under contract quickly, and closed ASAP.
If you've heard that Greenville's market favors sellers, you heard right. Homes for prospective buyers are almost as scarce as hens' teeth, especially at a price point below $250,000. Bidding wars are common, and homes in popular subdivisions often receive multiple offers within 24 hours. As a result, local sellers in 2021 received on average 100.2% of their listing price.
Although new communities are popping up everywhere, it doesn't seem likely that supply will keep up with demand anytime soon. Greater Greenville is earning a reputation for its climate, economy, and culture. Foodies, families, outdoor enthusiasts, and fine arts connoisseurs are flocking this way and increasing the demand on a housing inventory level that's already abysmal.
Rising home prices
According to GGAR stats, the average price of a home increased from $276,757 in 2021 to $317,029 in 2022. That's a 14.6% increase, more than 1% every month.
Homebuyers in this market see the amount of home they can afford shrink as prices climb. A modest, older 3-bedroom, 2-bath home in a safe community--if you can find it--sells for significantly more than it did even one year ago. As a result, buyers on a tight budget frequently need to scale back their expectations or move further away from metro Greenville if they hope to find an affordable home.
Purchasing a new home is fraught with similar pricing hazards. One of the local builders told my husband just a couple of weeks ago that the prices of their new condos are scheduled to increase by $5000 every 2 weeks, at least for the foreseeable future! Additional increases are built-in based on how quickly the units sell. And, yes, the units are selling like hotcakes.
Rising home prices have significantly reduced Greater Greenville's Housing Affordability Index, which compares median household income with median home price. An index of 100 means that a family earning the area's median household income could qualify for a mortgage to purchase a median-priced home. Since the end of 2019, Greenville's Housing Affordability Index has dropped from 109 to 89. This means that a local family earning the median income would not qualify to purchase a median-priced home and would have to locate a less-expensive home.
Our local housing market is HOT and favors sellers. Low inventory levels have spawned rising prices which seem likely to continue, at least for the short term. Demand continues to increase since people are discovering that Greater Greenville's a terrific place to live.
One factor we didn't discuss, but certainly merits close attention in 2022, is the interest rate. The Fed has already indicated the likelihood of multiple increases. If mortgage interest rates jump, they will undoubtedly affect the Greater Greenville Housing Market. Time will tell how extensive those effects will be.