By Christina Lee Knauss
Columbia real estate agent Graeme Moore, owner of The Moore Co., recently had an experience that would be considered highly unusual in almost any other recent era of real estate sales except this one.
He sold an expensive house to a couple who moved to Colombia to work from across the country who had never physically seen or walked around the house before.
“We’d met before and looked at some of the houses in person, but they didn’t find anything that worked on that trip,” said Moore. “They couldn’t come back here because of problems with work and their kids, so basically they had to shop unseen, using only photos and a video.”
Buying a home without ever having seen it in person isn’t the only unusual thing in the real estate market these days.
Increasingly, tales of buyers are being told among realtors who are willing to go to great lengths to get into a home, and some are even willing to forego recommended precautionary measures such as home inspections.
What drives such actions? There are simply more buyers than places to live.
It’s a sellers’ market like no other recently – powered by everything from low interest rates to pandemic-induced changes in work and housing preferences.
The market is booming in Columbia, Charleston, Rock Hill, and Grand Strand, as well as all of the Carolinas and the Southeast.
The wild market is also leading to an increase in cash offers for homes for quick sales. Two bar-only companies – Opendoor and Ribbon – recently expanded into the Columbia market after seeing high demand for their products in other parts of the Carolinas.
“It’s a classic supply-and-demand situation, with much more buyer demand than housing supply,” said Moore. “These conditions existed before the pandemic and have only intensified in the last 16 months. With COVID-19, everyone got scared and interest rates plummeted, and many people took their homes off the market. Now more and more people want to buy because it’s really cheap to borrow money and there aren’t the houses in the market to meet the demand.
“It will stay that way as long as interest rates stay low, the economy remains relatively healthy and we lag behind in terms of housing stock.”
According to the South Carolina Association of Realtors’ latest home listing summary, pending home sales in South Carolina increased 21% overall between June 2020 and May 2021.
The average total sales price increased 14.2% to $ 257,000 while SC inventory levels decreased 54.7%.
According to the association, single-family houses fell by 53.5%, so that on average there is only an offer of single-family houses for 1.1 months and condominiums for 1.2 months on the current market.
While much of the recent market craze is fueled by the pandemic, the seeds for it were sown during the Great Recession of 2007-2009, according to Morris Lyles, a broker and broker at ERA Wilder Realty in Columbia and president of the South Carolina Association of Realtors in 2021.
“After that crash in 2008, a lot of contractors got out of the construction business and there was a standstill in the people developing properties, and now we’re seeing a huge backlog that has built up since then,” Lyles said.
“A lot of people shy away from home buying because they lived at home with their parents, graduated from college, or other factors, and now they’re ready to go out into the world and buy houses. Now it seems like everyone is trying to do it at the same time. “
Lyles said low interest rates are another contributing factor to the buying boom, as well as changes in people’s priorities about the type of home they want to live in and what type of work they are looking for.
Forced to stay home due to the pandemic, many people realized that their current home no longer met their needs, and the increasing opportunity to work remotely has led many people to move to smaller, less stressful areas where the cost of living is lower. Columbia does that bill for a lot of people, Lyles said.
Those who bought homes during the height of the pandemic often had to rely on video home tours and demonstrations, and while that trend slowed a bit as society reopened, it is still a bigger contributing factor house sales than before the pandemic, Lyles said.
In the rush of buying the limited number of homes in the market, more buyers are willing to take the video trail to see if a home is right for them, though Lyles said he encourages buyers to make every effort to physically visit a home before buying it.
“We hear of people who occasionally buy a house unseen these days and I advise against it because you can’t get a good feel for a house without going through it and it’s very important to get a home inspection as well,” said Lyles.
The hot market is not only affecting buyers, it is also causing some homeowners who want to get as much money out of their home as possible to make the decision to sell.
Empty nests, singles, and relocation by working remotely are among the new sellers, and there are new companies offering services geared towards paying the sellers asap and getting the apartments to market.
On June 15, Opendoor, a San Francisco-based online company specializing in quick home cash deals, expanded into the Midlands with Columbia as one of six new markets it entered this month. Opendoor was founded in 2014 and offers homeowners a so-called “one-click” approach. People can go to the company’s website, quickly upload information and pictures, and in many cases get a quote for their home from Opendoor within a few days.
Opendoor then brings the house to market.
“Selling to Opendoor gives the seller a lot of security in the process,” said Jon Enberg, Regional General Manager of Opendoor.
“You don’t have to worry about a business failing or when the close is, and we’ll take responsibility for repairs or upgrades to the home when we buy it.
“This takes a lot of risk out of the process for a seller.”
Another new cash-based option in the Midlands is Ribbon, a company headquartered in New York City and Charlotte. With so-called “RibbonCash offers” the company supports potential homebuyers who are eligible for mortgages with cash so that they can accelerate offers for homes.
The cash protection allows the buyer to get into the house and the seller faster, and the buyer then has up to six months to take out a mortgage. The company also works with real estate agents looking to expedite a sale with a cash offer.
“There has been a tremendous surge in institutional buyers in this market, with companies quickly buying up homes, converting them into rental properties, or reselling them, and in this market an everyday family is losing,” said Shaival Shah, co-founder and CEO of Ribbon.
“Through our approach, we’re automatically giving everyday buyers the opportunity to make a cash offer for a home and giving them a chance in this competitive market.”
Whether home buyers and sellers choose one of these technology-based options or go the more traditional route, the trends suggest that the market will remain competitive for quite a while.
The financial conditions that motivate buyers are unlikely to change for at least next year, according to Jan Hadder, regional vice president for the construction division of the Columbia office of Silverton Mortgage.
Hadder noted that interest rates are expected to remain low, with the Federal Reserve forecasting no major fluctuations in interest rates through 2022.
The interest rates for a 30-year fixed-rate mortgage are currently around 2.8%.
First-time home buyers can also be boosted by a recent announcement by the Federal Housing Association about student loan debt and how it affects potential buyers. The FHA recalculates how student loan debt is calculated when determining the debt to income ratio for mortgages.
The new policy allows lenders to use the actual monthly payment amount on a borrower’s student loan in the underwriting process, which is typically lower than a previous requirement to use 1% of the borrower’s total balance.
“This new calculation is an attempt to remove barriers and give creditworthy individuals with student loan debt more access to affordable finance, which has a disproportionate impact on people of color and could make a big difference to many people who have been waiting for funding Time to try to buy a house, ”Hadder said.