As real estate prices continue to skyrocket, not all segments of the market can keep up.
The median median selling price and the average selling price of the Aiken area, which includes Aiken County, Edgefield County, Barnwell County, and portions of Richland County, increased nearly 20% year-over-year, according to data from the Aiken Association of Realtors (AOR) .
“It’s putting a lot of people out of the market,” said Matthew Hunter, branch manager at Assurance Financial.
year of the squeeze out
In April 2021, the median selling price of a home in the Aiken market was $275,602, according to AAOR data; this price skyrocketed to $308,283 in April 2022.
The median selling price in April 2021 was $235,600 according to the same data; a year later it’s up to $266,000.
The average selling price is calculated by adding up all house prices and dividing by the number of completed sales. The median selling price lists all prices in order and finds the midpoint where half the houses sold for more and half the houses sold for less.
Catina Broadwater, senior broker at Broadwater-Toole Realty, said she’s encountered buyers who have been approved in the $150,000 range, but there just aren’t many homes on the market at that price, and when they do come across the market, they quickly get snapped up.
“So, this first-time homebuyer, someone on a tight budget, really doesn’t have a place right now unless they’re lucky if something comes along,” Broadwater said.
Nearly 7 in 10 households in the United States cannot afford a new home at the median price, according to data recently released by the National Association of Home Builders.
Similarly, Lawrence Yun, chief economist for the National Association of Realtors, said much of the current housing supply is concentrated at the top end of the market, where inventories are rising, while home prices at the bottom end of the market are disappearing quickly, leaving many first-time buyers behind.
Hunter said that with the automated underwriting systems used for pre-approvals, a normal home payment to gross income ratio would be 36%. One thing to keep in mind, Hunter said, is that gross income doesn’t equate to net wages, which can cause people to jump in over their heads.
Under that ratio, a person would make $1,650 a month for a home that costs $320,000, slightly above the Aiken area average.
That equates to a monthly income of $4,580 with an annual income of just under $55,000.
The median annual income in Aiken County is $53,385, according to the US Census Bureau, where Barnwell County is $37,572 and Edgefield County is $52,491.
“We see a lot of people that when we come down and say, ‘Here’s your monthly payment’ (they say), ‘Well, that’s just too much,'” Hunter said.
Broadwater said she read an article a few months ago about a homeowner who was selling his home and didn’t go for the highest bid; he decided to be a first-time home buyer.
“That was a big story because that’s what happens with these (first-time) homebuyers;[there is]no place they could go,” Broadwater said. “And nobody builds or builds on purpose in this price range.”
“I hope we have a contractor who says, ‘Let me build specifically for these buyers,’ because we’re pushing them out,” she continued.
While some aspects of the housing market present uncertainties, one thing is certain.
“It’s a seller’s market,” said Debbie Roland, an Aiken real estate agent at Coldwell Banker.
“The crazy situation we get into with bids is people forgo appraisals, cash buyers come in and give way more for asking price, which changes the valuation rate in the neighborhood and forgoes inspections,” Roland described. “You have to be very creative to write an offer that will be accepted immediately while still protecting your buyers.”
Broadwater provided an example with one of their clients that illustrated the market in terms of value.
“We signed a contract for a new build on February 14 last year,” Broadwater said. “At the time, they paid $253,000 for the new building. That’s it. Fast forward now we are closing next month. This home is now priced at $359,000. (They) have over $100,000 in equity before they even move in.”
At some point, Roland said, the market pendulum will swing back toward the buyer’s market because it will always tip over, but there’s no telling when that will be.
Low inventories lead to new construction
A by-product of the hot market is that houses don’t stay on the market for long and are snapped up by buyers immediately.
Danny Minolfo, an Aiken real estate agent at Concierge Real Estate Services, noted that an average stock amount in a standard market would be six months; Currently, he said, there is only about a month and a half left in stock due the hot market and Houses fly from the market.
This lack of inventory has led to a massive surge in the new construction market.
“They’re clearing and building like crazy,” Roland said. “First we think, ‘How are we going to fit all this?’ They’re being sold, they’re being sold before they’re even built.There’s a lot of new construction going on, even amid tight lumber prices and obstacles to sourcing equipment or supplies.
Mortgage rates have also started to creep higher, but Minolfo doesn’t see that as a slowdown in the market.
“I think it will enlighten buyers,” Minolfo said. “Their first reaction is, ‘Oh my god, now that it’s four and a half interest, I can’t afford to buy a house.’ I think it’s the responsibility of both the lender and the broker to educate their customers and say, “Historically, we’re still at an all-time low.” You know, we enjoyed the 2% and 3% for a long time. Now we’re creeping back to normal, but if you asked your parents what their interest rate was in 1981 or 1982, they told you it was 12, 14, 17%.”
As for why people were moving to Aiken, Roland said she saw an influx of people coming with Augusta and Fort Gordon for cybersecurity. She also had a lot of buyers from the northern states because “they love the property tax rates here. They love that Aiken is a very affordable, friendly retirement town.”
Minolfo mentioned that Aiken is close to many other towns or areas that people might be interested in.
“The fact that someone who wants to live a little slower but enjoys visiting Greenville, Atlanta, Charlotte, Hilton Head, Charleston gives them the opportunity not to have to live in those cities, but to be able to enjoy them anytime,” he said.
For those buying homes right now, Minolfo recommended finding an experienced realtor who can help guide the process.
“Sit down and talk to an agent,” he said. “There is no commitment up front. And really, if you are a buyer there should be very little or no financial burden of working with an agent.”
“Working with an experienced real estate agent or agent would benefit them mentally, emotionally and financially,” he said.