Columbia home buyers face high prices and rising interest rates | Colombia Business

COLOMBIA – Rising interest rates combine with a still tight housing market in the Midlands to pinch buyers, especially first-timers, property professionals said.

Borrowers need to take out bigger loans to cope with continued price increases: The median price of a sale in the Midlands rose by $40,000 in April compared to the same month in 2021, according to SC Realtors.

They must borrow at higher interest rates as federal policymakers approve rate increases in an effort to slow high inflation.

The combination demands more from buyers.

A family that must borrow $250,000 for a more expensive home faces monthly payments $300 to $350 a month higher than a year ago due to interest rates, said James Fleshman, president of Foundation Mortgage of Columbia.

With demand still in search of relatively few properties, the market continues to be difficult.

“All of a sudden what they can afford has gone down,” said Olivia Cooley, who runs her own real estate company.

Rising interest rates — from around 3% to over 5% — have yet to cool the market, said Jill Moylan, CEO of Home Advantage Realty.

It’s difficult for buyers to bid above the asking price and cover any difference between the agreed price and the home’s appraisal, Moylan said.

This makes it very difficult for first-time buyers to buy, as they may struggle to meet the asking price, she said.

Many first-time buyers only succeed if they get help, from family or elsewhere, to cover the costs.

Cooley’s real estate company works with a couple who are building their own home in Lexington instead of chasing the market.

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However, with supply chain delays, this project has stretched out for nine months and they have not yet been able to lock in their loan. This usually happens 90 days before the owners move in.

As a result, their interest rate and monthly payments go up even as they wait for their house to be finished.

So they are nervously waiting for their builder to give them the go-ahead to close their loan, Cooley said.

For first-time buyers, the path remains particularly difficult. Rents are also rising, but customers continue to get tired of submitting multiple bids and losing, Cooley said.

In years past, Fleshman said, first-time buyers would have an easier time because they could ask sellers to help them with closing costs and wouldn’t have to go over appraised value to get a home.

“Some of the tools that we had to get them into a house, the market took them away,” he said.

Some homebuyers are now accepting the higher cost of borrowing on the assumption that the mortgage they sign this year will be refinanced in a few years when rates improve, Cooley said.

Rising home costs are putting pressure on some state workers, such as police and teachers, said Nick Kremydas, CEO of SC Realtors.

To have affordable homes, these people have to accept longer commutes to work, he said.

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This market may not calm down anytime soon, Kremydas said, because there is still so much pent-up demand for homes.

That’s a big difference between now and the real estate crash of the late 2000s, Kremydas said. Currently, there is no surplus of surplus properties as in 2008; instead, there is a shortage.

The collision of rising prices and interest rates is increasing stress for home buyers.

Fleshman said Foundation Mortgage lending experts need to take some time to make sure harassed buyers trying to close a deal in just days understand the ramifications of what they’re about to sign.

A reminder that Fleshman offers buyers: any money spent to exceed the appraised price of a home does not count towards the down payment for the loan.

Buyers and their real estate agents are feeling the heat of this market, he said.

“It’s all going against them,” Fleshman said.

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