Over the past five years, Columbia home builder Eddie Yandle said he built one house in the $400,000 or more price range. One.
The market for higher-end housing had fizzled during the worst recession in a lifetime and its painful aftermath. But as the economy and the housing market have gained solid footing, higher-end homes are starting to sell again.
“This year, I’ll do 20 (homes valued at $400,000 or more) – in one year,” said Yandle, who is no rookie to the home-building business. Since 1989, Yandle said he has seen the biggest of the ups – the housing bubble of the mid-2000s – and the deepest of the downs during the recession in the Midlands’ housing market.
Now, he sees order returning to housing, which has lagged other key sectors in contributing to a U.S. economic recovery. While home sales plummeted in 2011 to their worst year on record, they began rebounding in 2012 in the lower-end price range of $100,000 and below.
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But as the market has stabilized, the move-up buyer – looking to buy a bigger house because of a growing family or income – is back. And sales are on track to improve over last year.
For at least a year, houses costing $300,000 or more have been the biggest sales gainer among all price categories in the Columbia housing market. That price range increased 16.8 percent alone in October, or more than 8,619 units, compared to the same month the previous year, according to data from the S.C. Realtors trade group. Overall, home sales rose 3 percent through the first 11 months of the year, compared to the same period a year earlier.
Before that, existing homes in the $300,000 and above category largely were sitting stagnant for four to five years, Yandle said, unable to attract buyers.
But in the past year, they have been selling as the move-up buyer looks for a home for the next 10 years, or looks to make that final home purchase. As the economy has improved some, home prices have begun to increase, and that has triggered sales of more expensive homes.
“They’ve been able to sell their houses now (because they can) get enough equity out of them to buy a new house,” Yandle said.
In fact, the homes they most likely are selling, in the $200,001 to $300,000 category, had the second-largest sales gain in October in the Midlands, jumping 12.1 percent, or 9,865 units, the Realtors report said.
The number of homes going on the market also boosted the inventory of homes for sale in both price ranges, according to the report. Inventory rose 11.8 percent in October to 9,147 units in the $300,000 and above category, and it increased 10.7 percent to 6,408 units in the $200,001 to $300,000 category.
“It’s better all around,” said Page Latham, a Russell & Jeffcoat real estate agent in Columbia. “The market definitely is ready for those people (the $300,000-plus buyer). With the interest rate being so low, if you can get 5 percent more house in the $300,000 range, well that’s a lot more house.”
Interest rates for 30-year, fixed-rate mortgages have dipped below 4 percent in recent weeks.
Columbia businessman Jae Kim, EXIT Real Estate Solutions owner, said the $300,000 and up home price range is a natural progression point for a market long-stymied on the one end by a glut of foreclosures, but enticed now on the other by an improving economy and continued low mortgage interest rates.
“We’re definitely seeing it,” Kim said Monday. “Public sentiment has changed a little bit. There’s a little more confidence in the stability of our economy. We don’t have as much panic going on. So, that is part of it. And, our interest rates remain ridiculously low. That’s free money.
“So, if you’ve been sitting on the sidelines long enough, and you’re wondering when this is going to get better, it’s not. This is about as good as you’re going to get,” Kim said, explaining some of the reasoning behind the market numbers.
Kim said a year ago it was banks selling foreclosures that had a handle on the market, not homeowners. Now homeowners, who are looking to move up, are in the market competing.
With 75 percent to 80 percent of the Columbia foreclosure market now dissipated, Kim said buyers have to turn to the traditional market. Sales in the $100,000 and below market – which had been the hottest – are slowing. And the move-up buyer is looking for a bigger home.
“When somebody sells their house and moves up, that’s the magic number; you’re hitting the $250,000s, $300,000s, $350,000.”