COLUMBIA — Fewer homes were bought and sold in the Columbia area in October as rising interest rates prompted some to move away from the housing market, agency owners said.
The number of completed transactions fell 25% in October compared to the same month a year earlier, according to data recently released by SC Realtors.
Those numbers have been falling for much of 2022, but October’s drop was the steepest yet.
Rising interest rates, one of the side effects of the Federal Reserve’s efforts to control inflation, were the main reason the market cooled, said Graeme Moore, owner of The Moore Co. . in Colombia.
Homes priced above $500,000 have been hit the hardest, Moore said, as potential buyers see those deals as much more expensive now with higher loan rates.
Some potential buyers are looking at rates and deciding to stay where they are for now, said Olivia Cooley, owner of a real estate company in Irmo.
Customers who took out a 1.9% mortgage on falling interest rates would now face rates of 7%, Cooley said. Many of them are rethinking their plans, so fewer homes are put on the market or bought.
Fewer buyers mean fewer bidding wars are breaking out than a year ago, she said.
An affordable home in a hot Midlands market, such as Chapin or Lexington, can still attract several immediate offers, she said.
More expensive properties spend more time on the market, with fewer buyers.
“We don’t have the buying frenzy,” Cooley said.
Home prices continued to climb in October, but at a slower pace than the strong increases of the past two years.
The median selling price for the month was $258,725, a 10% increase from the same month in 2021.
Earlier in 2022, these increases were close to 20%.
The numbers don’t reflect that sellers have to do more to close deals than just a few months ago, Cooley said.
Some are back to offering concessions, like helping with closing costs or contributing money to help buyers get a fraction of their mortgage rates down, she said.
These were common features of a home sale, but had mostly disappeared over the past year or two as buyers had little bargaining power.
Home value assessments need to come down because transactions from months or a year ago don’t really reflect a home’s value today, Cooley said.
Still, the market looks healthier to him than in the past two years, when customers were bidding $50,000 more than the asking price in some cases.
Current home values are expected to hold, giving buyers who need to buy now the option to refinance their mortgages later if rates come back down.
“You can’t refinance overpaying for a home,” Cooley said.