Home Equity Values Remain Stable in Columbia, SC
By Richard BarringtonLocal Lender Columnist
Jan 5, 2009
Home equity values in Columbia, SC were buoyed by an increase in the area's average home price in the third quarter of 2008, compared with one year earlier. This stability in a generally troubled real estate environment has benefits for both existing home owners and new home buyers in the Columbia area.
Columbia Home Prices Increased While Other Areas Fell
According to data from the Federal Housing Finance Agency (FHFA), the average home price across the United States fell 4.0% from the third quarter of 2007 to the third quarter of 2008. Over that same time period, home prices in Columbia actually increased, by 2.92%. This increase ranked Columbia in the top ten percent of metropolitan area for housing performance.The stability of the Columbia market is reflected by home prices throughout the state of South Carolina. Of fifty-one areas measured by the FHFA (all 50 states plus the District of Columbia), South Carolina ranked 6th in housing appreciation. For that period, the average home price in South Carolina increased by 2.42%, making it one of only 18 states to post an increase.
The modest increase in housing prices in South Carolina in general and Columbia in particular represents more than just positive performance in a weak market. It represents a level of price stability that is good for both existing homeowners and new buyers alike.
For Homeowners: Steady Home Equity Means Secure Net Worth
For existing homeowners, a modest increase in home prices represents a gentle boost to net worth. For many people, their home represents their largest single investment, so its value is an important component of net worth. As long as home values remain stable, people build equity as they pay down their mortgages over time, so the home's contribution to net worth builds steadily.This is more than just theoretical wealth. That equity can be used as collateral for home loans for a variety of purposes. This spending helps keep the area's economy vital, and in particular, home loans for property improvements directly support the area's real estate market. In other words, stable property values today promote further stability in the future.
For Home Buyers: Home Loans More Likely in Stable Areas
At the same time, these stable real estate values have some benefit for new home buyers in the Columbia area. While Columbia's housing prices do not represent the type of bargains available in markets experiencing steep declines, many of those same markets had previously experienced sharp increases over many years. In contrast, Columbia's housing prices are up a moderate 26.44% over the past five years, meaning they are still very affordable.Perhaps more importantly, mortgage companies do not like to make home loans in an unstable market. For those mortgage companies, falling home prices mean the collateral for their loans is dropping in value, increasing the risk of those loans. Mortgage companies focused on the Columbia area are likely to be much healthier, and much more confident about making new loans in the region.
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About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.
