Could the real estate bubble burst? Here’s the latest Columbus housing market outlook
Columbus’ housing market heavily favors sellers midway through 2021, a trend that may not let up before the year ends.
Homes are going quickly and buyers are paying more in the Columbus area, according to Chris Jiles, broker of Re/Max Champions Realty in Columbus and past president of the Georgia Association of REALTORS. Most listings sell within about 40 days, he said. It takes around 30 days to complete the closing process on a house — leaving a given property with around 10-14 days listed for sale.
“The last six months, we’ve moved into what can best be described as a strong seller’s market,” Jiles told the Ledger-Enquirer. “We’re seeing multiple offers on houses in just a matter of them being on the market for a few days. Prices have gone up. People are paying over asking price.”
That means the housing market in Columbus is going strong, COVID notwithstanding. And the bubble may not burst any time soon.
High prices
The average sale price in Columbus, as of July, was $214,626, an 11.7% increase year-over-year, according to the Columbus Board of Realtors. In nearby Phenix City, the average sale price in July rose 9.9% year-over-year to $208,273, according to the Alabama Board of Realtors.
Sellers in Columbus traditionally have participated in the closing costs of a house, as typically buyers and sellers split the costs.
“We’re now seeing none of that,” Jiles said.
Buyers in today’s market are covering their entire closing costs, Jiles said, with the sellers not involved.
The number of days a house is listed on the market has shot downward. In May 2020, the average number of days on the market was around 68 days. In May 2021, that number dropped to 44 days, Jiles said. Interest rates are also at historic lows, well below 5%.
Georgia Gov. Brian Kemp deemed real estate as an essential industry, Jiles said, so agents worked through the pandemic.
“I would’ve thought COVID would’ve slowed our market down just simply because people would not have wanted to have people coming in their house and potentially bring the disease in,” he said.
Buyers from the North moving to states like Georgia and Florida are one of the reasons housing prices have skyrocketed, according to Coldwell Banker realtor Dedrick Josey.
Others are “cash-rich” buyers who have recently sold their own home and are using the funds for the full purchase price of a home, he said.
“Sellers tend to engage, or entertain, cash buyers over buyers that require a contingency, which normally is a loan,” Josey told the Ledger-Enquirer.
Will the bubble burst?
If the bubble does burst, don’t expect it to happen this year.
The strong seller’s market is projected to go on “for the rest of the year,” Jiles said. Part of that is driven by the low interest rates.
“A 3% interest rate is not that unusual (in today’s market),” he said. “The lowest interest rate I ever had was 6 5/8%, and I was proud of that. I’ve seen homes with a 12% interest on them before.”
Josey said he encourages buyers who may need contingencies to save as much money as possible, so that their offers are competitive. He also tells them to look into other loan products, such as conventional loans through a bank.
“It makes it difficult for (the realtor) and your client to navigate a home search if you don’t have what sellers are looking for financially,” Josey said. “And that’s cash.”
Millennials, young people and those drawn to the city by Fort Benning and other major employers play a role in the city’s housing market. Millennials make up the largest share of home buyers in the nation, according to the National Association of Realtors.
Nearly one-third of millennials said COVID-19 pushed them to begin house hunting earlier than they had planned, according to a survey conducted by data company Clever Real Estate of 1,000 people planning to purchase a home in the next year.
Columbus’ economy is also projected to see continued recovery from the pandemic, according to UGA’s Selig Center for Economic Growth.
“You better know where you’re gonna live when you put your house on the market,” Jiles tells potential sellers, “because you’re gonna be moving in 30 days.”
This story was originally published August 8, 2021 at 8:00 AM.
