The Columbia real estate market in South Carolina has been hit hard by foreclosures. While the local economy has made great improvements in recent years, there’s still plenty of ground to be made up. As a result, a larger percentage of homeowners in Columbia have found themselves underwater compared to a majority of markets across the country. That said, real estate in Columbia has become a commodity for today’s budget-conscious investors. Both traditional sales and distressed properties appear to offer investors a lot of potential. There’s no doubt about it: the market is improving, and should continue to do so for the foreseeable future.
Columbia Real Estate Market Overview
- Median Home Value: $138,100
- 1-Year Appreciation Rate: +6.1%
- Median Home Value (1-Year Forecast): +2.8%
- Median Rent Price: $1,175
- Price-To-Rent Ratio: 9.79
- Average Days On Market: 66
- Percent With Negative Equity: 14.6%
- Unemployment Rate: 2.8% (latest estimate by the Bureau Of Labor Statistics)
- Population: 133,451 (latest estimate by the U.S. Census Bureau)
- Median Household Income: $43,650 (latest estimate by the U.S. Census Bureau)
- Percentage Of Vacant Homes: 12.25%
- Foreclosure Rate: 1 in every 1,216
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Median Home Price In Columbia
The median home value in Columbia is approximately $138,100. While well below the national average, real estate prices in Columbia have made up a lot of ground over the course of a decade. Since the beginning of January 2016, in fact, home prices in Columbia have increased 29.0%. In the last year (alone), median home prices in Columbia have jumped 6.1%. The increase is most likely the result of three specific indicators: demand, supply and the city’s strengthening economy. Stronger economic fundamentals have enabled more people to actively participate in the market. However, available inventory levels have restricted the number of buyers that can actually follow through with a purchase. As a result, competition for housing has jumped, along with home prices. There doesn’t appear to be an answer to the inventory shortage coming in the near future, which will push prices higher for the foreseeable future. Therefore, it’s same to assume prices will continue to rise, somewhere around 2.8% in the next 12 months.
Columbia Foreclosure Statistics
According to RealtyTrac, a nationally recognized real estate information company that specializes in distressed properties, Columbia has a very high distribution of distressed properties. With approximately one out of every 1,216 homes in some stage of distress (default, auction or bank owned), Columbia boasts a foreclosure rate of about 8.2%. At that rate, Columbia boasts one of the highest foreclosure rates in the country. The country as a whole, for that matter, has an average foreclosure rate of 3.9%.
It is worth noting, however, that while Columbia may have a foreclosure rate that more than doubles the national average, foreclosure activity is on the decline. “In September, the number of properties that received a foreclosure filing in Columbia, SC was 24% lower than the previous month and 6% lower than the same time last year,” according to RealtyTrac. The drop in foreclosure activity may be attributed to a strengthening economy, which has enabled more homeowners to get out from underwater.
As the economy continues to strengthen, foreclosure activity should continue to drop. That said, real estate in Columbia has a long way to go. There are still several pockets across the city with higher foreclosure rates, not the least of which include:
- 29229: 1 in every 588 homes is currently distressed
- 29223: 1 in every 889 homes is currently distressed
- 29204: 1 in every 967 homes is currently distressed
- 29209: 1 in every 1,014 homes is currently distressed
- 29203: 1 in every 1,022 homes is currently distressed
Columbia Real Estate Investing
Columbia real estate investors, not unlike investors across the country, favor distressed assets over those that are priced more traditionally. Placing an emphasis on distressed homes increases their odds of locating deals with potentially larger profit margins. With that in mind, there are a couple types of distressed properties Columbia real estate investors should pay special considerations to: pre-foreclosures and auctions. If for nothing else, pre-foreclosures and auctions make up the overwhelming majority of distressed homes in the Columbia real estate market — 41.5% and 39.0%, respectively. Constituting 80.5% of the distressed property market, Columbia real estate investors will have an easier time finding deals with attractive profit margins if they prioritize these motivated sellers. Investors in Columbia should focus their acquisition efforts on local courthouses and auctions. If for nothing else, that’s where they will find the majority of the city’s distressed homes.
Fortunately, pre-foreclosures are public knowledge, which means investors simply need to take a trip to their local courthouse and look for homes that are late on mortgage payments. This process takes some times, and investors need to know what they are looking for, but the information is all there. In identifying the homes which have neglected to keep up with payments, investors will most likely find motivated sellers. Those missing payments may be inclined to sell for a discount than face the ramifications of an impending foreclosure.
In addition to the local courthouse, Columbia real estate investors should also check local auctions. The homes being sold at auction have already been repossessed by local banks and will be auctioned off to the highest bidder. That said, auction homes can often be had at a discount from the home’s market value.
Of course, knowing where to find real estate deals in Columbia is only part of the equation. Once investors secure deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Columbia real estate investors?
Columbia’s affordability tells investors everything they need to know about local investing. Since it is actually more affordable to buy than rent in Columbia, a great deal of the market leans heavily in favor of purchasing. Not only that, but a larger contingent of buyers is actually more ready to buy today than in years past. The strengthening economy has enabled more buyers to actively participate in the market, which bodes well for wholesalers and rehabbers. While it is possible to execute long-term rental property strategies, investors will find more demand from buyers.
Columbia Real Estate Market Summary
The Columbia real estate market has been hampered by foreclosures, more so than the majority of cities across the country. In fact, only a handful of cities have a higher foreclosure rate than Columbia. However, recent progress has fostered optimism for buyers, sellers. Investors, in particular, have found real estate in Columbia to be particularly attractive. The city’s foreclosure activity suggests below-market deals are more abundant, which is great for profit margins. Not only that, but demand for houses is on the rise. Those investors who are able to meet that demand could find Columbia to be a great city to invest in.
Have you thought about investing in the Columbia real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Columbia in the comments below.
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