| Columbia Daily Tribune
In a year where we experienced a pandemic, followed by a government induced lockdown, millions and millions of job losses, record GDP loss, a contentious Presidential election, we have the most robust housing market we have experienced since the mid-2000s.
The Columbia Board of Realtors recorded 2,679 home sales, the highest number since 2,900 plus in 2005. It is counter intuitive to experience such a robust year in a year that was so challenging in so many ways. How many of us saw this phenomenon coming, my guess is not many. Following are some of the indicators as to just how strong the market was.
Housing
As mentioned previously, the housing market had its best year since 2005 as 2,679 homes were sold through the Columbia Board of Realtors. That represented an increase of 309 homes over last year or 13%. The year started off “normally.” That is, January and February were normally slow months (as compared to the summer months) with about 125 homes sold. When the lockdown hit, April and May showed declines from the same months last year. Since June, however, the market has been very good with the fourth quarter showing particular strength.
While annual sales were up an impressive 13%, fourth quarter sales jumped 31.7% over the previous year. In talking with realtors, that momentum appears to have carried over in 2021 with the largest impediment being the lack of inventory. Existing home sales increased from 2,066 to 2,312, an increase of 246 homes or 11.9%. New construction homes sold increased by 59 over the previous year, an impressive 20.2%. The average sales price of a home sold increased from $236.3 thousand to $256.9 thousand, an increase of a little over $20 thousand or 8.7%. Again, the price increases exceeded that late in the year as the market heated up.
When you break down the increases by existing homes and new construction homes, existing home prices were up $23.3 thousand or 10.2% while new construction homes were up $11.1 thousand or 3.8%. Another significant number indicating a strong market was the average days on the market was 42, down 18 days from 60 a year ago. That represents a significant decline of 30%. Maybe more impressively, the average days on the market for the last five years was 58. The market would probably be more robust than it is if the inventory of homes were greater. We ended the year with just 1.41 months of inventory and that inventory of homes has been below two months since May. The single largest driver behind this hot market is the historically low mortgage rates which increase affordability.
A local real estate developer, Rob Wolverton, does an annual study on the local residential real estate market and cites a couple of other factors. He mentions pent up demand from renters who have historically rented as opposed to owning now opting to buy and a large and growing market to downsize as people age selling larger homes and right sizing to current needs (count me in this latter category) as other factors that influenced the market. Another interesting characteristic of this market is that it is relatively broad based across the price ranges. While homes under $450 thousand moved particularly quickly, the market above $450 thousand was stronger than I have ever seen it. Columbia has always had a relatively strong housing market but 2020 stands out as a particularly robust year. It looks like that trend will continue with the dearth of inventory the main thing holding it back from being even more robust.
Construction
Not only was the housing market robust but the single family detached home construction market was strong as well. The City of Columbia issued 374 permits last year totaling some $121.2 million averaging $324 per home. Last year’s comparable numbers were 335 permits totaling $1o6 million averaging $316 thousand per home. The County of Boone issued 379 permits totaling $85.8 million or $226 thousand per home. Last year’s numbers were 274 permits issued totaling $63.5 million or $232 thousand per home. It is worth noting that County permits exceeded city permits.
Overall, 2020 will go down as one of the most robust housing markets on record despite the challenges mentioned at the beginning of this article. As we head into this year, the market has good momentum and with interest rates continuing at these low levels for time to come, with the COVID-19 vaccine being dispensed as I write, with further stimulus sure to come, the market should continue to do well.
Jeff MacLellan is retired from Landmark Bank. He spent 37 years in banking, and has been tracking local economic indicators since he came to Columbia in 1987.
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