Rising home prices in Aiken County pushing out lower, middle buyers

Jun. 5—As housing prices continue to skyrocket, not all segments of the market can keep up.

The Aiken area's average median sales price and average sales price, which includes Aiken County, Edgefield County, Barnwell County and some of Richland County, are both up nearly 20% compared to a year ago, according to data from the Aiken Association of Realtors (AAOR).

"It's squeezing a lot of people out of the market," said Matthew Hunter, branch manager at Assurance Financial.

Year of the squeeze-out

In April 2021, the average sales price of a home in the Aiken market was $275,602, according to AAOR data; that price skyrocketed to $308,283 in April 2022.

The median sales price in April 2021 was $235,600, according to the same data; a year later, it's up to $266,000.

The average sales price is calculated by adding all the home prices together and dividing by the number of closed sales. The median sales price lists all prices in order and finds the midpoint, where half the homes sold for more and half the homes sold for less.

Catina Broadwater, broker-in-charge at Broadwater-Toole Realty, said she's come across buyers who got approved for the $150,000 range, but there's just not many homes of that price on the market and when they do come on the market, they get snapped up quickly.

"So, that first-time homebuyer, someone on a fixed budget, they really don't have a spot right now unless they get lucky with something hitting the market," Broadwater said.

Nearly 7 out of 10 households in the United States can't afford a new median-priced home, according to data recently released by the National Association of Home Builders.

Similarly, Lawrence Yun, chief economist at the National Association of Realtors, said much of the current housing supply is concentrated at the upper end of the market where inventory is increasing, while homes prices at the lower end of the market are quickly disappearing, leaving many first-time buyers behind.

Hunter said with the automated underwriting systems used for pre-approvals, a normal house payment vs. gross income ratio would be 36%. One thing to note, Hunter said, is that gross income is not equivalent to take-home pay, which can lead to people getting in over their heads.

Under that ratio, for a house that costs $320,000, slightly over the Aiken-area average, a person would be making a $1,650 monthly payment.

That translates to a $4,580 monthly income, with a yearly income just under $55,000.

The median yearly income in Aiken County is $53,385, according to the U.S. Census Bureau, with Barnwell County's being $37,572 and Edgefield County's being $52,491.

"We're seeing a lot of people that when we come down and say, 'here's your monthly payment,' (they say), 'well, that's just too much,'" Hunter said.

Broadwater said she read an article a few months ago about a home owner who sold his house and didn't choose the highest offer out there; he chose a first-time home buyer.

"That was a huge story, because that's what's happening to those (first-time) homebuyers; (there's) nowhere for them to go," Broadwater said. "And no one is building or intentionally building in that price range."

"My hope is that we'll have a builder that says 'let me build specifically for these buyers in mind' because we are pushing them outside," she continued.

Seller's market

While some aspects of the housing market have uncertainties, one thing is for sure.

"It's a seller's market," said Debbie Roland, an Aiken Realtor with Coldwell Banker.

"The crazy situations that we're getting in with offers is people are waiving appraisals, cash buyers are coming in and throwing down substantially more for the asking price, which is changing the appraisal rate in the neighborhood, waiving inspections," Roland described. "You have to be very creative to write an offer that gets accepted right now and still protect your buyers in the process."

Broadwater gave an example with one of her clients, illustrating the market in terms of value.

"We went under contract Feb. 14 of last year on a new construction," Broadwater said. "At that time, the new construction, they were paying $253,000. That's what it is. Fast forward, now we close next month. That home is now $359,000. (They) have over $100,000 in equity before they even move in."

At some point, the market pendulum will swing back toward more of a buyer's market, Roland said, because it will always flip-flop, but there's no telling when that will be.

Low inventory leads to new construction

A byproduct of the hot market is that homes don't stay on the market long, immediately getting snapped up by buyers.

Danny Minolfo, an Aiken Realtor with Concierge Real Estate Services, noted that an average amount of inventory in a standard market would be six months; currently, he said there's only about one and a half months worth of inventory due to houses flying off the market.

This lack of inventory has created a massive rise in the new construction market.

"They are just clearing and building like mad," said Roland. "At first, we're thinking, 'how are we going to accommodate all that?' They're sold; they're sold before they're even built. There is a lot of new construction, even amid the tight pricing on lumber, and the hindrances of obtaining appliances or getting supplies."

Mortgage interest rates have also started to creep higher, but Minolfo doesn't see that slowing down the market.

"I think what it's going to do is it's going to educate buyers," Minolfo said. "Their initial reaction is 'oh my gosh, now that it's four and a quarter interest rate, I can't afford to buy a house.' I think it's the lenders responsibility, as well as Realtors responsibility, to educate their clients and say, 'historically we are still at an all time low.' You know, we enjoyed the 2% and 3% for a long time. Now we're creeping back to normalcy, but if you asked your parents what their interest rate was in 1981, or '82, they would tell you it was 12, 14, 17%."

Aiken's charm

As for why folks would want to move to Aiken, Roland said she's seen an influx of people coming for cybersecurity with Augusta and Fort Gordon. She's also had many buyers coming from Northern states because "they're loving the property tax rates here. They're loving that Aiken is a very affordable, friendly retirement town."

Minolfo brought up that Aiken is close to many other cities or areas that people might be interested in.

"The fact that if somebody wants a little slower paced life, but enjoys the visit to Greenville, to Atlanta, to Charlotte, to Hilton Head, to Charleston, this gives them the opportunity to not have to live in those cities but be able to enjoy them at a at a moment's notice," he said.

For those buying homes right now, Minolfo recommended they find a seasoned realtor who can help them navigate the process.

"Sit down and talk with an agent," he said. "There's no commitment up front. And really, if you're a buyer, there should be very little or no financial burden to work with an agent."

"To work with a seasoned Realtor or agent would behoove them mentally, emotionally and financially," he said .