MacLellan: The Residential Real Estate and Jobs Markets in Columbia 2022

What a difference a year makes in residential real estate.

Entering 2022, we were coming off the two most frenzied residential real estate markets in 2020 and 2021, Those two years were catalyzed by historically low mortgage rates and the market's desire for more space caused by remote work and school as a result of the pandemic.

During the frenzied period, we experienced rapid price appreciation, record low levels of inventory, record low levels of days on the market and sales were the highest they had been since the 2004 – 2006 timeframe. Sales through the Columbia Board of Realtors in 2022 amounted in to 2249, down from 2819 in 2021, a decrease of 570 homes or 20.2%.

When you do a deeper dive into the numbers, the residential real estate market decline accelerated as we went through the year. The decline in sales in the first quarter was 40 homes or 8.1%, the decline in the second quarter was 93 homes or 11.1%, the decline in the third quarter was 138 homes or 17.3% and the decline in the fourth quarter was down 247 homes or a decline of 35.5%.

The decline in the month of December alone was a decrease in home sales of 132 homes, a decrease of 55.2%.  The December sales number of 107 was the lowest number since 2009 according to Brian Toohey, CEO of the Columbia Board of Realtors.  It is interesting to compare the quarterly numbers to what was happening to 30-year fixed-rate mortgages.  We began the year in the low 3% range, and quarter-end mortgage rates were as follows: 3/31 – 4.79%; 6/30 – 5.70%; 9/3,0 – 6.70%; 12/31 – 6.27%; and rates briefly went over 7% in November. There is a pretty good inverse correlation between rapidly rising mortgage rates and declining home sales.

Looking at some other statistics from last year.

It is interesting to see those days on the market as they declined to 19 days on average from 22 days last year.  Nationwide, that number increased to 47 days, so Columbia’s market fared better. That was due in part to the low levels of inventory coming into 2022.  Speaking of that number, at the end of the year, the number of months inventory amounted to 2.85 months, up substantially from .84 in December of last year.

The National number for December was 2.5 months.  Lastly, and good news for those of us who own homes, the average price for a home sold in this market rose to $328,219, an increase of $35,585 over last year, or 12.1%.  The median price of a home sold in this market also rose to $287,000 and increase of $36,222 or 14.4%. That is good news as I mentioned for those of us who own a home but home affordability has taken a big hit as higher home prices coupled with a doubling of interest rates have put homeownership out of reach for many.

The Columbia employment situation has been interesting to follow for the past few years. The pre-pandemic numbers showed a civilian labor force of 99,300, of which 96,967 were employed and 2,337 were unemployed representing an unemployment rate of 2.4%.  February was the pre-pandemic month or the last normal month.

By April of 2020, the comparable numbers were as follows, civilian labor force 89,894 of which 83,342 were employed, 6,462 were unemployed and the unemployment rate was 7.2%. In a matter of two months, we lost 9,406 in the civilian labor force, we lost 13,625 jobs, the unemployed increased by 4,125 and the unemployment rate spiked to 7.2%.

The employment market recovered significantly by the following February of 2021 but was not back to normal.  Comparable numbers were a civilian labor force of 98,285 of which 94,739 were employed and 3,546 were unemployed for an unemployment rate of 3.6%. We went from a high unemployment rate almost back to normal in a matter of 10 months.

When I say normal, historically this market has been under a 3% unemployment rate.  By February of last year, the comparable numbers were as follows, civilian labor force of 100,773 of which 98,421 were employed and 2,352 were unemployed representing an unemployment rate of 2.3%, once again under 3% and a tight labor market.

By December of 2022, the numbers looked as follows: civilian labor force of 100,708 of which 98,981 were employed and 1,727 were unemployed representing an unemployment rate of 1.7%.  We are back to normal with a tight labor market. Interestingly, the employed number was over 99 thousand for the months of September, October and November.  This slight drop in December is even more significant since seasonal retail issues usually bump up the December month.  Clearly, the local economy has experienced interesting times since the pandemic.  We experienced the most frenzied real estate market ever in 2020 and 2021.

High-interest rates and inflation slowed the market dramatically. The jobs market took a big dip at the time of the pandemic but we have clearly returned to our low unemployment and tight labor market.

This article originally appeared on Columbia Daily Tribune: MacLellan: Residential Real Estate and Jobs Markets in Columbia 2022