Hello everyone and Welcome to another episode of Selling Greenville your favorite real estate podcast here in Greenville South Carolina I am your host as always Stan McCune I am of course a realtor here in Greenville South Carolina if you've listened to any episodes you already know that I represent buyers I represent sellers I represent invest S I represent owner occupants and everything in between so if you have any real estate needs just let me know my contact information I always try to remember to put in the show notes if you don't have my contact information you can look it up there and just a reminder is always please go ahead and subscribe to the show if you like it make sure you don't miss any episodes downloading the show helps us in the algorithm subscribing to it and of course rating and reviewing it I want to get more ratings more reviews to en encourage me to keep pressing forward with this show which I think that everyone benefits from it hopefully that is that is the hope that is the thinking we're trying to educate The Market on Greenville as a whole trying to make sure that people understand what local real estate is like and I get a lot of positive feedback from a lot of people but make sure that feedback isn't just told to me make sure that feedback comes through on the the r ratings and the reviews of the show itself now today we are going to be doing a little bit of a of a part two on greenville's housing affordability crisis we did an episode on this last year and there is some worthwhile data to consider for a second episode I think I don't plan for this to be a very long episode since it's a topic we've discussed a little bit before but I think it is worthwhile to consider let's start by looking back a couple of months let's start with an astonishing stat we know that housing affordability is directly correlated to a few things more than anything it is correlated to supply and demand so when as we've discussed many times before when the demand outpaces the supply for houses when there are more buyers than there are Sellers and prices go up and the number of houses what we call inventory houses that are available for sale that number then goes way down and so what we saw so in Greenville we have you know the Greenville Association of Realtors tracks what's happening in the market but sometimes it takes a couple of months for their statistics to you know really be accurate so I tend to wait a couple of months before I start saying what those statistics are but rest assured none of the numbers are favorable for housing affordability if we go back to November December of 2020 and then you know January which January numbers might change a little bit but we're looking at median sales prices up between 10% and 15 well 10 between 10.3% and 15.7% the past three months year on year okay so like November of 2020 was up 13% from November of 2019 so that's crazy you know we talk about the stock market how much you should expect to get from the stock market year on-ear for most people they would be thrilled if they get you know 133% year on-ear of any investment well real estate wise we are seeing those types of numbers happening around here and I don't expect that pace on a meta level to to hold up but that is what we're seeing happening right now so as far as the housing affordability index we talked about this again last year but it dipped below 100 for the first time last year and what that means is that the housing affordability index it measures affordability by region by looking at the median house old income and then what is necessary to qualify for a median priced home under prevailing interest rates and so here's what that means basically 100 means that the median household income is a 100% of what is necessary to qualify for the median priced home in other words 100 is we're barely hanging on the median household income is barely able to afford the median priced home last year we dipped below 100 for the first time according to the numbers the GG published recently for January January it finally it went back up to 100 it had been in the high 90s to end 2020 January went back up to 100 but that's honestly not a positive thing that's not something I'm celebrating because that's actually the biggest decline year on-ear that we've seen if if that ends up being accurate you know like I said they they will adjust this data in future months but the housing affordability index in January of 2020 was 115 now it's 100 that's a 133% drop in the past 12 months that number has dropped 7.9% so January of 2021 it's looking like housing affordability decreased by 133% year on-ear that's that's obviously not good inventory this is even more honestly more astonishing we've been talking about how you know inventory in we we look at month's inventory and when it's in the threes that's like a crazy buyer Market well it's been in the twos since covid basically and a lot of that has to do we've talked about in the past with interest rates mortgage interest rates being low in December according to the GG that went down to 1.9 months I mean I did not think I would ever in my lifetime see it in the ones it's nuts it is absolutely nuts again when month supply of inventory gets low like that that impacts housing affordability and it just makes it very difficult to buy obviously it's a great time to buy like I said interest rates are so low and they're probably never going to go this low again at least historically it we would be surprised if it went this slow again right but at the same time it's it's just such a difficult time to buy you have to you have to to be ready okay there's going to be bidding wars right I'm I'm hearing people I'm hearing other agents and experiencing it myself other agents that are saying I had clients that put eight offers above list price on various homes and finally the eighth one they got I mean that's crazy that is frustrating for everyone it's it's me as an agent it means a lot of work that I have to do for my buyer clients and you know I I we all have to just kind of endure the market when it's like this obviously if you're just selling and and you don't have to buy well it's a great Market to do that if you're an investor looking to potentially sell properties this is the time to do it you you have an opportunity here where there's just nothing available that you can sell in ways that you haven't been able to in the past and so that's something for sure that that needs to be considered but the Greenville Journal took this housing affordability conversation to the next level by talking about developers that are specifically focused on affordable housing so the last time we talked about this and in what we'll call now our part one episode on the housing affordability crisis we talked about how really among other things one of the main things is we just need Builders to build more houses that has a ripple effect when when there's more new construction that's out there people that are maybe in the first home that they bought and are looking to make their next move they're very likely to consider new construction and by the way if you're looking at new construction consider using a realtor rather than using the Builder's realtor having your own realtor will help you in a variety of ways one it just gives you that layer between the Builder and you someone that can advocate for you but a good realtor can also push for the Builder to do different things can also help you to understand what you need to inspect and what you need to consider as you go through that process so keep that in mind by the way if if you're in that bucket of potentially looking at new construction but as people are moving out of their their first home their starter home and if new construction is out there a lot of them will will buy that new construction and then that puts their home back on the market and so that helps housing affordability in a variety of ways so we talked about that in the past but there's also a segment of of specifically affordable housing I say that in quotes air quotes affordable housing these are developers that are spe specifically building for below the market for a specific demographic and and I don't mean that in a in an identity politics type of way I mean that specifically from a financial perspective a demographic that normally is unable to afford home ownership or at least home ownership that they need there are developers that that are attempting to build build homes for those people in order to help them get out of this constant cycle of renting and to be able to finally purchase that first home and it's really great if they can finally purchase that first home and its new construction you know that's that's a best case scenario now it's going to be Builder grade everything's going to be Builder grade it's not going to be anything fancy but it allows people to break a cycle and to be able to finally Pierce through some of the economic restraints that they that they may have had due to being unable to get out of a cycle of just going from one rental to another so the Greenville Journal published this article it says the title of the article is kind of wordy but it's Greenville has trouble finding suitable residents for affordable housing units despite widespread need and that's a little bit of a misleading title but it gets into a lot of interesting aspects of of this other concept of affordable housing which is actually trying to build for people that that need affordable affordable types of of construction below what the market is which is going to be increasingly more and more prevalent so an analysis that the Greenville Journal linked to that was conducted by the Greenville housing fund the Greenville County Redevelopment Authority and Thomas P Miller Associates it found that we're approximately 12,000 units short to meet Demand with 35,000 residents earning less than 30,000 $513 per year which is the wage needed to afford rent on an average two-bedroom house in the county so we need 12,000 units more 12,000 in theory houses but could be Town Homes too I I believe 12,000 units short and additionally I found this very interesting Greenville it was in the top 10 Metro areas that experienced the most growth for cost burdened rental households now we've talked about that before that it is disproportionately bad to rent in Greenville versus buying there are are other episodes on the podcast where I just discuss that we actually broke it down how the same house that you're renting for $1,700 you could purchase and have a minimal down payment and your mortgage would be several hundred your mortgage and utilities and everything would be several hundred less than that per month but again it's tricky to break the cycle because it's easier you know if you've got credit score of 600 there's probably going to be someone out there that's willing to rent to you whereas if you got a credit score of 600 particularly during covid it's difficult to get financing that is the reality of the situation and so here's what ends up happening with these affordable builds that are that they're trying to add to the market is it's it's kind of a vicious cycle of the the developers the builders building these homes they get a hodg podge of funding from all sorts of different groups the federal government the County government the city government advocacy groups Banks and maybe even the developers themselves I'm I'm taking this straight out of the Greenville Journal article that exact language they're they're getting help from a lot of different places because obviously the only way to build affordable housing is if you cut costs in some way well you don't want to cut costs and make make the house not sturdy or or not sound or poor quality so they need help government assistance charitable assistance whatever the case may be but the lay on top of that that makes this extremely difficult is that what is required by a lot of these groups is that they actually have before they start building a pre-qualified person that is that fits the parameters of this demographic that they are looking for that financially needs to to be able to get affordable housing they need that person to already be teed up prior to them starting construction on the home and it's a it's a vicious cycle because those people that are out there they might it might take a lot of work for them to become creditworthy to be able to to get the type of financing they need but then and additionally there's no homes out there by the time they finally get creditworthy now they can potentially link up with one of these communities to be able to potentially get you know a property under contract that hasn't been built yet well now it's got to be built and that might take several months or maybe a year and while that's happening these people people are are still renting and so it ends up being this vicious cycle and what's happening is that we're just not having a lot of affordable housing being built in the area and and I really encourage again as much as possible our our state our County our local officials to cut out as much red tape as possible the the Greenville Journal kind of references this in passing that you know there's all sorts of of of aspects that are involved here and there's just a lot of red tape at the end of the day and it ends up hurting everyone and so we need to that's something as a community we need to get together I am a part of some things as a realtor a few different Community a few different committees rather where we try to assist with this with with affordable housing and try to promote that sentiment among government leaders and among other people because a lot of people don't understand how this works they just think oh affordable housing that just means that people need to stop artificially inflating prices and landlords need to drop their rent and all of these things but there's a whole lot more that goes into this that that doesn't meet the eye and a lot of it comes down to honestly just too many cooks in the kitchen at the end of a day and so we have 12,000 units that need to be built and that number is probably going to keep increasing every month hopefully I'm I'm very hopeful that as Co starts to hopefully ease off as things get more open theoretically interest rates will go up which is you know it's a positive and a negative as mortgage rates go up that means that there will be you know fewer people buying but at the same time that should mean that our inventory levels become a little bit more buyer friendly it's not going to flip to a sellers Market anytime soon outside of something major happening like a war as as I mentioned I believe last episode but we have a need for at least it to move a little bit more towards the seller and it will still or sorry towards I think I said before sellers Market we needed to move at least a little bit more towards being a buyer's market to balance it out because it's been so much of a sellers Market for so long I wonder how many times I've mentioned in this podcast buyers Market when I meant sell's Market it's a sellers Market all right if I said anything about it being a buyer's market listen it's not been a buyer's market for like a decade so so anything that I said before disregard that I am not re-recording this podcast this is one of my busiest weeks of the year and I'm just trying to squeeze this in right now to be completely honest but that is the problem there are more questions than answers when it comes to this but if you guys have any thoughts or any ideas or any questions about this as you know my contact information is in the show notes just like it always is please feel free to reach out to me I'd be happy to just chat about this or if you or someone you know is looking to buy or sell real estate let me know that as well of course that is that's how I actually make money I don't make money on this podcast I make money as a realtor as an investor those are the things that I do and as always please if you love the podcast subscribe download rate review do all those cool things until next time stay safe let's buy and sell some houses together [Music]