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Augusta Area home prices are higher than ever but remain affordable according to Atlanta Federal Reserve data

CSRA home prices are higher than ever and seemingly rising more and more each day, but homes around the Augusta, Columbia County and Aiken County area remain affordable, according to a new report from the Federal Reserve Bank.

The Atlanta Fed created an interactive home affordability tool, HOAM (or Home Ownership Affordability Monitor), which measures the ability of a median-income household to absorb the estimated annual costs associated with owning a median-priced home.

The tool is based on the U.S. Department of Housing and Urban Development’s standard for affordability, which says that homeowners should not pay more than 30% of their pre-tax income on housing costs. Anything more than that is considered not affordable.

The HOAM index classifies affordability on a 100-point scale, with any rating below 100 considered “unaffordable” and any rating more than 100 affordable. With a median home price of $238,300, the tri-county area that makes up the Augusta metro area currently has an average rating of 112.4, meaning homes here are still considered “affordable.”

The highest median home price for January 2022 was in Columbia County, where the median home price was $259,833; however, Columbia County also boasts the CSRA’s highest affordability index of 156.9. This is because the median family income in Columbia County is substantially more than Aiken County and nearly double that of Richmond County.

In Augusta-Richmond County, the median home price was a relatively modest $182,783 with a HOAM index of 112.5, which is still comfortably in the “affordable” zone, according the Atlanta Fed’s tool.

In Aiken County, which is considered part of the Augusta metro area, the median home price in January 2022 was $246,117 with a HOAM index of 111.8. This means homes in Aiken County are the least affordable in the CSRA, but still comfortably within what HUD considers affordable.

While Prices Have Risen, Data Shows Homes Remain “Affordable” in Aiken, Columbia and Richmond County-Augusta as of January 2022.

So, what does this mean for the future of home prices in the Augusta and Fort Gordon area? Before I tackle that loaded question, let me just say that what I am about to say is my OPINION. I would also like to point out that my opinion assumes all other factors that affect the housing market like local and national economy, bank interest rates, etc. remain the same.

That said, based purely on the information above, I think the bottom line is that local home prices in our area are not likely to stop going up any time soon. No one knows exactly how high prices will go, or when the market will shift, because it eventually will; however, as long as people can afford current market prices, and housing supply remains low, the basic law of supply and demand will continue to drive up prices.

Excluding a national recession, the only wildcard, in my opinion, that could change the direction of the market in the near future is interest rates. Interest rates have already risen substantially over the past few months, and experts warn that, with the Federal Reserve expected to hike rates several more times in 2022, it seems like a safe bet that the days of 2.5 percent rates are in the rear view mirror.

Since interest makes up a significant portion of the monthly payment on a home, it stands to reason that homes at any given price will be less and less affordable as interest rates rise. Add in the fact that, since homes are taxed based on their value, and taxes are part of that monthly payment, and homes could rapidly become less and less affordable to more and more people.

The bottom line is that, as much as home prices in our area have risen, there is still plenty of room left to go higher. However, the same can not be said for the Atlanta metro area, where the affordability index recently dipped to below 100 for the first time.

The other thing that will likely dictate how much longer home prices will continue to rise in our area is inventory. You may have noticed that new homes are being built around just about every corner of the area, and eventually that influx of new inventory will start to fulfill demand, and the bidding wars we are currently experiencing will come to an end. The trouble is that Columbia County’s population is forecasted to grow another 22 percent by 2030, according to the Fort Gordon Alliance, so builders will need to build a little faster if supply is going to catch up with demand and level off prices in the Augusta area any time soon.

If you are considering cashing in on the hot housing market, or you are just curious about your home’s current value, check out my Home Value Report Tool for an INSTANT report.

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