#8 – Market Predictions for Columbia, SC from the American Monetary Association

Columbia, SC: 25.0% Return on Investment (2011)

Market Values in Columbia have been exceptionally stable after a moderate decline from its value peak.  Since values did not appreciate significantly during the bubble, the subsequent contraction has been very mild.  Some mild volatility emerged during 2010 as the government tax incentives expired, but is expected to dissipate in 2011 as Columbia resumes a trajectory of modest value growth.  Currently, approximately 16% of listings are from foreclosures[1].

One of the unique aspects of Columbia that makes it an attractive market for investment is student  housing for the University of South Carolina and a vibrant retiree population.  These factors combine to create a high percentage of residents in Columbia that rent their residence.  With such a large tenant pool, the returns available to investors are quite attractive.  The high percentage of renters and low rate of volatility in values has led to a very small rate of foreclosures relative to many other market areas.  This level of stability is a breath of fresh air for many investor

s that live in highly volatile markets, and would like to source their income property investments in areas where values hold more constant.  For these people, Columbia may represent a very attractive opportunity.

In addition to student housing, the business community of Columbia is also vibrant, resulting in a multi-dimensional economy that will help to create value and stability for the market for investors.  The area presents a balanced ROI profile with healthy cash flows and modest rates of expected appreciation that produce leveraged appreciation.  The key strength of markets like Columbia is that its consistency makes market timing much less of a factor than in other cyclical markets where value appreciation is necessary to offset large negative cash flows.  Since the rent revenues frequently exceed costs for income properties in Columbia, investors have the luxury of relying on cash flows to sustain their property until returns emerge from leveraged appreciation.

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