Inventory declines yet again in February
At the end of February, the number of homes and condos for sale was down to 3,376, which is just 0.1% lower than January and 21.2% less than February 2017. This marks the 85th consecutive month of year over year declines in inventory and left central Ohio with a 1.2 months supply of inventory at the current sales pace, according to the Columbus REALTORS® Multiple Listing Service.
The lack of inventory in central Ohio is a major obstacle for home buyers in today’s market, and buyers need to be prepared to move very quickly on new inventory as homes that are properly prepared for market and appropriately priced are still selling quickly, especially if they are effectively marketed.
The average sale price of a home during the month of February in central Ohio was $210,791, which is 10.4% more than the same month a year ago. The median sale price was $177,000, up 9.3% from a year ago.
There were 2,373 central Ohio homes and condos listed during the month of February, a 23.1% increase over January although 6.5% lower than the same month a year ago.
There were 1,681 homes and condos sold during the month of February which is 2.8% more than the previous month and 2.9% below February 2017.
It’s encouraging that new listings are on the rise, but we are still in need of more inventory. There is no question the number of sales would be much higher if we had more homes and condos available to sell.
Homes spent an average of 44 days on the market during the month of February, which is unchanged from the previous month.
Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.
Buyers may want to speed up their home search this spring, as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.
Mortgage interest rates are on the rise and these rising rates will eventually have a significant impact on the direction buyers choose when shopping for homes. Every time interest rates go up, you eliminate a group of people who can no longer afford to buy a home, while others are forced into a lower price bracket ultimately getting less home for their home. While the outcomes varies with some of these folks being forced to rent for a period of time until they make more money or can afford a larger down payment—others may simply have to buy a smaller house but either way the end result is the same, a slowing of the rate of home appreciation.
For the bulk of buyers and in the short term, it’s not going to deter their decision to purchase a home, and rather it will get them off the fence by creating a sense of urgency. Higher rates are a kick in the pants for you to start thinking seriously about buying.
Rate increases—even minor ones—can add up over time however. For example, on a $300,000 house with a 30-year fixed-rate mortgage and a 20% down payment, the difference between a 4% and 5% mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. Buyers who thought they could take their time or wait until the perfect house came along and that rates were going to stay low forever are being forced to realize that if they’re going to buy, they should probably buy now.
Home buyers who are concerned about rising rates may want to lock in with a lender (see Understanding Mortgage Interest Rate Locks), which guarantees the current rate for a set period of time. Still, don’t let your linger on making a decision. It typically costs several hundred dollars to lock in a rate and the longer the lock, the higher the cost.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Hilliard 43026 Lewis Center 43035 Marysville 43040 43041 New Albany 43054 Pickerington 43147 Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235