2017 was the Hottest Housing Market in History for Central Ohio
There were 32,218 homes and condos sold in central Ohio in 2017, which is 1.7% higher than 2016 and the highest number of homes sold on record for a single year, according to the Columbus REALTORS® Multiple Listing Service.
2017 also saw record high home prices. The average sales price of a home last year was $214,802, which is 6.3% above the previous year. The median sales price of a home in 2017 was $181,500, which was 6.8% higher than 2016.
During the month of December, the average sales price of a home ($214,735) was 10.0% higher than the same month a year ago.
The healthy economy of 2017 clearly produced many buyers who were persistent in the pursuit of home ownership. Sales prices have continued to steadily inch up month after month, leaving us with one of the strongest housing markets on record.
According to S&P Chairman of the Index Committee and Managing Director David M. Blitzer, inflation is lagging prices severely. Across the country, home prices continue to rise three times faster than the rate of inflation.
There were 1,493 central Ohio homes and condos listed during the month of December, a 1.2% increase over the same month a year ago, although a 29% drop from November.
The resulting inventory of homes for sale at the end of December was 3,876, which is 16% lower than November and the lowest on record in over 20 years. This marks the 83rd consecutive month of year over year declines in inventory.
The declines in inventory left central Ohio with a 1.4 months supply of inventory at the current sales pace, which is another all-time low. This means that, if no more homes were added to the market, it would take less than 1.5 months to sell all the homes and condos currently for sale in central Ohio. (A balanced market is usually around 6.5 months supply.)
It’s not unusual for listings to taper off during what is typically the slower winter season and especially during the holidays. We’ll begin to see an uptick as spring approaches, if not sooner.
Given the shortage of inventory, it comes as no surprise that homes sold more quickly in 2017. On average, homes spent only 35 days on the market last year which was 11 days fewer than 2016.
More sellers should feel ready and eager to list in 2018. Economic indicators such as unemployment rates and consumer confidence are at healthy levels, and the current market largely favors sellers however, this varies between markets and price points.
The economy could get a lift from tax reform, with homebuyers and homeowners likely having more income, but less in the way of write-offs, according to Fannie Mae’s Economic & Strategic Research (ESR) Group’s recently released Economic and Housing Outlook for January 2018. Analysts believe housing will again be marked by short supply this year.
“The new tax laws are likely to motivate a mixed response in the housing market: Increased disposable household income should lead to greater housing demand, but changes to deductions essentially reduce the subsidy for homeownership,” says Doug Duncan, chief economist at Fannie Mae. “On balance, we expect the housing market in 2018 to encounter many of the same challenges as last year, including inventory shortages, particularly in the middle and lower-end of the market, and affordability headwinds.”
Analysts anticipate GDP will increase 2.7%, as well as a tumbling unemployment rate—if policymakers step up.
“The question for 2018 is less about the impacts of the tax cuts for consumers and corporations than about how the Fed manages the pace of monetary policy normalization amid a stimulative fiscal environment,” Duncan says. “As we see it, the traditional view of a trade-off between employment and inflation lacks solid empirical support in recent decades, and aggressive monetary policy to ward off a potentially overheating economy may do more harm than good. Managing a ‘soft landing’ will be a difficult but critical task for policymakers in 2018.”
Analysts also expect the Federal Reserve to hike the key interest rate, which can affect the cost of a loan, including mortgages, at least twice this year. The Fed raised the rate three times in 2017.
Fannie’s forecast comes on the heels of another outlook released this week by Freddie Mac, which anticipates a boost in home prices, sales and starts in 2018.
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