That’s according to Forbes.com and Moody’s Economy.com. The list was comprised of America’s Forty Biggest Cities and was based on a range of factors including the state of the local economies, new construction contracts, foreclosure rates, local credit markets, sales rates, affordability and inventory. The cities rounding out the top five of the list include:
1. Seattle, WA
2. Pittsburgh, PA
3. Columbus, OH
4. Dallas, TX
5. St. Louis, MO
While Columbus is experiencing a bit of a downturn it doesn’t reflect what’s happening across the country. The fact is the market is not as bad as the national media says it is, at least not here. Real Estate is local and influenced by a number of local factors. There are several factors that have kept our local market in check, foremost amongst these is Columbus never experienced the boom and thus isn’t experiencing the severe bust. Unlike other markets which experienced irrational rates of appreciation and quickly became overvalued, homes in Columbus have appreciated at rates similar to years past as such prices have held relatively steady.
Columbus Home Prices – What They Have To Say
Annual Price Change From 2006: -1.2%
Projected Price Change to 2008: 3.49%
Next year Columbus should boast the eighth-fastest sales rate of the 40 markets examined.
This suggests the market should correct itself by 2008, which makes sense as it’s not a market problem we have here in Columbus but rather a supply issue. The building industry typically works two or three years ahead, buying land and building speculative (spec) homes. This isn’t a problem as long as sales are consistent, but that wasn’t the case this year. After several record setting years, developers and builders kept working at these levels, and when the correction hit, they were left with an inventory of land, lots and homes. As such inventory levels are up sharply, currently there are 19,397 home for sale in Columbus.
When builders are stuck with excess inventory, they typically attempt to attract buyers with offers of discounts or free upgrades. Sometimes cutting thousands off the sales price or offering a free upgrade to a gourmet kitchen with stainless steel appliances and granite counter-tops. As inventory levels fall, as they are doing now, builders are under less pressure to sell and will begin to do away with these discounts.
Interest Rates are also playing a significant role in the absorption of our city’s housing inventory. Interest rates are still at historic lows, encouraging many buyers to take advantage of this rare opportunity to purchase a home well below market value, with a loan offering an interest rate that is unlikely to been seen again for years, if ever! The mortgage rate for 30-year fixed loans are currently at 6.125% (6.875% for jumbo loans, that is those in excess of $417K).
Good news for existing home owners, while inventory levels are up and prices have come down slightly, homes are still selling. According to MLS statistics, so far this year 19,339 homes have been sold with an average sales price of $170,286, and an average days on market of 116 days. For the same time period in 2006, the number closed was 20,583 with an average sale price of $172,990 and an average days on market of 105 days. Not a huge change from last year. The average days on market is just that though, an average. There are homes that are still being sold in under 60 days and the key difference between those homes and the ones that are on the market for over 120 days is condition, and price. The homes that are selling in this slower market are the ones that are in the best shape and are priced competitively (to sell). One of the problems with being able to price a home to sell is that many people want to price it based on what they “feel” it is worth, or what they “need” to get out of the sale. The problem with that is ultimately buyers control prices. A buyer doesn’t have the emotional attachment to the home and bases the purchase price off of comparable homes (a buyer will not pay more for your home if they can get a similar home, with similar amenities for less).
Ready to make a move?
If you are thinking about buying or selling a home give us a call or send us an email so we may discuss your specific needs.