Anyone eager to buy a home this spring probably has reasons to feel good. The job market is solid. Average pay is rising. And mortgage rates, even after edging up slightly as of late, are still near historic lows.
And then there’s the bad news: Inventory levels are down and buyers are struggling to find homes to buy. This is most pronounced at the entry-level price points, that is the starter home segment of the market. Currently, the inventory of Columbus and Central OH homes for sale priced under $200,000 stands at just 1,056. Here’s how the this breaks down across our local Columbus suburbs: Dublin 12, Westerville 3, Worthington 4, Hilliard 2, Upper Arlington 2, Gahanna 2, Clintonville 7, Lewis Center 1, Delaware 10, New Albany 0, Powell 0.
Indeed, the supply of homes for-sale is at a nearly 20-year low. The most affordable homes—those that tend to attract first-time buyers—are in short supply too. Meanwhile, home prices are rising sharply as buyers find themselves competing for the few homes that are for sale.
Reports are growing of bidding wars erupting across hot markets and in some cases sellers are being forced to put off buying another home because of the scant inventory and the escalating prices. As such many owners are electing not to list their current homes out of concern for finding a home to purchase and timing their transactions. (If you are one of these owners call us today to learn how we can assist you in locating a home to buy before you sell, and possibly a buyer in place to purchase your home once we’ve identified your new home!)
About 1.42 million homes were for-sale nationally at the end of January, down 10.7% from a year earlier, according to the National Association of REALTORS®. Inventory has declined to its lowest point since realtor.com began tracking in 2012, and the volume of newly listed properties is failing to significantly add to inventory.
Why is the supply so low? Housing experts point to several reasons which we discussed in our previous post, Reasons Behind Limited Housing Inventory.
- Since 2008, the average time homeowners have stayed in their houses before selling has doubled to nearly eight years, according to Attom Data Solutions.
- Many homeowners aren’t selling for fear they wouldn’t find a new home they would like and could afford. (Some who had locked in ultra-low fixed mortgage rates may have been reluctant to take on a new loan at a higher rate however, mortgage interest rates dropped to their lowest levels ever this week).
- Some homeowners own other properties they rent out and have little incentive to give up the steady rental income, especially while they’re also benefiting from rising home values.
- Investors, who typically keep properties for disproportionately long periods, own a larger share of houses. Between 2006 and 2016, the share of U.S. single-family houses and condos owned by investors averaged around 30 percent, according to Attom, and reached 35% last year.
Nor are builders replenishing the stock of new homes fast enough. Though the pace of building has been rising, it has yet to make up for years of sluggish construction growth that followed the housing bust. Builders complain that they can’t build more homes because of a lack of ready-to-build land, costly regulations and a chronic shortage of skilled construction workers.
Builders are building homes now at a 65% of the rate we have historically. The long-term solution to this scenario is building more new homes in the low and mid price ranges.
Despite the scant supply, U.S. home sales are expected to rise this year, economists say. Fueled by job growth, pay raises and still-low loan rates – and perhaps fearful of being left out as more homes are snapped up and prices rise further – many people are looking to buy.
Sales of previously occupied U.S. homes surged to 5.46 million, up 9.6% in January from a year earlier, according to the NAR. In January 2020, pending sales were also up 5.7% over last years totals.
The shortages are prompting home prices to skyrocket. Nationally, the median sales price jumped 7.7% from a year ago to $228,400—more than double the pace of average pay gains. Locally the median sales price was $197,000 representing an 8.5% increase over January 2019.
Currently, the inventory of Central OH homes priced under $200,000 stands at just 1,056. Here’s how the this breaks down across our local Columbus suburbs: Dublin 12, Westerville 3, Worthington 4, Hilliard 2, Upper Arlington 2, Gahanna 2, Clintonville 7, Lewis Center 1, Delaware 10, New Albany 0, Powell 0.
Competition is likely to heat up even more heading into the spring / summer for house hunters looking for homes in the lower- and mid-market price range. Buyers looking in these price points should plan accordingly, this includes finding an highly experienced buyer’s agent (new agents have been entering the market in droves and it’s critical that you work with a seasoned expert) who can get you setup on a search to receive new listings as they hit the market (as well as pocket listings, coming soon listings and other hidden homes for sale), when you find a home you are interested in considering DO NOT WAIT… get out to see the property the day showings start, if you’re interested in the home notify your agent immediately, expect multiple offers and talk to your agent about Strategies to Win in a Multiple Offer Situations. Buyers have to make smart, thoughtful decisions very quickly and need to be prepared to do so. Finally, get started well in advance of your desired/required move date and prepare for what could be a longer than usual home buying processing.
For More on this topic see Housing Market in Need of More New Homes and Shortage of Buildable Lots Will Push Up Home Prices
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please contact The Opland Group. We offer professional real estate advice and look forward to helping you achieve your real estate goals!
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