In their latest news release on November 2014 housing data the Columbus Board of Realtors claims that Central Ohio Home Values Continue to Rise at Sustainable Levels.

It is true that home values were up by 5.1% in November. But that’s not the full story.

November was an awful month for home sales. We sold 200 fewer homes this November than a year ago. That’s a 10.9% drop, which basically wipes out any gains we achieved in October. Over the year home sales lag by 3% as compared to 2013. I don’t expect we’ll catch up in December.

Columbus OH MLS November 2014 housing data

Most local housing data are even worse. However, one school district managed to register a substantial increase in home sales.

The clear winners are Grove City and the Southwestern City School District with a 20% gain in sales combined with a 10% gain in home values. Almost all other subdivisions as well as the City of Columbus suffered a 20% decline in home sales. Powell home sales plummeted by 68.8% (only 5 homes sold there in November).

Why Are Home Sales Down?

I believe there are 3 reasons why November was such a bad month:

  1. The inventory is still very low. Home buyers don’t have much to choose from. And most home buyers are very picky. They rather wait for a few months or a year to find the perfect home than buy a house that needs work and does not meet their expectations.
  2. The Columbus apartment boom is keeping young buyers trapped in a lease. With so many new, high-end apartment developments springing up all over town (and more coming next year), many potential buyers decide to lease a modern apartment with all amenities than own a house that requires work.
  3. Lending criteria are tough and keep many buyers from qualifying. While interest rates are extremely low, most potential buyers stumble because of a lack of down payment or dents in their credit.

Home sales are NOT down due to the early November snow. Most contracts for November closings were signed in October. However, the cold Thanksgiving weather may have an impact on December sales.

Why Are Home Values Up?

There are 3 reasons why the average and median sales prices of Central Ohio homes has increased by 5% this year.

  1. There is a strong demand for homes. With historically low inventories home prices are increasing, as more buyers compete for a limited number of properties.
  2. Most homes that sold for top dollar have been recently remodeled. These upgrades come at a significant cost to the home owner. In many cases the seller does not recover the full investment of the upgrades.
  3. Foreclosures and bank-owned properties have decreased to historic lows. Less than 10% of all listings are distress properties. The average sale price of distress properties is around $75,000, less than half of the average home price in our MLS ($178,819).

What Can We Expect for December?

Based on my research of December 2014 home sales in the Columbus MLS, I predict that

  • Home sales will be down by more than 10% as compared to December 2013.
  • The inventory of active listings will be virtually the same as a year ago.
  • The number of contracts seems to be substantially higher than a year ago, which indicates that we can expect a significant turn-around in January 2015.

Not a Great Year for Real Estate

2014 was not a great year for real estate. It appears that home sales will be down by 5% for the year as compared to 2013. Because home values have increased by 5% in 2014, the total sale volume will probably stay the same.

With the inventory slowing increasing, 2015 should be a better year for both home buyers and sellers. Buyers will have more choices while enjoying historically low interest rates. Sellers will benefit from increasing home values.

Please leave a comment in the box below and let us know how real estate will impact you in 2015!