May 2015 was another excellent month for Columbus home sales. Closed transactions increased by 8.4% year over year. And the average sales price is up by 9.1%, getting close to the $200,000 mark.
Days on market (DOM) have decreased to 54. And the inventory hovers at 7,400, in record low territory.
So far, 2015 has been an excellent year to sell, but a tough market to buy a home.
The demand for quality homes in desirable school districts is very high. Many suburban listings go in contract within a week. Buyers are looking for upgrades. Homes that are simply “move-in ready”, with original oak kitchen cabinets and 30 year old windows won’t sell quickly.
Home Ownership Rate Plunges
With so many buyers looking for new homes, it may be hard to understand why the home ownership rate has been on a downward spiral for the past 10 years. The number of American households owning a home is at its lowest level since the early nineties.
As of Q1 2015, the home US home ownership rate stands at 63.8%. During the height of the housing market it reached almost 70% in 2004.
The Ohio home ownership rate stands at 66%, which is higher than most parts of the country. In Columbus, however, less than 45% of households own the home they live in. For more local data click here.
Why the Home Ownership Rate Won’t Rise
A number of factors contribute to the historically low rate of home ownership:
- There are not enough first time buyers. Traditionally, this segment of the housing market contributed to around 40% of all home purchases. Over the past year only 25% of all buyers purchased their first home.
- Student debt drains the purses of young adults and reduces their ability to qualify for a loan and save for a down payment.
- The Dodd-Frank Act made qualifying for loans more difficult. So, there’s less credit available for home buyers.
- With Upscale Apartments sprouting up all over Columbus, young professionals are persuaded to rent for a few years and take advantage of exceptional amenities in these brand new developments.
The age group most affected by the sinking home ownership rate was Gen-X (35 – 45 year olds) followed by Millenials (35 and younger).
Buy Now – Don’t Delay!
Home ownership is more affordable NOW than anytime in recent history. And it’s not going to last.
Home values have been increasing rapidly. Buying a new home will become more expensive with every day you wait.
Interest rates will most likely go up in the second half of 2015. Even a small increase of 1 percent can push your house affordability down by tens of thousands of dollars.
You probably won’t see a better time to buy in your life-time. What are you waiting for?