If you are like most people, you probably believe that real estate peaked in early 2008 and crashed later that year.
That is not correct. At least not in Central Ohio.
Actually, 2005 was the best year for home sales in Columbus. During that year more homes sold at a higher price than any time before and anytime thereafter.
We have been in a housing market slump for 5 years already. And I believe, that Columbus is leading the nation.
Here is a chart from the Columbus Board of Realtors. It shows how many homes sold since 1995. Sales clearly peaked in 2005 with 27,400 homes sold at an average price of $178K. In 2009 we were back to the numbers of 2002, and I expect that the numbers will drop even further in 2010.
You probably wonder what’s next?
That’s a tough questions. We know that we will see fewer home sales in 2010 than in 2009. We also know that it is becoming increasingly difficult to get a home loan. The home ownership rate in the Midwest dropped to around 71.0% from a high of 73.8% in 2004. Finally, we saw mortgage interest rates go up for 4 weeks in a row. They are still at record lows, but it’s not a good omen.
Let’s look at census data for the Columbus Metro Area. You will see that our population has reached 1.78 million people. It has increased by 10.56% since 2000. This growing population needs homes to live in. The increasing demand for housing will catch up with the market and home sales will begin to increase again.
After 2005 Central Ohio home builders continued to develop new properties at the sales rate of 2005. As you can see from the chart the number of sales (the demand) decreased, while builders continued to add inventory until 2008. This inventory has to get absorbed by buyers.
Nobody knows exactly when this will happen. At a recent conference a speaker predicted that we will need 2 more years to sell off the excess inventory of new homes as well as the flood of foreclosure properties that has hit the market in recent months.
Home prices will stay low until supply and demand reach an equilibrium. This means that excellent deals are available for qualified buyers and we will continue to see a buyers market.
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Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Real Estate Agent helping First Time Buyers.
(614) 975-9650