Did you realize that the Fall market is already here! It snuck up on us. It might not feel like it with these 90 degree days, but now that Labor Day has come and gone, we’re in the heat of the Fall market. Literally.
Over the years, we’ve seen an incredibly strong market in September and October because of lack of inventory and increasing demand. This year is no different, but there are some trends in the market that you’ll want to keep an eye on so you can see how they might effect your selling and buying plans.
To understand the market though, we first to explain how we view and track the local real estate market. We’ve all heard that real estate is all about location and that’s never been more true. We like to use the term “Hyper Local”. What does this mean? Well, each neighborhood has it’s own ecosystem if you will. Demand and supply can be different from one neighbor or another…heck, from one street to another. Monthly, our Build Cincinnati team reviews the sales, listings and trends for each area we focus to understand the health of that market. We even go as far as breaking each area up by price point.
An example would be looking at Montgomery and Hyde Park. Below, you’ll find a quick breakdown of home sales and listings at different price points and their average days on market. By going hyper local, we can best advise our clients on how to position their homes or buying plans.
Less Than $400,000 – 10 Listings
$401,000 – $700,000 – 26 Listings (2 New Construction)
$700,000+ – 40 Listings (18 Resale or Completed Homes & 22 New Construction)
Less Than $400,000 – 28 Listings
$401,000 – $700,000 – 18 Listings
$700,000+ – 25 Listings
Most people are under the impression that each of these areas are Seller Markets, meaning the lack of inventory gives Seller’s the edge. That might be true some cases, but in many, there is actually a growing amount of inventory. Before you worry though, Cincinnati in general only has 2.1 month absorption rate
. This means that if there were no new listings, all of the homes would be sold in 2.1 months (theor
etically, of course). A balanced market in Cincinnati is 4.5-5 Months
, so we’re still well below that.
Here’s what this means to you:
For Sellers: the market is strong! Home prices are up 7.4% across Ohio. However, Sellers and Agents need to be care not to become over confident in a home’s ability to sell at any price. When pricing your home to sell, we need to be ever vigilant in finding that sweet spot on pricing. The first two weeks after listing are the most important and you only have one chance to do it right. We always arm our clients with list price range and of course, a suggested list price. When reviewing the competition and sales, be sure that you’re being objective.
For Buyers: Inventory is low in most cases, but there are great properties that come on the market (or we find through back channels) routinely! Our team is hungry to find new homes, lots and opportunities for our Buyers, but we all have to work harder than ever to find them. This means making yourself available as much as you can to see homes the moment they hit the market and being pre-approvaled! We’ll be sure to take care of you on this front!!
Building Buyers: Cost is going up so get it now before it gets even more expensive to build! Over the past 12 months, the cost to build has gone up 8-10%. That’s purely the cost of materials and contractor work. Lumber, hardwood, labor, roofing, you name it! The longer you wait to build, the higher likelihood that the cost will go up even more. Land and lot opportunities are more difficult and more expensive to find too. If you’ve considered building, now might be the time to explore it a little more seriously.
With that, we’ll leave you with an interesting statement that sums up what many are seeing out there and to calm any of those that are throwing the term bubble around…
“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline.” -Mark Fleming Chief Economist at First American
How many homes are on the market in Cincinnati? About 4,000.
In other words, not many. And housing inventory—that’s what that’s called—is falling fast. This time last year there were 15 percent more homes on the market than there are today.
Here’s what that means if you’re thinking about dipping into the housing market: The buying windows are smaller, the prices are rising, and more than any time in recent memory you should consider building one yourself.
As to that last part—the whole resale vs. new construction debate—we’ve got a few words of wisdom to get you started:
Upfront/long-term costs: Generally the cost to acquire a lot and build on it is higher than buying an existing home. The thing to keep in mind here is maintenance costs, which are reliably lower in new homes—at least in the time frames we’re talking about (20-30 years).
Build it now: Rising interest rates are increasing the cost of homeownership, whether new build or resale. But new build prices are also sensitive to commodity prices—lumber, steel, roofing, etc. And commodity prices are rising too, meaning if you want to build new, you should do it soon.
Hot neighborhoods: The myth about new homes is you can’t find lots in hot neighborhoods—Madeira, Hyde Park, Downtown, et al. But that’s not true. Whether through subdivision or tear down, lots are available in these communities, and you can get ahold of them today.
Exactly yours: File this one under the category of “super obvious things,” but when you build a new home, you get to make it exactly what you want. That includes the floor plan, materials, interior design… everything you can afford, you can have. It really will be the house of your dreams.
Character: Like a broken-in baseball glove, an existing home is aged and polished in all the right places. It has strange intricacies, lovable imperfections, and a certain way of getting better the more you get to know it. You don’t get that with new build.
Maintenance costs: The thing people underestimate most about owning a home is the constant work it requires. Well, that work gets more expensive as a house ages. Yes, this is the downside of the whole “character” thing; it’s all fun and games until you need a new boiler.
Walk-in ready: Build new and you could be waiting for more than a year to move in. Buy a home that’s already built and, well, “here are the keys.” All you need to do is arrange the furniture, and your life immediately gets simpler.
The market is about to heat up: Think it’s difficult finding a house you love now? Wait until it really gets warm out—May and June. That’s when home sales go into overdrive. It’s also when things tend to go on and off the market in a matter of days, if not hours. So you should strike before the iron gets hot; that is, get looking now.
…and when you do decide to get looking, there’s not a better team out there than our friends at Build Cincinnati. With them you get the best of both words—a diverse portfolio of resale homes in hot communities, and a better understanding of new construction than any other realtor group in the area.
—as featured in Cincinnati Refined (in partnership with Local 12 News).
Written by Brian Penlap: http://cincinnatirefined.com/arts-design/cincinnati-housing-market-build-cincinnati-coldwell-banker-west-shell-local-real-estate-team