There is some good news recently put out by the Cincinnati Board of Realtors. According to the sales numbers the last 4 months have seen increasing home sale activity, a good indication that the housing market is beginning to recover. An even better secondary metric is that the overall inventory is dropping. This means that more houses are being sold than are being put on the market. Generally speaking a balanced market caries about 5 months of home inventory.

More sales and less inventory helps to return demand to a steady level. It is this relatively static demand that has given Cincinnati real estate has historically appreciated 2% each year. Although modest, it is steady and the recent positive changes in the short term market point to the fact that we will soon return to slow and steady long term appreciation.

Month 2008 Home Sales Inventory

January             1,130                    13.31

February          1,334                    11.32

March              1,557                      9.75

April                 1,636                      9.49

May                 1,913                      8.38

CNN Money reports about the US subcommittee efforts to bring together a relief package, or legislation reform to help the ailing housing market in Ohio and other states. The article sites some numbers from Realtytrac and some are good for Ohio, and some are not so good.

Across the country foreclosures surged 48% in the month of May which is not encouraging. However Ohio saw a 7% drop in foreclosures compared to the same month in 2007. Hopefully this is the beginning of the reversal of a trend that sees Ohio’s foreclosure rate growing every year since 2000.

At some point all of the adjustable rate mortgages will have reset and the home owner will either refinance a fixed rate they can afford, negotiate with the bank, sell their home, or foreclose. The question we in the real estate and mortgage profession is when will we hit bottom, when will we have moved past a point when all of the crisis mortgages have been flushed from the system and we can slowly begin to rebuild the housing industry based on sound lending principals and appropriate risk / reward tolerances. The end goal is to attract investors to buy up relatively bland, and previously dependable residential mortgage backed securities. Only then will we know the depth of the damage to the reputation of the housing industry as an investment vehicle.

We have written here about the changes in Cincinnati’s property values over the last two years. A part of the real estate downturn that is being overlooked is the assessments for property taxes. Locally we have seen our home value decline between 5% and 11% depending on where we live but it has not been as bad as California. Their property value has declined so much that there is now a company that will help homeowners obtain a break on their property tax reasons.

Prop8.org takes advantage of a California proposition that allows for homeowners to get a reduction in their property taxes. Prop8.org charges a fee to help homeowners navigate the legal paperwork, and submit the necessary papers. We do not have this luxury in Cincinnati but it is important that the next time your property is assessed that you pay attention and gather the recent sale data for your neighborhood so you understand you new property assessment.

Nation wide it seems like the drop in home values is slowing. According to a recent Standards and Poors report on home values, 18 of the 20 index cities lost less value over th last quarter than in previous quarters.

In looking at the chart the most critical piece of information I see is data out of Cleveland and Chicago. Both large mid western centers show a significant slowing in depreciation compared with previous quarters and in aggregate if you look at those as leading indicators for the region our decline may be slowing as well. We have reported before on Cincinnati real estate price trends and this is another report that makes us confident that the overall depreciation will most likely end with the calendar year especially if the summer sales season sees absorption of some of the foreclosed properties currently on the market.

Everyone I know has been asking us “So how is the market doing … really.” The honest answer is that it is not as bad in Cincinnati as other place but of course, we would like it to be better. When we pulled up numbers and took a statistical look at both sale price and units sold the number show a decline, but not the catastrophic drop some other parts of the country have seen.

Hamilton County saw a decrease in sales of 14% (3137 to 2697) in the first five months of 2008 compared to the first five months of 2007. In the same time period sale price fell slightly by 11% ($169,617 to $152,360). The challenging part about these numbers, particularly the sale price is that there are so many bank owned homes being sold now at a fraction of their market value. With fewer overall sold properties, the higher volume of bank sales is having a greater impact on the average sale price in Hamilton County.

CNN Money posted a report on the projected home value changes over the next 18 months. The news for all of Ohio is about the same; CNN Money thinks we will lose about 5% of our home value across the state in 2008 and that the market will stabilize with less than 1% value loss in 2009.

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What this mean to the average house hunter is that if you are looking to move up market, this is the time to do it! The numbers support this idea and here is an example:

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You are moving from your $150,000 house to a $250,000 house. That is a $100,000 jump. If you sell for 5% less ($142,500) and buy for 5% less ($237,500) you have a $95,000 jump. With the same houses, you will have a $5,000 savings by moving up in a down market. Further savings come into play when property taxes are assessed at the 5% lower price.

CNN Money published a study today on the future value of homes all over the nation. After looking through the home value tool, the outlook for Cincinnati is fairly similar to that of Ohio.  The state will see about a 5% drop in home values over the course of 2008 with the depreciation slowing to a less than 1% fall in 2009.

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What this means to the average home buyer is that if you are looking to move up market, it is time to take a look and make a move. Moving upmarket in a housing slowdown is a financially rewarding thing if you are in a position to take advantage of the value changes.

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If you are moving from a $150,000 home to a $250,000 that is a $100,000 jump. If both homes sell for 5% less due to the market you are moving from a $142,500 home to a $237,500 home in a $95,000 jump. Same homes in question. $5,000 savings. Moreover the new house property tax will be assessed at the 5%  lower sale price.

If you watch the news to often you hear the consistent drone that home prices are down! The real estate market is in the tank! Well that may be true in some areas but not all. The fact is that in select Cincinnati neighborhoods the average SOLD price is up 20% or more including parts of Amberley, Indian Hill, and Mariemont. The area around Symmes Township and Dry Run / Mt. Carmel have seen better than 9% increase in sold price.

On the other hand some zip codes drop in sold prices up to 25% in the same time period. There could be dozens of reasons for this including tax abatements, inflation, inventory, and normal cyclical changes in neighborhoods. Paramount is that when looking for a home or an investment property your agent has a sense of the overall market trends in that particular area. Nothing is ever a guarantee for valuation but this is the kind of information you should ask for and expect from a real estate professional.

The accuracy of information in this post is dependent on the MLS system for time periods. The analysis included 31 zip codes comparing the previous 6 months with the same six month period one year prior. The analysis is a useful tool for estimating value trends and is not guaranteed to be applicable to all properties in the areas aforementioned.

CNNMoney.com did a study to find the cities where home prices are likely to rise the most - or fall the least - over the next 12 months. The top six cities were: Atlanta, Boston, CINCINNATI, Cleveland, Detroit, and Houston.

The article states that the reason Cincinnati appears on this list is a result of the city’s manufacturing-heavy economy which should benefit from the falling dollar. Commercial building is up, and high-end developments are moving in. Some of these developments include The Banks Project, The Gateway Quarter, and other 3CDC downtown projects are contributing to the local economy. Other notable development in the suburbs include Kenwood Towne Place, Nordstrom that is being constructed at the Kenwood Towne Centre, and the recent addition of IKEA in West Chester.

CNN released an article listing the Top 100 Cities to Live and Launch and Blue Ash, Ohio was ranked #62. With a population of 11,942 people, Blue Ash is the second largest employer second only to the city of Cincinnati. Startups can benefit from programs such as Ohio’s Job Creation Tax Credit, which goes to companies that create 25 new full-time jobs paying at least 150% of the minimum wage. According to the article the population of Blue Ash more than quadruples during the workday because there are so many businesses there. Within Blue Ash 35% of the area is residential, 35% business, and the rest is for public or other use.

The city of Blue Ash boasts alot of businesses unique to Cincinnati, such as Marx Bagels, Benchmark, Cappels, and Servatiis Pastry Shop. Blue Ash has quiet residential neighborhoods with easy access to shopping, and highway access. The Blue Ash Towne Square hosts concerts and other events during the warmer months, and is beautifully decorated over the holiday season. The Blue Ash Recreation center located on Cooper Road has year round activities for people of all ages including swimming facilities and an indoor exercise center for a small fee for residents. There are plenty of nature trails, a private airport, and public golf facilities as well. The city of Blue Ash residents attend Sycamore Community Schools.