A number of my discussions with other real estate agents and clients have focused on the state of the Cincinnati Real Estate market after the $8,000 tax credit. The situation is very postive because there are a number of other factors that are supporting a very active residential real estate market in Cincinnati and elsewhere in the nation.
A recent survey by Better Homes and Gardens found a number of factors weighing on the minds of potential buyers concentrated on the current level of affordability in the market. The research shows that nearly two-thirds (63%) believe it is a “buyer’s market,” more than half (54%) feel that mortgage rates are affordable, and 70 percent indicate that there are affordable homes on the market. The reason that buyers are still buying is that they can afford to buy good properties at lower prices with affordable loans.
I believe that it is this overall affordability that will support the residential market through the next year until the overall economy stabilizes and. As the economy heats up and interest rates rise look for the overall housing prices to rise also. Hopefully they will be in tandem with lower unemployment and increases in wages.
In recent weeks major real estate developers have been walking away from properties because like many home owners, they are underwater on their mortgages. Tishman Speyer Properties gave up the 56-building, 11,232-unit Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan, turning the properties over to its creditors after defaulting on some $4.4 billion in debt.
What is frustrating to many home owners is that financial institutions are doing everything that they can to prevent Homeowners from foreclosing, while large developers are simply handing the keys back over to the banks when thier properties become too much of a financial liability.
RealtyTrac continues to track the increasing number of short sales and foreclosure and the problem continues to weigh down the housing market. As the economy slowly recovers it is my hope that the unemployment rate will drop and with it, the number of families facing foreclosures. The Federal Government continues to put pressure on lenders to modify mortgages through the Making Homes Affordable program, and the program is slowly helping to relieve pressure on families that qualify.
The Ohio Association of Realtors features the 2009 home sales in their monthly publication. The below graphic shows a state wide look at sales volumes and price changes in specific regions of the state.
The good news is that here in the Cincinnati market the annual volume has not changed much year over yer. What is concerning is the 8% price reduction year over year. Cincinnati real estate sales increases by 33% in November, which was a surprisingly strong month. That influx is most likely due to the $8,000 first time home buyer tax credit.
With 2010 beginning my expectations and hoped for the local market are a continued stabilization in price, and a slow and steady increase in volume. The tax credit extension should help drive spring sales and as we move into the summer and fall the slowly rebounding economy should help more people feel more confident in purchasing a home.
It is a fact that there were 1,905,723 foreclosure filings – default notices, auction sale notices and bank repossessions in the first six months of 2009. That represents an increase of 9% from the previous six months (July – December 2008) and 15% increase over the first 6 months (January – June) of 2008 according to reporting service RSI media.
Sadly a portion of the foreclosures appearing in recent months are due to the overall economic slowdown and subsequent job loss being experienced in almost every industry. Small local companies cut back staff as the economy slowed and those staff, unable to find new positions, found themselves unable to pay their previously affordable mortgage. he 10 states with the highest foreclosure rates were Nevada, Arizona, Florida, California , Utah, Georgia, Michigan, Illinois, Idaho and Colorado. While the Cincinnati real estate market has seen price and sales volume declines, this is top 10 list I am glad Ohio is not on.
I received some useful information from one of the loan officers I work with, Mike Zipfel from Midwest Mortgage. Home loan interest rates have been on a downward trend for the last few months, however as the economy begins to stabilize, and the stimulus money enters the economy, interest rates are beginning to rise. In the last week, rates have risen above 6% for the first time in recent history.
There are wide economic factors that drive interest rates and a number of economists on a recent NPR program feel that as inflation begins to appear interests rates will rise. A 1% change in interest rates can make a difference in the price range that a buyer afford. Below is a table that shows the impact a 1% interest rate increase can have in the monthly payments on a 30 year mortgage.
With this information in mind we are suggesting that any prospective home buyers who have been considering making a move do so now to take advantage of the affordability of Cincinnati’s current real estate market, the low interest rates, and the $8,000 tax credit for first time home buyers.
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.
