Ohio Governor John Kasich made affordable housing in his state a priority long before his presidential bid. He is taking new measures to follow through on this promise. The Ohio Housing Finance Agency recently announced that it will be providing $3 million in funding to affordable housing programs in the central part of the state. This initiative will be helpful for Columbus and other communities with limited housing for low income citizens. Read more
The Central Ohio housing market may be growing at a record pace, but there is still a lack of affordable housing options for low income families. Policymakers have discussed some of the ways that they can address these problems. One of their options is by replacing some of the abandoned houses that are falling apart around the state.
New Report Shows Need to Replace Abandoned Housing
Policy Matters Ohio recently published a report that showed the problems with the state housing market. The report said that many foreclosed properties have fallen into disarray. These properties have been held by lenders since the foreclosure crisis took hold nearly a decade ago. They probably won’t be sold anytime soon, since they are in dire need of repair.
Policy Matters Ohio said that these properties should be replaced. Their presence could threaten prices of other properties, which could derail the state’s otherwise stellar performing housing market.
The question is what to do with the land if these buildings are torn down. Some groups recommend replacing these buildings with units that would house low income families, since there is a great need for that.
Replacing housing units would also benefit the state taxpayers. The number of residents receiving assistance for public housing has been elevated in recent years. In fact, a recent report from the U.S. Housing and Urban Development Inspector General showed that nearly 400 families are receiving housing aid that they aren’t eligible for. Some of these families are generating six figure household incomes, which means that they are taking up spaces that are needed by people without the resources. Local housing officials are given discretion over enforcing these policies, but many of them have been reluctant to take action.
While some of these families are actually making high incomes, the shortage of available housing units in many parts of the state is a driving factor. The state recognizes the need to increase the supply of housing for middle and working class families, but has yet to release any substantive proposals to address the issue. The state legislature is currently discussing a new bill (HB 134) that would expedite the process of acquiring, destroying and transferring properties, but some details may still need to be ironed out.
Many policymakers will likely be swayed by the recent report and may consider trying to purchase foreclosed units to develop new affordable housing programs.
The Ohio housing market is one of the strongest in the country. According to the National Association of Realtors (NAR), housing sales this spring were the highest in ten years. The market is currently one of the strongest in the country, but price increases are still lagging the national average.
Stronger job growth has significantly boosted demand for housing units across Ohio. Lawrence Yun, the national economist for the NAR, said that the revitalized housing market is a symptom of a more robust economy.
“Buyers have come back in force, leading to the strongest past two months in sales since early 2007,” said Yun. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.”
Other temporary factors could be driving growth as well. Yun pointed out that mortgage rates have been increasingly slightly in recent months, which may have spurred some buyers to start looking early while they can still find affordable loans. The trend could reverse if the Federal Reserve decides to raise rates further, but Yun and other experts are confident that growth will remain stable for the duration of the year.
Will Prices Increase With Demand?
Three weeks after releasing its first report, the NAR stated that housing prices in Central Ohio have risen slower than the national average. Analysts stated that median the housing price in the second quarter was $172,000, which was a 5.8% increase from the prior year. Throughout the rest of the country, housing prices increased by 8.2% over the same time interval. The median housing price is only slightly over $225,000, which is far lower than the national average. Housing prices are even fairly low in Columbus and other large Central Ohio cities.
Jill Rudler, a representative of Keller Williams Realty, said that the modest price increases were still encouraging, since they outpaced previous years. “Our gains are normally 3 or 4 percent a year, so 5 percent is huge,” she acknowledged. “We also haven’t seen the losses that other markets have seen over the years.”
Experts are still unclear about the long-term direction of housing prices. Rising demand could be a leading indicator that prices will increase in the coming months. However, it’s also possible that demand could stagnate, but Realtors remain optimistic about the long-term direction of the Ohio housing market.
The National Association of Realtors (NAR) has ranked the Central Ohio housing market as one of the 20 strongest in the country. A number of factors could be driving the market, but job growth appears to be the most significant. However, some economists fear that the job growth engine could be sputtering, which raises some concerns about the long-term direction of the housing market.
Job Growth Concerns Overstated
A recent report from PNC Financial Services Group Inc., found that the job growth is expected to slow slightly in 2015. They reported that the number of jobs in Central Ohio increased 2.3% in 2014, but expect that figure to drop to 2.2% this year.
The figure is not very significant, but still raised some concerns among economists and real estate agents. Some fear that deceleration in the job market is a leading indicator that the economy is losing steam, which would threaten the direction of the housing market.
However, experts from PNC doubt that there is anything to be worried about. Mekael Teshome, an economist with PNC, responded to this question with stark optimism. “No, not at all,” Teshome said. “I think one of Columbus’ advantages is it’s not a boom-and-bust economy. Settling into a normal rate of growth is not entirely bad, especially with the unemployment rate fairly low. It’s really actually a good thing – we’re at cruising speed.”
Teshome acknowledged that job growth declined slightly in the third quarter. However, he said that slower growth was expected. He also pointed out that job creation was actually stronger than PNC predicted earlier this year.
“Columbus will remain among the growth leaders in the Midwest, even as the region’s economy settles into its long-term growth rate,” read the PNC report, which bodes well for the direction of the housing market as well.
Housing Market Likely to Continue to Rise
The housing market could face a setback if job growth decline too much, but a fallout in the job market doesn’t appear to be on the horizon. The NAR believes that housing demand will continue to rise for the foreseeable future and nothing in the PNC report indicates otherwise.
While job growth may decline slightly over the next few months, it’s likely to still surpass the national average. Housing demand will probably continue to rise if it continues to outperform neighboring states, especially if more people relocate to Ohio for better career prospects.
The Ohio housing market has been growing rapidly over the last few years. Demand for condos in the northern part of the state has been especially strong. According to Michelle Jarboe McFee, condo sales increased 11.6% between January and June, but could rise even higher before the end of the year.
Northern Ohio Housing Market Continues to Accelerate
The housing market throughout most of Ohio has been stronger in 2015 than any other year since the beginning of the recession. However, the market has been particularly strong in Northern Ohio. Data from the Northern Ohio Regional Multiple Listing Service shows that sales have risen five times faster in the northern region than the rest of the state.
The report may be surprising after recent data detailed the strength of the Central Ohio housing market. Realtor.com recently reported that Columbus has the fifteenth strongest housing market in the country. However, while the market for homes in Central Ohio is particularly strong, the market appears to be growing much faster in the northern parts of the state.
Economists are confident that the economy will continue to grow through 2015. They believe that the stronger job market and increased business activity in Ohio will lead to a stronger housing market before the end of the year.
Condo Market is Particularly Resilient
The demand for condominiums and single family homes is poised to grow even faster than demand for other units in 2015. There are probably several factors that are affecting demand for condos and other smaller properties in the area:
- A growing number of millennials are choosing not to have children or are waiting longer before starting families.
- The strong job market appears to be drawing recent college graduates from other states to Ohio.
- Many families chose to downsize during the recession and have become more adjusted to living minimalist lifestyles. They may prefer living in smaller homes.
- Debt remains a concern for many Ohio homeowners. According to a recent report, a growing number of Dayton homeowners are underwater with their mortgages. These families may also want to live in smaller homes to save money.
Demand for all forms of housing is expected to continue to rise throughout the rest of the year. The market should prove especially strong as the job market and other sectors of the economy grow. However, the market for condos in Northern Ohio is one of the most hottest in the state.
The housing market in Central Ohio was stagnant for several years after the recession. However, recent reports indicate that the market is starting to gain traction. The Columbus REALTORS® Multiple Listing Service (MLS) showed that the number of new homes and condos on the market increased 15.2% between March and April and 7.4% year-over-year. Many experts are confident that the market is going to continue rising for the foreseeable future.
Housing Experts Surprised by Sudden Turnaround
The Central Ohio housing market didn’t fare well after the recession. Part of the reason may have beendue to the fact that the state unemployment rate was higher than the national average for several years. However, recent data from the Bureau of Labor Statistics shows that the unemployment rate in the state is now on par with the rest of the country. This could be one of the factors that is driving the recent housing recovery.
Regardless of the driving factors behind the sudden uptick in housing sales, housing experts throughout the state are highly encouraged by the recent developments. Kathy Shiflet, President of Columbus REALTORS®, is among the optimistic experts.
“Central Ohio sellers have gotten the message that it’s truly a great time to put your home on the market, which was made apparent by the significant number of new homes listed in April,” Shiflet stated on her company’s website. “It’s clear the central Ohio housing market is really beginning to heat up!”
Both housing prices and sales have clearly risen. If job creation and other stimulus efforts are continued, then the trend will probably be sustainable for the near future.
Recovery Benefits Sellers Over Buyers
While the housing recovery is encouraging overall, sellers are ultimately the ones benefiting from it. The average home price rose 4.4% from the previous month, which limits opportunities for prospective buyers that were seeking a bargain.
Many real estate professionals report that the recovery has led to bidding wars between buyers, which could create frustrations for people that are trying to find a new home. According to the Columbus Dispatch¸ the bidding wars are most concentrated in Central Ohio cities such as Upper Arlington and Clintonville.
Ken Wightman, an agent for Berkshire Hathaway, acknowledged that sellers and their agents are ultimately the beneficiaries of the new trend. “When we put a property on the market now, we’ll get multiple bids — that’s automatic,” he said.
Sellers realize that they are the ones holding the cards in the current market. They are giving buyers a deadline to give their best offer.