The fierce competition among buyers for a dwindling supply of homes for sale isn't likely to end anytime soon, according to Cincinnati real estate analysts.
But a few things are clear – activity is robust, and current levels of consumer confidence, low interest rates and adequate mortgage availability could put 2016 as the best year for sales in a decade.
Real estate groups in Southwest Ohio, Northern Kentucky and Southeastern Indiana each reported gains in sales through the first six months of 2016 compared to a year ago.
Nationally, existing homes are selling at the fastest pace since 2007. Last month, first-time home buyers accounted for 33 percent of sales and half of properties sold last month spent 34 days or less on the market. Both are signs confirming a robust appetite for purchasing homes and that the pool of homebuyers may be expanding.
Rents are also continuing to rise in Greater Cincinnati, reducing the spread between the cost of homeownership and renting. The average rent was $844 a month in 2015, up nearly 5 percent from the previous year, according to CBRE's Cincinnati office.
"It's going to be a very good year," said Joe King, president of Coldwell Banker West Shell. "While I was expecting a healthy year because our fourth quarter was very strong, I'm very pleased with it. We're experiencing a good market."
The Cincinnati Area Board of Realtors reported sales rose almost 7 percent and the median selling price rose more than 6 percent to $150,000. The median selling price in Northern Kentucky rose more than 7 percent to $149,900 while sales are up more than 11 percent, the Northern Kentucky Association of Realtors said. Sales are up 8 percent from a year ago in Dearborn, Ohio and Franklin counties in Southeast Indiana, according to the Indiana Association of Realtors.
Real estate agents, however, said sales activity would be more robust if more homes were on the market. As of June 30, the inventory of homes for sale was down nearly 22 percent – or about 2,000 fewer homes – from a year ago, according to the Cincinnati real estate group.
“Our current inventory of homes for sale will remain low until new construction increases and consumers wishing to sell not wait to put their home on the market until they find their new home," said Patti Stehlin, president of the Cincinnati Area Board of Realtors.
The lack of inventory has been a source of frustration among prospective buyers for a while said Jim Simpson, president of the Northern Kentucky Association of Realtors. When a property comes on the market, he said sellers obtaining multiple offers quickly is the norm.
Some owners and investors are also still waiting for values to return to their properties – especially in the lower-priced and higher-priced sales categories, according to Jeanette Schneider, senior vice president of Re/Max of Southern Ohio.
The tight supply has fueled a rise in home prices, but Cincinnati still is keeping its hallmark as a relatively affordable market. Nationally, the median selling price for homes in June was $247,700. Prices in Cincinnati remain below peak levels seen in the mid-2000s. Among markets that haven't returned to peak prices, real estate tech firm HomeUnion named Cincinnati on its top 10 list of metropolitan areas expected to see price appreciation on single-family homes.
"I see this as sustainable," Simpson said. "I think our prices are going to continue to increase at a normal, good level."
Home building activity has happened at a slower pace in Greater Cincinnati as the real estate market has rebounded. Compared to a year ago, permits for single-family home construction are up more than 18 percent in 2016 in Butler, Clermont, Hamilton, and Warren counties. Despite the improvement, Dan Dressman, executive director of the Home Builders Association of Greater Cincinnati, said shortages of buildable lots and skilled construction workers has slowed down the process.
"It’s taking longer to get from the starting point to the finish line," Dressman said.
The average rate on a 30-year fixed rate mortgage was 3.48 percent, according to results from a Freddie Mac survey released July 28. One year earlier, the average rate was 3.98 percent.
Originally published at http://www.cincinnati.com/story/money/2016/07/28/home-sales-so-far-2016-high-competition-low-inventory/87292876/