Home prices in Butler and Warren counties have climbed to record highs, finally recovering from the massive hit the market took during the Great Recession.
Patti Stehlin, president of the Cincinnati Area Board of Realtors, said average sales prices in both counties, as well as Cincinnati region, have reached and now exceeded what they were selling for before the Great Recession.
”It’s definitely a seller’s market versus a buyer’s market, and with low inventory that makes it even more a seller’s market because the demand is there,” Stehlin said. “It will continue to be a seller’s market, I believe, until at least next year.”
A national home price index released recently from The Standard & Poor’s CoreLogic Case-Shiller surpassed the peak it set in July 2006. There have been more than four years of steady gains in home prices.
“The new peak set by the (index) will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance,” said David Blitzer, managing director and chairman of the index committee, in a statement.
The average sales prices for Butler County-area homes in October increased to $173,127, a 6-percent gain from the October 2015 average sales price of $163,306. The average sales prices for Warren County-area homes in October increased to $254,275, a 5.8-percent gain from October 2015’s average sale price of $209,900.
The year-to-date average sale price in Butler and Warren counties also have continued to increase. Butler County went from $165,137 to $177,232, a gain of 7.3 percent, while Warren County went from $237,034 for year-to-date 2015 to $241,073 year to date 2016, a gain of 1.7 percent
In the Cincinnati region as a whole, homes sales reported by the CABR reached a sales volume of $423.3 million in October — surging nearly 20 percent compared to the sales volume that occurred during the same month last year. Closings increased by 5.51 percent to 2,184.
Through October, year-to-date sales volume of nearly $4.25 billion eclipsed by 12 percent the year-to-date sales volume for 2015.
“The demand is there,” Stehlin said. “A lot of time they get into multiple offers and the offer may even be above list price in some situations.”
The increase in home prices, however, should flatten out as interest rates rise.
“(The buyer) may not be able to buy a $210,000 home. They’ll have to reduce it to (purchasing a) $200,000 home to be in the range and, therefore, not getting as much house,” Stehlin said.
Jim Abele, CABR’s chief executive officer, said interest rates had started to decline after the last recession and the home sales market saw a glut of foreclosure property and short sales, and consumers were concerned about jobs and security.
“These factors, along with many others, take time to heal and correct themselves,” he said.
As the consumer became more comfortable with their personal situations — and the number of foreclosure and short sale properties declined — people started seeing value in real estate and the region started seeing more and more buyers, he said.
“The inventory of homes declined to the point where any home put on the market, if good quality and priced properly, would sell quickly. Thus, sellers could demand more for their property,” Abele said. “With interest rates remaining at all-time lows, it was the perfect storm for property values to increase to their levels today.”
Tony Jantzen, of Monroe, said he and his wife, Kristi, purchased a new home for their family in the 500 block of Todhunter Road, opting to go from a 2-story home on a quarter acre to a ranch on an acre, an amount of property he said is a rarity in Monroe.
Jantzen said he knew prices were on the rise when he purchased the home but that it was still within the family’s price range. Price was just one of many factors they considered.
He said he is optimistic about selling his current residence, which he said he has increased in value each year since he purchased it six years ago.
“We’re happy with that,” he said. “We haven’t sold it, so we don’t know what we’re going to get, but we priced it fair and we want to sell it quick, so I think it’s good.”
The ongoing recovery in home prices shores up Americans’ household wealth and should provide more homeowners the incentive to sell. The number of homes for sale is low partly because many families have little equity in their homes and would benefit little from a sale. Rising home values help counter that trend.
But other analysts caution that imbalances remain in the housing market.
“Inadequate supply of homes available to buy — especially at the entry-level end of the market — remains a huge problem,” Svenja Gudell, chief economist for real estate data provider Zillow, said.
And after adjusting for inflation, prices remain about 20 percent below their peak, according to Ralph McLaughlin, chief economist at Trulia, a home buying website.
“It’s good news for homeowners,” McLaughlin says, “but not so great news for homebuyers who have seen prices outpace incomes for most of the housing market recovery.”
Since the real estate market began recovering in 2012, prices have grown much faster than Americans’ incomes. That has made it difficult for many would-be buyers, particularly younger Americans, to take advantage of low mortgage rates.
Home prices have increased at a 5.9 percent annual rate, adjusted for inflation, S&P says. Yet Americans’ after-tax incomes have increased just 1.3 percent during that time.
At present, local inventory remain low, interest rates are climbing slowly, there are plenty of buyers in the market and new construction is rebounding slowly, Abele said.
“All the factors appear to be aligning for continued growth in, at least, early 2017,” he said. “2016 is ending up as one of the most productive years ever. It will be interesting to see how 2017 compares.”
Stehlin said a raise of the interest rates will get some buyers off the fence that were thinking about making a change
“I think the inventory will go up the next quarter,” Stehlin said. “It typically does in the spring as well, but I think depending upon the weather, we may see that as early as the end of January or first (part) of February because (people are saying) ‘If I don’t make my move now, I may be paying a higher interest rate.’”