Columbus real estate market grinds through downturn
Real Estate Market Report
By Gilbert Mohtes-Chan, Monday, August 29, 2011.The Columbus, Ohio, metro area saw pent-up consumer demand fuel summertime housing sales in July. Home sales climbed 23.3 percent year-over-year to 1,865 properties sold, outpacing the statewide gain of 17.8 percent. Pending sales surged nearly 50 percent from July 2010.
With fewer available homes on the market, Ohio's state capital and largest region remains a buyer's market. The number of homes on the market declined 18.6 percent to 15,702 units. That represents a 9.6-month supply, a drop from 10.3 months the previous year.
This report highlights real estate market statistics and trends in the Columbus metro area and includes a chart with detailed market data and commentary from local real estate professionals.
Overview
The median sales price of a home in the Columbus metro area in July rose 5.9 percent compared to the same month last year, to $141,359, according to Columbus Board of Realtors. Sales jumped 23.3 percent year-over-year in July.
Real estate experts attribute the midyear boost to buyers shrugging off the economic uncertainly across the region and nation and taking advantage of low interest rates and the lowest home prices in two years. With fewer homes on the market than in the past, Columbus is experiencing a buyer's market.
Foreclosure activity remains a factor in the market, with distressed property sales representing more than a third of all sales.
CBR reported home sales totaled 1,865 in July, compared to 1,513 during the same period in 2010. Pending sales, or those under contract, climbed 49.7 percent year-over-year to 2,553. The average sales price inched up 1.3 percent to $170,238.
Statewide, the average sales price increased 3.1 percent to $140,903 in July, according to the Ohio Association of Realtors. Through the first seven months of the year Columbus boasted the state's highest average sales price at $157,889.
There were 15,702 homes on the active market in Columbus, down 18.6 percent from July 2010. The average number of days on the market rose 11 percent to 93 days from a year ago.
"We've seen a marked increase in activity this summer," said Rick Benjamin, president of the Columbus Board of Realtors. "There are pockets where the market is very solid. Our core city has done well in some areas."
While July recorded a year-over-year increase in housing price, home values to date continue to be weighed down by distressed properties. The board reported the year-to-date median sales price stood at $129,900, off 3.8 percent from the same time last year.
Other indicators reinforce this trend. The Federal Housing Finance Agency's Housing Price Index reported first-quarter prices in the Columbus region fell 3.14 percent, compared to a 2.94 percent drop statewide and 2.49 percent decline nationally. In the past year, Columbus home prices have dipped 2.24 percent from the same three-month period in 2010.
By year-end, the region's home values are predicted to decline 2.8 percent, according to the Fiserv Case-Shiller Indexes released in May. Home prices nationally are expected to fall 3 percent.
"The short sales and real estate owned (REO) sales from the banks do have an impact. Lender sales have had a dampening effect (on prices)," Benjamin said.
During the second quarter, the median sales price of a distressed property fell 15.6 percent year over year to $70,000, according to the Realtors board. In comparison, the median sales price for a traditional or nondistressed property rose 3.6 percent to $166,395 from the year-ago quarter.
Distressed property sales accounted for 39 percent of closings during the first half of 2011, compared with 27.4 percent for the same period a year ago. In the second quarter, distressed properties made up 16.2 percent of the inventory but 35.8 percent of sales.
On average, traditional homes sell in about 110 days while distressed properties go in 78 days.
"What this means is that we are selling a lot of ... inventory that's been on the market for quite some time," Benjamin said.
In July, Columbus foreclosure filings fell 52.4 percent year over year, with 1 in 575 housing units receiving notices, according to RealtyTrac. That compares to a 34.6 percent drop in foreclosure filings nationally and a 38.1 decrease in Ohio, where 1 in 608 units received notices statewide.
Ohio ranked ninth among states in foreclosure activity in July and Columbus ranked 68th among major U.S. metro areas.
"We have had zero success in selling bank-owned properties. There is not real great value in bank-owed properties," said Joe Armeni, broker-owner of Re/Max City Center in Columbus.
Since peaking in 2005, Columbus has seen home sales decline each year, tumbling a total of 28.4 percent to 19,676 in 2010, according to CBR statistics. That was the lowest number of transactions in nearly a decade.
During that same period, the average sales price fell 10.7 percent to $158,893. On the plus side, the decline was less severe during the recession because "the lack of any significant bubble growth earlier in the decade," according to a May regional economic report by PNC Financial Services Group.
PNC economists said the region's housing market "has fallen into a second round of mild declines, alongside the national trend. The labor market damage that could be wrought by state and local government budget cuts will also keep demand from restoring strong price growth trends anytime soon."
PNC forecasts a 1.2 percent decline in home prices this year and a 1.9 percent increase in 2012.
"The market is soft. The only thing holding people back is they are afraid of the economy," Armeni said. "It's a buyer's market."
Columbus weathered the recession better than other Midwest areas because of its diverse economy and less reliance on manufacturing. The region features major financial companies such as JP Morgan Chase and Nationwide Insurance, as well as a major research institution, Ohio State University, which is one of the largest university campuses in the nation.
RelocateAmerica recently named Columbus, Ohio's fastest-growing city, as one of the best 100 cities to move to in America.
"We have a diverse economy. We're the only major city in Ohio experiencing population growth. We typically don't experience the wide (economic) fluctuations," Benjamin said.
"Columbus' economy stands out, particularly in the Midwest, as having a broad array of strengths and very few weaknesses," PNC reported.
Armeni agrees. "It has been the only gem in Ohio in terms of growth. Columbus will probably be one of the first to turn in Ohio because of the stability in the economy."
Market Data
| Columbus, Ohio, Metro Area | |
| Population (2010 estimate) | 1,836,536 |
| Population growth (2000-10) | +13.9% |
| Total closed sales (2010) | 19,676 |
| % change closed sales (2009-10) | -2.8% |
| % change closed sales (July 2011 vs. July 2010) | +23.3% |
| Sales per person | 1 sale per 93 people |
| Median sales price (July 2011) | $141,359 |
| % change median sales price (July 2011 vs. July 2010) | +5.9% |
| Foreclosure activity rate (July 2011) | 1 in 575 units |
| % of sales distressed (January 2010-June 2010) | +27.4% |
| % homes affordable to median-income households | 86.2% |
| % unemployment (June 2011, not seasonally adjusted) | 8.2 percent% |
| Walk Score | 55 |
| Rent-vs.-buy ratio | 13 |
Sources: U.S. Bureau of Labor Statistics, Metrolist Inc., Columbus Board of Realtors, Trulia, RealtyTrac, Walk Score, National Association of Home Builders/Wells Fargo, U.S. Census Bureau.
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