Good day Ohioans and happy 2022! It's officially a new year, which means more fun news including a new strain of COVID, record-inflation, and midterm elections. But all that craziness aside, there are plenty of reasons to be optimistic. After all, 2021 was the greatest year in Ohio real estate history. Let's review.
Low home inventory was the theme of the past year as buyers raced to put in their best offer in an attempt to outbid and outmaneuver the competition. This was particularly prevalent in certain suburban communities, which experienced unprecedented demand (you know who I'm talking about Hilliard, Worthington, and Westerville, just to name a few).
But an interesting nuance to the low inventory debacle is that "low" is a relative term. Compared to previous years, we actually had plenty of listings, however, the number of buyers outstripped the supply by a longshot.
According to Sue Van Woerkom, 2022 President of Columbus Realtors, “The number of homes listed for sale last year was almost 11 percent higher than in 2020...We actually had more listings in 2021 than in any year since 2010, when the country was recovering from the stock market and housing crash of 2008".
This resulted in the strongest seller's market Ohio has seen in recorded history. In Central Ohio alone, over 36,000 homes were sold for an average of $32,000 more than the previous year, a 12% annual increase. Prices per square foot actually increased by even more, defying the common trope that people are moving to larger homes. While that may have been true at one time, increasing prices are likely forcing people to buy smaller homes than they would otherwise. Homes also sold for an average of 2.2% above asking price and in just 16 days. For comparison, the average home in 2020 sold below asking price in an average of 27 days.
Not too shabby.
So can 2022 do us one better? We shall see. The Fed has already started raising interest rates, which is going to have an impact on mortgages. Unfortunately, this hurts both buyers and sellers. As interest rates rise, so does your monthly payment, which means buyers can't afford as much, which means (all things being equal) home prices fall.
All that said, I don't expect rates to come anywhere close to pre-2008 levels. If anything, a 30-year fixed conventional mortgage will slowly creep back up towards 4%, on par to where rates were 5 years ago when we all raced to refinance. Little did we know at the time that rates would continue dropping, thus making the once-in-a-lifetime bargains we cashed in on in 2016 look like highway robbery just a few years later. But let's try to keep some historical perspective here.
Of course, there will be naysayers who claim the bubble is about to burst. But short of another worldwide pandemic or Russian cyber-attack that takes down the internet, I don't expect any major changes in the housing market this year. Ohio is still growing, the job market remains strong, and employers are relocating to Ohio everyday. In fact, Intel just announced they plan to build a $20 billion chip factory (possibly the largest in the world) in Licking County of all places. So despite perceived chaos going on all around us, my outlook is neutral. To play on the old military adage, SNAFU, I think we're in a state of SAFUN. If you're not familiar with the acronym, just Google it, and until next time, stay safe and stay warm. Cheers.