If you are planning to buy a Columbus area home, you might be concerned about the rising home prices found throughout Central Ohio. Yet the appreciation in home prices is not any sign of a housing bubble, according to industry economists. Here’s why!
Distressed home inventory continues to fall. At the end of 2015, only 2.15% of Ohio mortgage loans were in some stage of foreclosure. Nationally, mortgage delinquencies have fallen to pre-recession levels. In fact, the Mortgage Bankers Association reports that new delinquencies are standing lower than historic norms.
Meanwhile, the national pace of new construction has been conservative. According to Lawrence Yun, Chief Economist for the National Association of Realtors, new housing units are being built at half the pace of the early 2000’s. In the years prior to the housing peak, builders cranked out 1.9 million housing units each year. But during the past four years, builders only averaged 950,000 new housing units a year.
In Franklin County, only 43 new home construction permits were issued during first half of 2015. During the same period in 2014, 42 new home construction permits were issued.
While tight lending standards have affected homebuilders to some degree, an ongoing skilled labor shortage is a significant industry challenge. Another factor is the high cost and scant availability of undeveloped land.
With the challenges facing home builders, it’s unlikely that the imbalance of home supply and demand will corrected by new construction anytime soon.
Another aspect of our current housing market is the credit quality behind home mortgages. Home buyers of recent years have much more “skin in the game” than buyers did during the housing bubble. Down payments have averaged higher, along with credit scores. Subprime mortgages, once common during the boom, are virtually non-existent today.
These are just a few reasons why our current housing market is not in “bubble” territory. Home prices may be rising quickly in some areas, but this is supply and demand at work. Bubbles, whether occurring in housing or the stock market, happen when speculation drives market activity, artificially inflating values.
Of course, some home sellers do a little speculation of their own, when they price their home for sale! This is why you need an Exclusive Buyer’s Broker to protect your interests, and prevent you from over-paying for a home!
As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Andrew Show
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
