First-time homebuyer? Here’s why it’s so hard to buy now in Cincinnati
Low inventory has driven up prices and competition is fierce when purchasing a home. Buying a home can be exciting and nerve-wracking at the same time, especially for a first-time homebuyer. The learning curve can be steep, but most of the issues can be mapped out and anticipated with the assisitance of a realtor.
A shrinking pool of homes for sale across the country and in the Cincinnati area is pushing up prices ”“ exacerbating an already existing affordability gap for many buyers.
According to the most recent report from housing data tracker, ATTOM Data Solutions, sales to buyers with Federal Housing Administration (FHA) loans ”“ typically first-time home buyers with low down payments”“ fell nearly 11 percent in the Cincinnati area in the second quarter, compared to the same period a year ago.
Even if they can afford it, would-be home buyers don’t have much to choose from these days.
The Cincinnati area has about a 2.1 month supply of homes for sale, or about a third of the inventory needed to create a balance of supply and demand in the market, according to the latest report from the Cincinnati Area Board of Realtors.
Experts say the dearth of listings has aggressively driven up prices as prospective buyers compete for available properties, pushing many buyers at the lower end of the market to the sidelines.
“I see it every single day,” said Realtor Donna Deaton of ReMax Victory in West Chester, which has agents throughout the Cincinnati area. “I’ve been out with a first-time home buyer almost every single morning looking at whatever new comes on the market. Basically, we get beat out on our bids because he’s on a budget and can only go so far over where he’s at.”
The average sales price in Cincinnati was up for the 13th consecutive month in June to $222,216, up about 5 percent from a year earlier.
Sales were up, too, last month, by a little more than 1 percent, as the market continues to rebound from a sharp pullback in April when home sales fell 10.29 during peak selling season.
The sales slowdown in April may have been an early sign that prices are beginning to restrict market activity.
But even those who are well-positioned financially often miss out on buying opportunities because they’re not fully prepared to make an offer in such a fast-moving market, Deaton said. The average number of days a Cincinnati home stays on the market has fallen to 29 from 39 just a year ago, according to a monthly housing report from RE/MAX brokerages.
“As a listing agent, I always advise my clients that if they don’t have a pre-approval letter (from a mortgage lender), we don’t even need to look at the property because there are likely three or four buyers who do have pre-approval letters, and that’s going to be a much stronger offer,” Deaton said.
While extremely low inventories have put a significant strain buyers in Cincinnati’s housing market, the long-term trend has been a boon for sellers.
Nationally, the home sellers reaped an average return of 26 percent on the previous purchase price of the home – the highest average home seller return since before the Great Recession began in December 2007.
But the spike in home prices and profits has not resulted in the rapid turnover seen in previous seller’s markets. Instead, an increasing number of homeowners today have decided to stay put, resting on the hard earned equity they’ve been fighting to recover since the housing market collapsed.
According to ATTOM, the average number of years a homeowner has stayed in their home was about six years in the second quarter, up nearly three years since the before the recession began.
Without those homes on the market, the situation for prospective home buyers is even bleaker.
The obvious solution, experts say, is for builders to build more new homes at a faster rate.
But that’s not likely to happen in the foreseeable future because of another supply-and-demand issue, according to Issi Romem, chief economist at BuildZoom, a San Francisco company that helps homeowners find contractors for renovation and construction.
“It’s just hard to find enough construction workers today to build more,” Romem said. “The economy has lost a lot of young workers, and the construction industry is aging much faster than other industries. There are far fewer construction workers available today than there were before the housing boom, which hurts the push to build more.”Return to Blog