If you’ve followed my market reports through the summer, you already know that Central Ohio is seeing different market conditions for different price points.
Overall, the Columbus area has had (and continues to have) a Seller’s Market. However, buyers and sellers in the higher price points will likely find conditions more favorable to buyers.
The starter home and trade-up home price points are in a strong sellers market. Inventory of homes in these categories is very low, and homes are flying off the shelves – often with multiple offers and a price far above asking.
Housing Market Mismatch
Meanwhile, there is a mismatch of homes that are for sale, and what most buyers are looking for. There are more homes to choose from in the higher price points, meaning that premium and luxury homes are, on average, taking longer to sell and are selling at or below list price.
This mismatch is also happening on a national level. A National Association of Realtors report found that inventory or existing homes for sale is 6.5% lower than this time last year at a 4.2 month supply. That’s the 27th consecutive month of year over year inventory decreases.
To give you an idea of how our local Central Ohio real estate market compares to the national market, in August 2017 we had a 1.5 month supply.
Trulia has also put out a report on this mismatch. This report found that recent natural disasters have further reduced inventory levels. Trulia’s report found,
Nationally, the mismatch gap has grown as the share of starter and trade-up listings has decreased to 45.8% of all listings from 46.5% a year ago. Meanwhile, searches for starter and trade-up homes has risen to 60.5% from 55.6%.”
The same Trulia report notes that Columbus, Ohio is a market experiencing some of the largest market mismatch increases. The report goes on to point out:
Trade-up homes in [Richmond, Columbus, Ohio, and Grand Rapids, Mich.] were a bit more stable from both a listing and search perspective, but this means that all the listing losses in the starter categories were made up for by proportional gains in the premium category. Similarly, the rise in proportion of searches for starter and trade-up homes has come at the expense of premium homes. so listing availability and search traffic are moving in opposite directions.”
Central Ohio’s Mismatch
When we look at the numbers over the last year, we can easily see the mismatch from the starter home market to the luxury home market.
From the numbers below, we can see that homes priced at $500,000 and up stayed on the market significantly longer. We can also see a clear Buyer’s Market for higher priced homes based on the average Months of Inventory.
YOY Number of
AVG Days On Market
AVG Months Of Inventory
|Under $300k||21.7% Decrease||29.38||1.18|
|$300k – $500k||9.8% Increase||46.08||2.38|
|$500k Plus||3.7% Decrease||85.4||7.14|
Data from the Columbus Board of Realtors
What Does This Mean For You?
What this mismatch means for you depends on whether you’re buying or selling, and which price point you are in.
If you are buying a starter home, be prepared for heavy competition. When you find a home you like, come to the table with a strong, well-informed offer. Have all your financing ducks in a row ahead of time. Don’t be intimidated by multiple offer situations, and don’t be surprised if you end up having to offer over asking price. Most importantly, work with a local real estate expert that will help you get your ideal home, while not making a bad investment and over paying for that home.
If you are moving up, this market may be perfect for you, depending on what price range you’re moving up into. If you’re buying a higher priced home, you may have plenty of options and be able to get a fantastic deal on your next home. Or, you may find your home sells quickly, but you don’t have a lot of options for your next home, so you may have to rent or work out a temporary arrangement.
If you’re selling a premium or luxury home, understand that while Central Ohio is experiencing a Seller’s Market, you’re probably selling a home in a Buyer’s Market because of the mismatch outlined above. Have a candid conversation with a real estate professional about realistic expectations for how long it could take for your home to sell. Make sure you and your agent do everything you can to give your home the best chance to sell such as updating the home, professional staging, professional photography, and fantastic marketing.
Whether you’re buying, selling, or both in any price point, keep in mind that market conditions can even vary by neighborhood, so it’s important to talk with a local Realtor to dial in on how the market is doing in a specific neighborhood.