The local housing market continues to be red hot and experts said it likely will stay so throughout 2021, if not longer.
Home sales are up 10% from last year, according to January 2021 data from the Dayton Area Board of Realtors. The home sale prices are up about 25%. The median sale price — $162,500 — is about 14% higher than it was this time last year.
Sharon Geier, board president, said she anticipates more activity from spring until the end of summer as the COVID vaccine becomes more readily available and buyers become more optimistic.
“The market has the pendulum effect. I don’t know when it will swing back, but I don’t see it topping out any time soon,” Geier said.
It’s a possibility that home prices will continue to rise in 2021, Geier said.
“But I don’t have a crystal ball,” she said.
Two driving factors for this hot market are low interest rates and fewer homes on the market than there are buyers, Geier said.
The average cost of a 30-year fixed-rate mortgage rose to 3.18% from the prior week’s 3.05%, according to Bankrate.com’s national survey of lenders. Last month rates set a record low of 2.93%.
Jeff Haymond, dean of Cedarville’s School of Business Administration, said he expects the Federal Reserve to keep interest rates low as long as they can, which in turn will keep the housing market “red hot.”
“I don’t see this changing for several years,” Haymond said. “It’s a hot market. It is a seller’s market. I believe it’s going to be a seller’s market for a while. I do see higher home prices maybe cooling the market a bit, but from red hot to only medium hot.”
Interest rates are lower than they’ve been in the past five years, he said, and rates are low on a broader, historical scale, too.
“Every rise in interest rates drives the housing market. Most people when they’re buying a house, they’re looking at housing affordability. (A low interest rate) enables purchases of much higher value houses,” he said.
Austin Castro, a realtor at Coldwell Banker, said he doesn’t see an end in sight to the way homes have been selling.
“There is so much demand that is pent up,” he said. “We have clients that have been looking for over a year. We don’t see this high demand environment changing for a while.”
Consumers are more educated than ever because they have tools at their fingertips like the internet, Castro said, so they steer clear of homes that are “grossly overpriced.”
“The market is efficient,” Castro said. “While it is a ‘seller’s market,’ and properties are selling faster than ever, things are not totally out of balance. Buyers are able to make informed decisions. Prices are ticking up due to lack of supply, but the data buyers have keeps prices from going out of whack.”
More people are spending time at home, Geier said, so they remodel instead of selling their house. Some people might also be reluctant to sell right now, she said, because they don’t want to have strangers walk around and potentially bring the coronavirus into their home.
“It’s been kind of a perfect storm of things,” Geier said. “It is great for the sellers, but the buyers have had the challenges.”
Credit: JIM NOELKER
Credit: JIM NOELKER
Some people might also be hesitant to put their home up for sale because they don’t want to go through the hassle of quickly finding a home after theirs sells, Geier said.
“We still have not caught up in the aftermath of the financial crisis,” Haymond said. “When the housing bubble burst previously, housing construction went down fairly sharply. We produce in the subsequent years a lot less new housing stock than you should have had.”
Haymond said eventually, high prices will draw out more housing supply.
More millennials than ever are looking for homes right now. Geier said they’re looking for houses in all price ranges. In her personal business experience, Geier said she is also seeing less activity from baby boomers downsizing.
Most of the homes that are on the market right now are middle priced homes, Geier said. Homes are selling all over the Dayton-area, but Springboro and Centerville continue to be popular areas. Downtown Dayton has seen a “renaissance,” Castro said, and homes in the South Park and Oregon District area are also popular.
Geier advised those looking to buy a home to come in with a loan pre-approval.
“As a buyer, doing your homework is more important now than ever,” Castro said.
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