Columbus Real Estate Market: What amazes me/encourages me.

1. Very little sign of distress. No foreclosures. Everyone has equity.
2. Record low inventory with no real inventory catalyst. Prices don’t fall when supply is low. Existing owners have low fixed rates and will continue to sit.
3. There is a ton of equity out there.
4. Fundamental supply and demand is intact. We aren’t building enough homes, this can’t be easily changed, and people need to live somewhere.
5. The security in knowing if rates dropped tomorrow hundreds of new buyers would walk into the market. The demand is there and will continue to be, the affordability is not. The market doesn’t need 3% rates to go gangbusters, the market could be very healthy and appreciating at 6% rates, just need to get back there…

The Market: What concerns me:

1. The commercial real estate market has some real issues. We all know “office” is screwed but its more than that. There are tons of “commercial” properties that were financed on 3-5 year adjustable rate mortgages that will be adjusting from 3% to 8.5% (all at the same time) during the next 2 years. The irony is many of these are fundamentally sound properties, yet these properties will no longer be able to afford their “debt service” or be able to refinance. There will be foreclosures, workouts, and a few fire sales. There is a ton of capital waiting to step in and buy these properties which will create a floor under the market to some extent. The concern is if this mess bleeds into the otherwise sound residential housing market if bank balance sheets suffer. Wth most residential mortgages backed by Fannie/Freddie/HUD, not the banks themselves, I would like to think this isn’t likely.
2. Negative headlines impact on buyer psychology. Isreal. Politics. Stock market. Fed. Bond market. Politics/Elections. NAR/DOJ Realtor lawsuit. Ukraine. Inverted yield curve. What else can go wrong?
3. High Interest Rates/Low Volume, decimating the mortgage industry and many real estate pros. Doesn’t really effect home prices but it’s sad to see it impact so many hard working professionals. Refinances non existant, purchases way down.
4. Frankly, we have too many “low value” “non-professional agents” and we are due for a cleansing. This needed culling doesn’t make the record low volume of transactions any less painful for all and will remain tough for the next year or two. I personally would love to see higher barriers to entry. In many ways the real estate model of today is broken: National Assoc. of Realtors, Ohio Assoc. of Realtors, State of Ohio, the Mortgage Bankers Assoc., and all of the largest real estate brokers in the nation (all the adults in the room) are financially incentivized by a larger head count of licensed agents, NOT by quality, professionalism, and production of the average agent/broker, which is what the consumer deserves.
5. Is the fed’s inflation target of 2% actually reachable? And will they stick to that metric? At the same time the Fed is raising rates the govt is injecting trillions in stimulus programs into the economy stoking inflation (Ironically the Inflation Reduction Act). The KPI’s that play into the inflation equation are very sticky, thus making the case of higher rates for longer a real possiblity.Get my monthly thoughts on the Columbus real estate market, unsubsribe at anytime!Drop your email!#columbusrealestate #columbusrealtor#columbusrealestateagent #columbusohio