Feb 22, 2013

Columbus Ohio Housing Recovery. Does this mean your home is worth more?

Watching a recording of Gary Keller's State of the Company speech at this year's Family Reunion convention in Dallas Texas. February 2013...

Home prices as shown on the graph are fascinating to see in this format. Columbus Ohio Housing Recovery? Does this mean your home is worth more?

When I hear from a home seller who bought a home in 2005 or 2006 with a no down payment loan or low down payment loan - I already know that my conversation will be different than if I was speaking with a home seller who purchased a long time ago.

How do you tell someone that they got caught in the troubled times. Logic would say to stay put and don't sell until your home value is up to where it was when you bought it. There will always be exceptions at both ends of this thinking, but realistically - the home you purchase later will cost more too.
  • Life circumstances will also dictate when someone moves. A job transfer or family issue will sometimes override any financial issues.
  • Home sellers need to work closely with a Realtor and look at all of the numbers for not just the home sale, but for the home purchase.
  • Personally I would rather make payments on a house that I WANT to be in rather than the one I know I will eventually sell.
If you can't sell for what you think you want now, it's ok because the one you are buying will increase in value. If it's a "move up" purchase, the home value can rise more quickly in the next home.

The graph is a photo of a slide show presented by Gary Keller. It is so obvious that those few years of a visible bump in home sale prices was what got us in trouble. Some home owners unfortunately borrowed that ghost equity.

Even if we don't go back to a 4% appreciation, a lower appreciation rate will still get us back on track eventually.

When we bought our first home in Columbus, Ohio. we knew that we could calculate a 4% increase in value for each year we lived in the home.

Here are the numbers...
Our First Home:

  • Purchase in 1985 for $45,900
  • 4% increase for 8 years would be a value of a little over $60,000 ( house was in contract in less than 2 weeks)
  • We actually sold the house 8 1/2 years after purchasing for $61,000.

Our second home that we purchased in 1993 shows this value:

  • Purchased for $107,000 in 1993
  • Sold it 4 years later for $121,000
If the appreciation rate was 4%, we should have been able to get around $125,000 for it. It needed a new roof, furnace and A/C, so I'm sure it would have sold a little bit higher had we replaced those 3 large ticket items. We were not unhappy with our selling price at all. We sold in a matter of weeks.

Our current home was purchased in 1998:

  • July 1998 we purchase our home for $165,000 (It was on the market for a year and need a ton of cosmetic work!) We looked at this house 6 times before making an offer, but I was a Realtor and I could stop in to take a look whenever I needed to see it "one more time." 
  • Homes in our neighborhood of Indian Hills, Columbus, Ohio that are similar to our house (before we added a mother-in-law suite) are selling between 185,000 up to $265,000.
We have lived here for almost 15 years. If we sold our home now (and had not added on to it) I would guess that we could sell for around $215,000 according to the most recent home sale statistics in our neighborhood.

Home sale prices remained steady in this subdivision until about a year or so ago. It was like a delayed reaction to the 2006 market shift. Home prices in 2006 in our neighborhood were higher. Not much, but they were higher. At one time there were 11 active listings. Now there is 1 and it's in contract.

Currently, this area of Northwest Columbus Ohio is having the "problem" of low inventory. Not enough homes for buyers. Multiple shoiwngs on the first day and multiple offers on new listings. THAT is this market!

Home prices will eventually go up because of Supply and Demand. They have a ways to go, but the higher priced homes will appreciate faster than the lower priced homes. The graph shows on average that prices are back to around 2006 levels. A year or so ago, we were seeing prices at the 2001 level.

The #1 Question we get on a daily basis now is "What is my home worth in THIS Market?"
It's tempting to list higher, but it doesn't work. We are seeing homes sit on the market at almost the price that would make a buyer feel compelled to make an offer. Days on market are very telling now. If a home is priced well, it's G-O-N-E.

Offers are more detailed, inspections are more in depth, terms and conditions are specific. Our buyer clients are well prepared. They have to be. Sellers are more prepared - they have to be as well.

My real estate business in Worthington and Northwest Columbus Ohio has required an adjustment to our strategy for selling homes. "Shift" was the word several years ago. Well...it's back. And we welcome it :)

 What are people talking about in your area?