Ohio housing market begins to ‘plateau’ but demand puts pressure on limited apartment rentals
The demand for houses in Ohio is starting to level off, with a dip in sales and a smaller increase in the average price, but experts say there are still major challenges in the state’s housing market that is already impacting other issues for people trying to find a place to live.
Ohio REALTORS, the state’s trade association for the real estate industry, issued a report that said the average price of a home in July hit $273,954. That is an 8.4% increase compared to the average price in July 2021. The number of homes sold last month dropped by 10.4% from the same month last year.
John Mangas, Ohio REALTORS 2022 president, said the conditions are a sign that the housing market is starting to plateau, but added that it is still very much a seller’s market.
“A more balanced market is where there's sort of more of a balance between a buyer's market and a seller's market. So, if we look at, for instance, 2017 or 2018, there would have been roughly four to five times the number of homes on the market for sale that we're seeing today statewide,” said Mangas.
The increase in interest rates has also been identified as a factor in the slow down in demand.
Rob Vogt, partner with Vogt Strategic Insights, does research and analysis on the housing market. He said the interest rate increase, rising home prices, and cost of materials to build new homes, is all culminating into a huge pressure on the apartment market.
“I've never seen this kind of demand for multifamily apartments. And that has a direct reflection on the single-family home market where we have not been able to build enough single-family homes to meet the demand of these moderate-income households,” Vogt said.
Vogt said one way to relieve the pressure on the housing market and to make it more affordable is for suburban neighborhoods to “embrace” higher-density housing — fitting more units on less land.
However, Vogt also acknowledges the pushback local government leaders could receive from existing homeowners who could potentially oppose the development of more affordable housing in their neighborhoods.
“City officials are in a really tough spot, trying to satisfy who their constituents are and also to provide enough housing that we are clearly going to need over the next 10 to 15 years,” said Vogt.
Mangas said there are positive elements within the housing market to also consider, such as the state’s low unemployment rate and economic growth.
He also countered the idea that a possible recession would impact the market — unlike in 2008 — because of the new criteria and regulations lawmakers have put on loans. He said there are a lot of factors that are “boding well for home ownership in Ohio.”