‘The Tide Has Turned’ In Greater Cincinnati
The Cincinnati Inquirer has this update on the tri-state housing market. “A dramatic rise in the number of homes for sale in Greater Cincinnati and Northern Kentucky has created opportunities for buyers but will make it tougher for sellers to fetch the prices they want.”
“In Greater Cincinnati, the number of single-family homes and condos for sale on June 30 was 16,349, up 27 percent from June 30, 2005. The figure in Northern Kentucky was 1,313 on June 30, up 10 percent from June 30, 2005, according to the MLS of Greater Cincinnati and Northern Kentucky. The inventory buildup reflects a dramatic shift in home sales from the record-setting pace of 2005, when 34,511 were sold across Greater Cincinnati, Northern Kentucky and Southeast Indiana.”
“Jamie Smith has taken full advantage of the market conditions. He bought a three-bedroom house in April in Colerain Township for $96,000, about $4,000 less than the original asking price of $99,900. ‘By the time the deal actually closed, the sellers cut their price by $7,900 when you figure in all the concessions they made,’ he said.”
“Smith, who moved into his new home in June, has reaped the rewards of a cooling real estate market, in which rising interest rates and other factors have slowed demand and created a housing glut that has put buyers in the driver’s seat. ‘We said it last month, and we’ll say it again, it’s a buyer’s market,’ said Dave Otto, president of the Cincinnati Area Board of Realtors.”
“Homes have begun staying on the market longer, and many sellers have been forced to lower asking prices to accommodate higher mortgage costs, a glaring departure from the buying frenzy that marked the past five years. ‘We all have just gotten a little spoiled by the low interest rates and the market those rates drove,’ said (broker) Tom Sturm in Colerain Township.”
“Sturm said housing market conditions are the toughest he has seen in 13 years.”
“Northern Kentucky couple Erich and Barrie Kuehnle bought a new home for $205,000 in May after the builder knocked $3,000 off the asking price for the four-bedroom home in Independence. Barrie said the builder also threw in new carpeting, lighting fixtures and stainless steel appliances, including a microwave, range and dishwasher.”
“While average prices across the local region continue to climb, the median price fell for the first three months of 2006. The median price of existing homes fell 1.4 percent to $137,700 in Southwest Ohio, Northern Kentucky and Southwest Indiana, compared to the first three months of 2005, the NAR reported in May. It was the first decline since the trade group started tracking prices in 1979.”
Thanks to the reader who sent in this link. Here is another report on a nearby market:
‘”It’s beginning to become somewhat of a buyer’s market,’ said Belleville broker Stan Sieron, who also serves as president of the Illinois Association of Realtors. ‘Buyers have a little bit more room for negotiation.’
‘Average prices in Monroe County were only up 1.1 percent, but significantly higher at $204,927. Prices dropped in Madison County, by 6.5 percent, from $143,503 to $158,188.’
Ben, While anecdotal evidence from non-bubble markets might be amusing, I hardly think that a $3K drop to $200K for a new home has much “Shock & Awe” value. It’s best to concentrate on what happens to the $700K Compton crack houses. I like the CA, AZ,FLA, VA… markets. They will have by far the loudest POPS that will reverberate LOUDLY through the entire economy.
The rest of the non-bubble areas D Learah can use as the poster children of the mythical soft landing.
There are participants on this blog from states other than CA, AZ, FL, VA. Everyone has a stake in this crisis.
And the pops in their bubbles are going to hurt locally.
When a house in upstate NY goes from 80K to 200K in a few short years, it’s a bubble. Even if it’s a 3 story brownstone that looks cheap as heck to somebody from NYC or San Francisco.
A bubble is a bubble is a bubble.
“It’s best to concentrate on what happens to the $700K Compton crack houses. I like the CA, AZ,FLA, VA… markets.”
I respectfully disagree. The broadest possible sweep gives us the most accurate picture of what economically lies ahead.
Pittsburgh has hardly enjoyed the price appreciation of most markets, but inventory is inching up. Today I drove through the Mt. Lebanon section (a fairly pricey area) and had to laugh at the number of “for sale” signs. A bubble here? I dunno. But what I do know is that homes here ain’t sellin’ so good.
I want to know as much as I can about as many markets in the U.S. as possible.
That thinking is what has continued a late run up in prices in Chicago. “Our prices aren’t as high as California so there’s no bubble here.” Prices are relative.
Full advantage? Wait until next year.
“Jamie Smith has taken full advantage of the market conditions. He bought a three-bedroom house in April in Colerain Township for $96,000, about $4,000 less than the original asking price of $99,900. ‘By the time the deal actually closed, the sellers cut their price by $7,900 when you figure in all the concessions they made,’ he said.”
Yeah, I wonder what the POS sold for in 2004? 60K maybe?
Next month’s article:
“Bearnanke has taken full advantage of market conditions, he bought a three-bedroom house for $90,000, about $6,000 less than the previous owner bought the house”
Any guesses about the next, next month’s article? haha
“By the time the deal actually closed, the sellers cut their price by $7,900 when you figure in all the concessions they made”
I hope you guys get the analogy:
I don’t know about all of you, but a attractive, yet desparate girl, somehow isn’t so attractive anymore. I get that gut feeling…something is wrong.
Northern Kentucky home prices will never fall, because everyone wants to live there…
Comparing the prices to California is pretty astounding.
Didn’t you know ?
1000 people a day are moving to Kentucky.
Its different in Kentucky.
I think it’s 1500.
‘a glaring departure from the buying frenzy that marked the past five years. ‘We all have just gotten a little spoiled by the low interest rates and the market those rates drove,’ said (broker) Tom Sturm in Colerain Township.’
Hopefully some locals can let us know just how big a ‘buying frenzy’ the area has seen.
Can a bubble burst in a place that never had a bubble to begin with? In some ways, this has little to do with what is generally discussed on this blog.
Maybe it wasn’t a bubble in the Cincinnati, but that doesn’t mean that the drying up of credit won’t impact prices there too. Mortgage markets, moreso than the houses themselves, are national. The credit markets will tend to have more effect in markets that that had housing bubbles. But nearly every house transaction is, at least in part, financed by credit, and so, therefore, every house price has at least in part been affected by the mortgage finance bubble. Even in markets far removed from the insanity of the coasts there will be ripples in pricing as the credit markets adjust to the new market conditions.
My pet theory (Warning: based on no data whasoever) is that in an environment where you have the lowest interest rates in 40 years and extremely lax lending standards, any place that DIDN’T see double-digit price increases was in effect suffering from a hidden market DEvaluation in housing. Now that rates are rising and the bloom is off the housing rose, these places will see problems too, even though they didn’t see the big run-up in prices.
I’m waiting to see how my little theory tests out, but news like this makes me think I’m on to something. (And makes me doubt very much what my local realtor told me just yesterday - “There’s no bubble here! OUR economy is great and everyone wants to live…” oh well, you know all the rest.)
I agree that the loose money supply probaly impacted prices everywhere to some extent. However, the price gains in places like San Diego, Pheonix, Las Vegaas, etc. were fueled to a large degree by the speculative mania.
So while I agree that all parts of the country will be impacted by tightening credit, I still have to believe that it will be worse were speculation drove prices up to absurd levels.
Here in the middle of nowhere in the midwest, a friend told me his realtor buddies are starting to whisper amongst each other about the big problem — houses aren’t selling and their commissions are disappearing. I have been surprised how many people from the coasts I have met since moving here 8 months ago — and all of them, except me, immediately purchased real estate. Maybe the downturn means people aren’t moving in from out-of-state anymore and it’s just the locals buying now.
Where I live is a tiny town (4,000 people) in the middle of nowhere. Yet recently transplanted Californians are all over the place (I’m one of them). I can say with great confidence that there is nothing special here (although it’s OK) so this migration must be happening (or have happened) all over the midwest.
It has TONS to do with this blog. It shows that this is a nationwide problem and that no area is immune to the coming “correction”.
Nationwide? Sorry but the problem is INTERNATIONAL. It is a worldwide problem. You would be surprised how it also crazy in Europe. The words Completely Out of Control comes to mind.
A $600,000 home price isn’t what makes it a bubble. I highly doubt that penthouse condos on Central Park West will ever approach that value at even the very bottom. Rather it’s the valuation of the home relative to the income it produces that makes defines a bubble. Take two homes one selling for $50,000 (same price as three years ago) that might rent for $200/mo (down from say $500 two years ago) and anther selling for $500,000 that rents for $6500/mo (both quadrupling in the last 4 years). I doubt many sane people would say that the second home is overpriced relative to the first even thought the price is higher and has risen dramatically.
There is a bubble everywhere. It’s all relative. There is a bubble in Omaha, Nebraska, Rapid City, South Dakota and Dothan, Alabama. Although houses don’t cost $900K there like they do in California, they are still overly appreciated in the past few years relative to wages, affordability and historical values, driven in large part by bubble refugees who think things look “cheap” (a very arrogant and thoughtless view). Somehow, this message needs to get through.
The reason that ther’s a bubble in Dothan, Al is that Robert Trent Jones’s great golf course is there. Check it out. Live on the fairway. hehehehehehe
I live in the Cincy area and deal a lot with developers in my line of work. I can tell you I have some doubts about the housing numbers that are being reported. With that said, new home construction has almost come to a halt. I have been driving through several neighborhoods in the northern suburbs (high growth area) and can tell you that their is a lot of vacant inventory that the builders are sitting on. I have even seen some homes were the builders have just walked away from the project. Example: Some homes have been left with parts of the exteriors unfinished, driveways never layed, and weeds growing all around. (This is in some very high end neighborhoods) I have also seen basements and foundations finished and then just left. Their are builders folding and talk of more to come. While this market has not had the same run up as Florida or Arizona, their still has been a good price increase and a lot of buyers using I/O and ARMs to get in. And this is the building season for this area. OUCH!!!
what do you do? I selling gps tracking and am not looking foward to 07. Not musc w builders ,but service contractors seem to have forgotten the 90’s and are up to thier necks
Long time reader (9+ months), first time poster.
I also live in the Cincinnati area (Warren county, North of Cincy). I was unaware of any frenzy going on in the area as a whole, but my county has been booming like crazy. The county just approved developers for 1000+ houses near me, with another 1000 slated for future approval. In another part of the county, 2500 homes just got approval but buildout is expected to take 30 years. I have noticed that previously approved building developments are not proceeding very fast, with just one or two under construction at any given time.
That said, I just bought a house 3 months ago, my parents closed on one yesterday, my previous neighbors closed on one 5 months ago. Before you tell me I bought at the top. I will say that the house I bought was on the market for 20+ months and was reduced from $350k to $265. It is an 1873 farm house (2800 sq ft) on 3.5 acres, and I plan to live here 20+ years raising the kids. Of course, I went with a 30 yr fixed with 20% down.
i find your comments on builders walking away from projects in Cincinnatti fascinating. I am a bubble follower living in CT and would love to see a picture of that if possible
I remember in the early 90’s in the Palmdale/Lancaster (CA) area that a builder walked away from a half completed project, later on it was torched for a Hollywood movie scene. That same area is making a few more “Movie Set Locations” as I type!
I live north of Cincinnati and lots of houses for sale and lots of them sitting. On the more “rural” roads you’ll see a row of houses with For Sale signs that say ‘No Money Down”. These houses sit on usually several acres.
A neighbor/friend has decided to build on a property farther out - To much building going on here for them…. I told my wife they pick the wrong time to move, should have done it last spring. House has been up for 2 months only one insane offer. Two other houses on the same street, still sitting - 224K and 189K. Neighbor has dropped from 180k to 179k – I think there will be a little more bleeding before the end! A house two houses down from them went up for sale - 4 total on one small side street. I sold in like a week for 209K! It’s nice house with a nice setup. That’s put a damper on the other 3 who have been sitting for 2+ months….
My friend has a bridge loan, not sure what is going to happen when the new house is finished and he has not sold. He acts like he has up to nine months to not make payments on his existing house. I’m sure the bank is not giving them the money for free; won’t they have to pay up the interest, or have it taken from the equity in the current house or tack on the new house?? I just don’t see the bank giving them 9 months of free rent like they think they are getting. If that were true, I would bridge loan and move every 9 months!
“The median price of existing homes fell 1.4 percent to $137,700 in Southwest Ohio, Northern Kentucky and Southwest Indiana, compared to the first three months of 2005, the NAR reported in May.”
With each emerging tidbit of local anecdotal evidence, I become increasingly convinced that we will soon see the first nationwide home price declines since the Great Depression (1930s). The price runup beyond fundamental support levels has penetrated each local metropolitan real estate market across the US this time to a degree not seen in past cycles.
I am a redevelopment specialist and planner in the area.
tia
maybe I’m a pessimist ,but in 94-97 if you asked a service contractor about builders they had fresh scars- now they’re back in BIG TIME
I am relocating to a “non bubble area” or what I would consider one. I am looking to buy. My thoughts are %50 off a $100,000 is not like
%50 off $500,000 so I am willing to take the dive.
You are absolutely correct, I could easily fork $50k over from savings where $250k would bankrupt me.
if you pay 120-140 times rent , it’s cool, just bargain hard
These prices seem sooooo cheap. I guess this is why everyone on TV reality shows have palaces compared to us: “You are trashy enough to call the Supernanny; how did you afford that 5000 square foot granite Wonderland?”
I am not sure if anybody posted it before me or not,but the crooks are getting exposed again - as we predicted here.
” The government also issued a sharp downward revision for its May figures, to show new home sales of 1.166 million rather than 1.234 million initially estimated.”
http://www.breitbart.com/news/2006/07/27/060727164635.phgh289u.html
Another long-time lurker emerging from the woodwork–found this blog because I fell in love with Vancouver while on vacation and thought about moving there (that thought went right out the window–the Vancouver bubble is super-scary).
I am from the other end of Ohio (Kent, pop. 40,000 on a good day, home of the infamous Kent State University), and even up here in my distinctly non-bubbly market (many people here work in Akron or the eastern suburbs of Cleveland), I am noticing more For Sale signs than usual, DOM are creeping up, the house around the corner for sale has had two price reductions, and the new small subdivision going in around the corner (32 houses in three phases) has come to a standstill. They have built 8 houses since breaking ground two years ago. Four were occupied at some point, but two of those have since sprouted For Sale signs (both on market for at least three months now AFAIK). If anyone wants some pictures, let me know.
My point is, even as you gawk and laugh at our ridiculously low housing prices (I bought my three-bedroom ranch on a quarter-acre lot in 2001 for a whopping 110K), the bubble IS affecting things, even out here in Nowheresville.
The relevant measure is always to compare housing prices to median income. I mean, you can get a house in less-scenic parts of Wyoming for way way under $100k, but good luck finding a job of any kind. $10 per hour there is big money.
Good point. I don’t think folks in high wage states understand just how low the pay is in much of the country. Also, if any locals could post what rents are in these areas it would be appreciated.
First, sorry for the double post. I can answer the question about rents (this is a college town, so there are tons of rentals here). For a reasonably nice 2 BR, you will probably pay about $700. If you are willing to do the “squeeze 5 people in a house and violate housing codes” thing, you can get a single room for $250 or so.
According to 2003 Census data (at http://quickfacts.census.gov/qfd/states/39/39133.html), median income in Portage County (where Kent is located) was $44,533, and the 2000 median home value was $123,000 (same source). So median home values were only roughly 2.76 times median income. (OK, the data come from different years, but overall, that doesn’t look too bad as far as affordability goes.)
The problem with Ohio is that it is shedding high-paying manufacturing jobs like nobody’s business–during the ‘04 election cycle I heard the number 200,000 bandied about a lot. This is one reason why the bubble never really got going in the first place.
Rent in SW MO for a half of brand new duplex with a very large yard (no fence though) 2 bd, 2 full bath, about 900 sq ft = $550. 3bd is $625. 2 bd 1 ba small apt in a medium sized apt building is $250/mo as is a very small house (house comes with garage and laundry room). The biggest employer in town pays $16/hr to their top workers — that is consered GREAT pay (except for the doctors that work in the local veterans home/rehab clinic).
$16/hour is good pay here in northern Arizona, too.
By comparison, anybody who makes under about $30k per year here in the DC area is usually considered ‘working poor’, though I don’t think the govt. sees it that way. That’s probably an accurate assessment, considering that montly rent for a 2br apt. will almost never run you less than $1000 unless you live in the ghetto or 50 mi. out of town.
I live in Arlington County, which actually provides homebuyer assistance for families who make as much as $100k per year, depending on # of children. But since you can’t (or at least couldn’t) buy an efficiency condo in Arlington for under $200k, that’s probably necessary, as well. Rents are quite steep in Arlington, as well, though many parts of the county have subway access within walking distance and other ‘urban’-style amenities.
Hmm, my post got eaten, so please forgive me if this appears twice…
Another long-time lurker emerging from the woodwork—found this blog after I fell in love with Vancouver while on vacation and thought about moving there. The Vancouver Housing Blog killed that idea REEEEAL quick.
I am from the other end of Ohio: Kent, pop. 40,000 on a good day, home to the infamous Kent State University. Most people work in Akron or the eastern Cleveland suburbs. I can tell you, even here in this distinctly un-bubbly market (I bought my 3BR ranch on a quarter-acre in 2001 for 110K), the bubble is having an impact. There are more houses up for sale than usual and they are definitely moving more slowly than usual. A house around the corner has already had two price reductions. There is a small new development going in up the hill (32 houses in three phases). They have built a whopping 9 houses since they broke ground over two years ago. Five of those houses had someone move in, but two of those are back on the market, which means 4 of 9 were never occupied and 6 of 9 are currently for sale (and these are not terribly expensive houses, either, maybe 200-225K). I can take pictures if anyone wants to see them. Just down the street from this new development, a pretty 1800 sq ft ranch with a wrap-around porch built in ’01 is asking 230K. The house has been up for almost a month now and there has been nothing going on with it. There is no way they will get that price for that house in this market. I am waiting for the first of several price reductions to come rolling down the pike on it.
So, my point is, even as you gawk and laugh at our ridiculously low housing prices, we are feeling the impact of the bubble even out here in Nowheresville.
It’s just above this one, at 13:53
We said it last month, and we’ll say it again, it’s a buyer’s market,’ said Dave Otto, president of the Cincinnati Area Board of Realtors.”
It’s never not a buyer’s market according to NAR.
purchased a home in cincinnati 12yrs ago for 42k …
it’s been on the market since feb 1 and just this week got it’s first offer….
42k
mmm… price-hilly goodness