Sales increase may mean housing market recovering

Posted on by Listify Me

11:54 PM Sunday, December 25, 2011

By Chelsey Levingston

Staff Writer

More homes in Greater Cincinnati since July are being sold than last year, but for less.

A high number of foreclosures still on the market, about a third of sales, are generating the extra activity, local Realtors said.

Every month for the past five months, home sales in Greater Cincinnati, including Butler and Warren counties, have been higher than the year before, according to the Ohio Multiple Listing Service Stats Report by Ohio Association of Realtors. Most recently in November, Realtors in Cincinnati reported sales of 1,235 homes, compared to 1,105 the same month a year ago, according to Ohio Association of Realtors.

That’s a good sign of increased activity in the right direction for the local housing market, said Doug Smith, vice president and chief executive officer of Courtney Duff Companies, a Middletown construction and real estate firm.

“It tends to say, number one, prices have stabilized, maybe we’ve reached the bottom. People are ready to move back into the marketplace,” Smith said.

But it took three to four years to hit bottom, he said. The question is how steep that climb back is going to be. He said it could be 12 to 18 months before there’s a significant improvement.

Year-to-date sales are down in Cincinnati 1.3 percent for the same time last year, according to the state Realtors association.

However, at the same time sales have started to improve, in all but one month this year the average sales price of homes sold is down from the same month last year. The average sales price of a house sold in November was $146,905, compared to $147,890 the same month in 2010, according to the Ohio Association of Realtors.

That’s not a statistically significant decline, Smith said.

“It’s showing that it’s a buyer’s market,” he said.

Still, average home sale prices were lower in 2010 than in 2000 in Fairfield, Hanover, Lemon, and Madison townships and Hamilton, Middletown and Trenton, Multiple Listing Service of Greater Cincinnati data show.

One of the reasons prices are down is because the supply of ready-to-move in homes is down, said Gwen Ritchie, 2012 president-elect of Hamilton-Fairfield-Oxford Board of Realtors. The supply is down because banks are holding back inventory to keep prices from dropping too low and other sellers are holding back property until better prices come back, Ritchie said. Buyers are holding back for better properties too, meaning a lot of buyers right now are investors who look for cheaper properties, she said.

“The demand is down, the supply of ready-to-move-in homes is down and lender-involved sales is up,” she said. “The properties that are selling are generally the lower priced properties.”

Approximately 36.4 percent of a total 15,526 home sales through November this year in Greater Cincinnati, excluding Northern Kentucky, were owned by lenders or government or in short sale, according to the Multiple Listing Service of Greater Cincinnati. It’s slightly more than the approximately 31 percent of 16,938 homes sold all of 2010 in the region that were lender-involved, according to the Cincinnati MLS.

Financial institutions have less of a backlog of foreclosures to handle, so they can process applications faster, Smith said.

“Therefore, you’re seeing more activity generated,” he said.

Generally foreclosures and lender-owned homes sell for a lower price, which lowers the average price for the market area, Ritchie said.

“Who knows, we may not be at bottom yet,” she said.

But until foreclosed properties are flushed out of the market and drop to 10 or 15 percent of total sales, the overall market is not going to be healthy, Smith added. Lender-involved properties will continue to be a drag on sales, prices and the overall economy. And the 36.4 percent of lender-involved sales shows the economy is still weak, he said.

AnneMarie Daniel, a Realtor for Comey Shepherd in Liberty Twp., said not all housing markets in Greater Cincinnati have been hit equally by changes in financing and economic times. Liberty Twp., for example, is faring better than other areas, Daniel said.

“It really goes market by market. I think the biggest change is we’re seeing more buyers are willing to explore bank-owned homes than in the past,” Daniel said.

The housing market was overinflated before the recent economic recession and now the market is stabilizing, she said. Foreclosures and lower home prices are both symptoms of the declining market, which is part of the stabilization, she said.

“There are still buyers and sellers out there, that has not changed,” she said.

John Rajendran is one of them. Rajendran owns a computer engineering business with a partner. He and his family recently moved into a new house in the Foxborough subdivision of West Chester Twp. and listed Wednesday their former home in Liberty Twp. for sale.

The family wanted to upgrade to a larger home for almost three years now. His wife’s father lives with them now and he wanted an office for when he works at home. The former house is paid off.

“The builder was offering a lot of discounts for custom build-to-order,” Rajendran said.

He said he’s confident he’ll be able to sell quickly.

“In our neighborhood, everything that’s gone up for sale, I don’t see any signs for sale,” he said.

Contact this reporter at (513) 705-2551 or clevingston@coxohio.com.