Ohio Real Estate Projections for 2021
Unless you are a real life psychic, predicting anything can be tricky. Add in trying to predict behaviors during a global pandemic the likes of which no one has seen before and it becomes a complicated matter. Even with unemployment at an all time high and the unexpected and still unknown complications of the corona virus the housing remained strong and reached new highs throughout 2020 and it is believed that in 2021 it will continue to grow in Ohio and throughout the country.
What happened in 2020?
What a loaded question. What didn’t happen in 2020 may be a shorter list, but as far as real estate despite all going on there has been a continued acceleration in the housing market. In Ohio nearly 900,000 people lost their jobs during COVID-19. Since then half of those jobs have recovered and more jobs in health, transportation, utilities, et. have been added as well. Even these numbers have not dampened the fire of the 2020 Ohio real estate market. It is a seller’s market with very high demand and low inventory. The mortgage rates are also at record lows dropping below 3% for the first time in 50 years. Ohio home values have gone up 7.7% in the last year with a current median home value of $162,933. Existing home sales and new home sales have both been on the rise and have reached the highest levels in the last decade.
Reasons for projected growth in 2021
Remote Work - With the number of employees working from home dramatically increasing it has added to the demand. It has also changed the “wish list” of projected home buyers to include more comforts. People want to buy homes with views, more land for their children, and homes with home offices. People want to buy homes that are in less densely populated areas of their city or in a different state.
People are Leaving the Cities - The pandemic is causing people to leave cities at record rates. Ohio is a place where people have been moving in order to get out of these bigger cities.
The Job Market is Growing - Ohio has one of the biggest economies in the country. In 2020, Ohio was ranked #9 as America’s top states for business. It has one of the highest rated infrastructures and a low cost of doing business. A growing job market and economy is always a good sign for a healthy housing market.
Mortgage Rates Will Remain Low - Mortgage rates are at an all time low in 2020 and the prediction is they are to remain low. This makes home buying more affordable. This will also cause a positive trend with millennials and gen z’s becoming homeowners.
Possible Negative influences
High Unemployment Rate - In 2020 unemployment skyrocketed during the COVID-19 pandemic. There were government resources available that have since fizzled out.
Delinquency Rate - When the unemployment rate was surging, the delinquency rates on auto loans, credit card loans, and mortgages were also surging. A higher delinquency rate makes banks more hesitant to lend as losses mount
Tighter Lending Standards - Banks learned their lessons from the 2008-2009 financial crisis and have tightened lending standards since then. However, banks are further tightening lending standards because they also are unsure when the economy will recover.
Overall Projection
The upshot is that the spread of COVID has brought on a cascade of events that point to a continued acceleration in the housing market. People are moving out of large cities and looking for homes in the suburbs and smaller cities. The divorce rate has accelerated which means that more people will be competing for available homes. Both new and existing home sales have reached 14-year highs, and the low level of interest rates will continue to propel demand. In Ohio it is predicted that the home values will increase 8% in 2021. The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise.
2020 has been quite the year, full of unknowns and fear, and a whole lot of time at home. There have been a lot of losses this year, but one of the big winners has been the housing market, which saw home sales and prices hit decade-plus highs following decade lows in the span of just a few months. We expect housing’s winning streak to continue in 2021 as seasonal trends normalize and some of the frenzied momentum fades.
