Northeast Ohio real estate markets are expected to cool in the new year, experts say, signaling a return to normalcy from the boon in activity that followed the COVID-19 pandemic.

From 2020 through part of last year, a combination of factors created significant opportunities for homebuyers and sellers. This year, those factors are starting to subside.

“We are coming out of this market that is really a once-in-a-lifetime market with the amount of activity and sales and pricing,” said Jose Medina, owner of Keller Williams Legacy Group, a North Canton-based realty group. “It was a time of massive growth, massive opportunity in the real estate market, and now … we've seen that that's returned to pre-pandemic levels.”

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When the U.S. Federal Reserve slashed interest rates during the pandemic to encourage economic activity, people debating whether to purchase a house or property gained an extra incentive to do so, Medina said. Additionally, as the pandemic forced people to work and live differently, their needs for housing changed.

“Maybe their work changed and now they need another bedroom that they can use as an office or they want more space,” Medina said. “(People are) going to invest money where they're spending (their time), which is in their houses.”

Fewer homes were sold in Northeast Ohio last year compared to the previous year, according to the latest statistics, which run from January through November, from the Ohio Realtors. There were 48,730 units sold last year, compared to 52,973 the previous year.

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But the average sales price rose 8% to $231,097. The Ohio Realtors report covers sales from Ashtabula, Belmont, Carroll, Columbiana, Coshocton, Cuyahoga, Geauga, Gernsey, Harrison, Holmes, Jefferson, Lake, Lorain, Mahoning, Medina, Muskingum, Portage, Stark, Summit, Trumbull, Tuscarawas, Washington and Wayne counties.

Northeast Ohio housing market
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Low housing inventory, increased number of buyers created imbalance

Though the pandemic caused some to become interested in purchasing different houses because of their shifting needs, Esta Ryder, broker owner of Ryder Realty Group, in Dalton, said it led others to recognize the value in their existing houses, which kept them off the market to consumers.

“Part of the problem was that sellers weren't selling because where would they go?” Ryder said. “If you're OK in your house and you’re content and your interest rates are 2.5% and there is nothing that you want to move into, there's not a lot of motivation to sell.”

A low inventory of houses for sale with an increased number of people looking for houses to buy created an imbalance between the supply and demand of the housing market. That marked a time of significant competition between homebuyers, Ryder said, with houses garnering multiple offers and bloated sale prices.

The trend of low supply and high demand is expected to continue into 2023, but for different reasons.

Since the pandemic, as inflation and the cost of building materials has risen, builders are becoming less likely to take on the financial risks associated with building houses, Medina said. Additionally, the number of what he calls “opportunity sellers” — those who sell their houses because they can get more money out of it at that time — have diminished as the markets return to pre-pandemic positions.

Currently, Medina said the region is experiencing a “massive shortage” of houses for sale. He referenced data showing that in November 2022, there were 584 houses for sale in Stark County, nearly half the 1,128 houses available for sale in November 2017.

The 375 houses sold in November 2022 in the county slightly outpaced the number sold in November 2017 but slumped in relation to the 456 sold in November 2021.

Medina also said the U.S. is experiencing a record-low number of houses that have been foreclosed, which contributes to the houses on the market.

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Housing prices NE Ohio
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Realtors: Still a good time to buy and sell

Despite the diminished supply of houses for sale and interest rates that are elevated from pandemic-era levels, Ryder said it’s still a good time for people to buy a house if they’re in a place to do so.

“(I want them to) understand that they're buying a house, they're not buying an interest rate,” she said. “If you're buying a house, you can refinance a few years later down the road, but you're still starting to pay for that property, you’re not paying for rent.”

Syndell Gant, a mortgage lender at Park National Bank, echoed Ryder’s belief, writing in an email that factors such as interest rates at their current levels shouldn’t make or break a homebuyer’s decision. Though interest rates play a role in mortgages, they may not be as large of a factor as some may assume.

“People continue to buy homes for lots of reasons — they need to move for work, they want more room for a growing family or they want to stop renting and get into their first home,” Gant wrote in an email. “While it may not be right for everyone, people shouldn’t shy away from the conversation.”

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Glenn Cummings, of North Canton, and his wife recently put their house up for sale.

Cummings, 58, recently retired as an educator from Hoover High School, and he and his wife were traveling to Colorado Springs, Colorado, to show their children a house they had bought. They listed their house the day before they left for their trip, and the next day, they had an offer. They plan to close in mid-January, Cummings said.

The whole process was expedited much more than he thought it would be, Cummings said. He was glad he and his wife were able to take advantage of the end of the hot housing market.

As the market begins to cool and competition begins to decrease slightly from six months ago, Medina encouraged potential homebuyers to take their time when searching for houses. Try to negotiate with the seller, he said.

Although interest rates are higher, prices should deflate a bit due to less competition, so homebuyers are still likely to get a house for a good price.

As for sellers, Medina said the remaining competition driven by high demand will likely allow them to pick and choose from offers should they opt to sell their houses.

“I would say homeowners are sitting on a lot of equity. So, if it makes sense for you to move, you probably have more equity in your house than what you did over the last five years,” he said. “If you're wanting to make a move, it's a great time to do that.”

This article originally appeared on The Repository: Northeast Ohio real estate markets to cool in 2023