Real estate market changes in year
Jan. 14—Inflation and interest rates worked together to completely change the face of the local real estate market during the past year.
As inflation continued to rise in 2021, federal regulators began raising interest rates to cool the rising prices7.
With each rise in interest rates, homes took on a higher price as a long-term investment for each small percentage increase.
A year ago, Ashtabula County realtors were rushing from house to house to try and close deals with many bids above asking prices.
"June was crazy. You dropped everything to go and show a house," said ReMax realtor Charlotte Baldwin and team leader of Charlotte Baldwin and Company.
The overheated housing market was a blessing to the seller, but not so much for everyone else involved in the process, Baldwin said.
She said in the heat of the market buyers were getting 20 bids for a house.
Things started to change in July as the market cooled a bit.
Local realtors said prices aren't coming down, but the amount of people seeking homes has dropped due to the higher interest rates.
The main issue locally continues to be lack of housing stock.
"Our biggest concern right now is inventory," she said.
Ohio housing market specialists indicate the need for homes will last at least last several years, Baldwin said.
The big challenge for buyers is reworking finance numbers with the increased interest factored into the equation.
"Buyers can't afford as much house," she said.
Some are considering smaller houses to make sure payments are comfortable.
Berkshire Hathaway Office Manager Bruce Schlosser said the two-pronged mix of inflation and higher interest rates has definitely affected the market during the last year.
Schlosser said areas with fewer financial resources, such as Ashtabula County, have been especially impacted by the changes but not excessively.
"It is not doom and gloom. We did see an appreciation [in county home prices]," Schlosser said.
He said the 2021 appreciation was 13 percent, but the rate dropped to four percent in 2022.
Schlosser said real estate and long-term stock holdings are still the two major wealth-growing aspects of the economy. He said he expects 2023 to be in the five to six percent appreciation rate in our area.
Baldwin said some financial analysts say seven-percent interest is better than paying rent at 100-percent interest and not gaining anything from it other than a roof over your head.
Schlosser said the industry is much healthier for everyone when demand and supply are closer in line.
Asa Cox, owner of Century 21 ASA Cox Homes, said the market has changed during the last year.
Cox said a United States Department of Agriculture loan program has kept her business busy.
She said business slowed a bit as the year progressed, and interest rates increased, but things are still doing well. She said her company sold more than 800 homes in 2022.
Cox reported a reduction in the massive overpricing of homes, but indicated the $319,000 asking prices for a Madison home escalated to $350,000 in the last couple of weeks.
She said she likes the idea that the market has retreated to something a little bit closer to "normal" so more working people can find homes.
