Market Crash: To Be or Not to Be?
Will the housing market crash in Cincinnati? It’s a great question. National media is having a hay day in the news reporting nearly every day about an impending housing market crash. Broad sourcing of data, bad comparisons of time, and general freak out hype up fear inducing headlines keep making their way to my screen every day. Clicks are the goal. Not necessarily providing accurate data that correctly represents individual regions and cities. It’s important to note that real estate is hyper local.
Also, year over year trends are not super effective because it’s been a wild couple of years on this earth. Over the past few years, the housing market in the United States has seen significant shifts. There are varying trends observed in different regions of the country. With all that uncertainty… every headline now predicts a housing market crash. So, let’s take a look at some of the trouble with broad comparisons. And, why a housing market crash in Cincinnati is unlikely.
The News and the Role They Play:
First, it’s important to note: The news does not predict. It reports. And the goal of the news is to grab reader attention. It’s also not held accountable to be accurate because it’s written in opinion and uses a lot of worlds like could, may, and possibly. And if you talk to any real estate professional, does not matter where, they will tell you the same thing: Real Estate is local. Comparing the entire US in percentages and trends leads to bad financial advice.
In particular, there has been a marked difference between housing markets on the West Coast and in the Midwest. Here, we’ll examine some of the key housing trends in these regions, and take a closer look at why Cincinnati has been experiencing a strong housing market.
West Coast Housing Trends:
California’s median home price is forecast to decline 8.8 percent to $758,600 in 2023. This is following a projected 5.7 percent increase to $831,460 in 2022. The headline I’m seeing about this reads “Home Prices are plummeting”. That’s true… It is… But there is context here that is not discussed. 2021 interest rates fell to 2%. That’s unheard of. The demand generated by this caused a ruckus and home prices shot up because of that demand. Supply and demand theory is very simple. Sudden shift up followed by a sudden shift down now that interest rates have balanced out… is a way less exciting headline.
So, one of the key factors contributing to the cooling of the West Coast housing market has been a lack of affordability. The high cost of living in cities like San Francisco and Los Angeles has made it difficult for many people to afford to buy homes. Additionally, the high cost of building materials and labor has made new construction more expensive. This further limits the supply of available housing.
Midwest Housing Trends:
In contrast to the West Coast, the Midwest has generally been more affordable in terms of housing prices. One of the key factors contributing to the growth of the Midwest housing market has been a relatively strong economy. Many Midwest cities have seen job growth and economic development. This has helped to attract new residents and increase demand for housing. Additionally, the lower cost of living in these areas has made them attractive to people looking to escape high housing costs in other parts of the country.
It could be that I’m biased, I do love Cincinnati. But how could you not?
Cincinnati’s Strong Housing Market:
One city in the Midwest that has been particularly successful in attracting new residents and growing its housing market is Cincinnati. In recent years, Cincinnati has experienced significant growth in terms of both population and job creation. In the last decade, the city’s population grew by over 4.5%, while its unemployment rate fell in December 2022 to just 3.0%.
One of the key reasons for Cincinnati’s success has been its strong job market. The city is home to a number of major corporations, including Procter & Gamble, Fifth Third Bank, and Kroger. This has helped to drive job growth and economic development. Additionally, Cincinnati’s relatively low cost of living and high quality of life have made it an attractive destination for people looking to relocate.
U.S. Bureau of Labor Statistics
Basically, all of these factors have contributed to Cincinnati’s strong housing market. In 2019, the city saw a 7.5% increase in home prices, which was one of the highest growth rates in the country. Additionally, Cincinnati’s housing market has remained strong even in the face of economic uncertainty.
Wrapping Up:
In conclusion, while the housing market in the United States is complex and ever-changing. There are certain trends that have emerged in different regions of the country. The West Coast has traditionally been known for its high housing costs. The Midwest has been more affordable. Having said all that, no one can predict the future. News is just news, and its opinion is of the writer and based on the data they pull for the article. Recent memory of 2008, and the housing market crash that ensued for several years later… makes for a great click bait. However, it’s leading.
The short story, talk to a local real estate agent. They’ll give you real time data about your city.
Andrea Bodey – Coldwell Banker Realty