I was looking at the local MLS statistics for June 2009 recently. What I found was kind of astounding on one level. And on another level it demonstrates that the Obama tax incentives for first-time homebuyers are incredibly effective.
Before I get into the meat of the story, let me offer some background. Cincinnati Ohio’s real estate market has always been pretty stable. Average home price increase year-over-year has always been around 3%. Some neighborhoods a bit more, some a bit less. So we haven’t ever seen the kind of increases seen in places like California, Florida, Phoenix or Las Vegas. So what is it that has me writing today? Our Cincinnati MLS statistics reveal that in June of 2008, the average sold home price was around $190,000. In June 2009 – twelve months later – the average sold home price was just on the high side of $130,000.
What? Did home values in Cincinnati decline by 35% in 8 months? No! What’s happening is that the Obama tax incentives are doing exactly what they’re intended to do – stimulate home buying on the part of the first-time buyer.
Those first-time homebuyers aren’t buying $200,000 homes. They’re buying homes in the $100K-$150K range. And because the number of homes bought by first time homebuyers is so much greater than buyers purchasing trade-up homes, the effect on average sold home price is pretty astounding. And why wouldn’t people buy a home now? There has never been a time when homes were so affordable.
First, they can get an $8,000 tax credit. Second, they can take advantage of some incredibly low interest rates on 30 year financing – in the 5% to 6% range currently. And third, home prices have declined around here recently for the first time since we’ve been keeping track. Largely as a result of economic fallout – in the form of short sales and foreclosure homes.
And this won’t last. The echo boomer generation is coming of the prime age for buying homes. And their numbers – way greater than the baby boom generation – will fuel an unprecedented demand for housing – way greater than the baby boomers. Obviously, such demand will have to push prices higher.
So I’m recommending to anyone who’s thinking to buy a Cincinnati home – that they get serious this year. Find a great Cincinnati Realtor, get on the Cincinnati MLS, and find the home of their dreams for less money than they ever will again! There’s no substitute for the Cincinnati MLS for the buyer who’s serious about buying a Cincinnati home.