Buyers and sellers alike are gearing up for real estate’s busiest time of the year even as tulips push up from flower beds and trees give serious thought to leafing out. This year, though, as buyers check that they really are ready to purchase a home and start perusing listings, they have a little extra ace in the hole as they prepare to embark on this next adventure: increased buying power.
In January 2019, home prices settled down a bit, household income increased, and mortgage rates dropped. These three things together spell increased buying power, and according to First American Financial Services, buyers are looking at a gain of $8,600 compared to the same time last year. That nearly $10,000 is no small change, and while you won’t find that amount magically appearing in your bank account, it does mean that your dollar goes that much further when purchasing a new home. These three came together to create a perfect storm for buyer’s just in time for real estate’s hottest season.
Three Things That Increased Home Buying Power
Nationally, household income appears to be on the rise as employment rates and wages increased by 3.3-percent. This alone, according to First American, added $13,000 to home buying power. Mortgage rates are also dropping from 4.64- to 4.46-percent in January. “That means a home buyer with a 5-percent down payment and a mortgage rate of 4.46-percent saw their house-buying power increase from $365,600 to $373,100 in January just from the lower rates,” writes First American.*
*(At the time of this writing, mortgage rates for a 30-year fixed mortgage rate averaged 4.28-percent for the week ending March 21, 2019.)
The third item to impact home buying power is what is called real home prices. A real value is one adjusted for inflation. (A nominal value, for comparison, is the actual value unadjusted for inflation price at a given time.) Real values help economists make comparisons with similar items, i.e. homes, cars, loaves of bread, etc., across a period of time. The difference reveals the effects of inflation and gives economists and regular people an idea of how these sometimes abstract seeming numbers affect everyday lives. In this case, real home prices mean that the prices from a given time (January 2018 and January 2019) are adjusted to reflect the same interest rate and compared. According to First American’s Real Home Price Index (RHPI), real home prices fell in January 2019 when compared to January 2018.
The result? Buyers in January 2019 have $8,600 more to put towards a home than they did in January 2018.
Why Increased Buying Power Matters in Columbus, Ohio
For buyers across the nation, this additional buying power is a boon, but for buyers warming up for the house hunt this spring in Columbus, Ohio, it is a particular win.
Increased home buying power gives buyers a foot in the door in Columbus’ relatively tight market because it improves affordability. Even though Columbus, Ohio ranks high in affordability for Millennials (those ranging in age from 24 to 44), homes – from high-end to fixer-uppers – move quickly here. For first time buyers in particular, this extra cash may allow them and their families to finally make the shift from renting to owning their own home.
How Increased Buying Power Helps Sellers
This perfect storm is also something of a boon for sellers or those thinking about putting their home on the market. That increased buying power makes it easier to make a move to something a little larger at last or shift to a nifty condo now that the kids are out of the house. Whichever side of the home buying equation you find yourself on, this spring looks to be auspicious for new beginnings.
What Makes the Columbus, Ohio Housing Market Strong
There are many factors that make the Columbus, Ohio home market a good investment both in terms of appreciation and equity. Here’s an overview of what is going on in our city and makes it unique for the region.
Columbus, Ohio is one of the of the nation’s fastest growing cities. It was the only large, northern city to grow more than 10-percent between 2010 and 2017. (Most of the rest are located in the southern and western parts of the United States.) People are drawn to Columbus, Ohio for a few different reasons. It is the state capital and home to the Ohio State University. Both are leading employers and give the city a cultural flair and diversity that makes it attractive for university graduates and those looking for a smaller community with lots to offer. The educated workforce pouring out of OSU and hoping to stay finds affordable rent and a bevy of large employers in healthcare, technology, and other fields. A number of state and local policies are supportive of the entrepreneur as well, which lets the economy continue to thrive and attracts new businesses from out of state.
What keeps people here and also attracts them is the high quality of life Columbus, Ohio offers its residents. Ranked in the top forty of U.S. News and Annual Report list of best places to live, Columbus is full of great food, craft beer, music, art, theater, museums, award-winning libraries, bicycle friendly roads, public transportation, walkable streets, and plenty of family friendly activities, too. Great schools, for the littlest residents among us to high schoolers, are undeniable attractors, too, with long-term benefits for the community as a whole. A population whose median age is 35.7 helps fuel the creative energy that keeps things fresh, moving, and developing.
Whether you are planning on buying or selling a home this spring, increased buying power is going to help you make the transition to the place you want to be. Learn more about how to use that increased buying power to your advantage by contacting us!