The housing market got some much-needed relief in the fall when mortgage rates began to fall, but that was short-lived. Despite two interest rate cuts by the US Federal Reserve, Mortgage interest rates have risen again and remain stubbornly high.
The turbulence in interest rates has trickled down to individual markets like Cincinnati, where agents say they don’t know what to expect from sale to sale.
“It’s unpredictable,” says Teena Jackson, one Redfin agent in Cincinnati. “I’ve been doing this since 2005 and I tell clients I’ve never seen a market like this, so we have to navigate it together.”
Cincinnati has benefited from the broader resurgence of the Midwest, where major corporations have opened offices to take advantage of the cheaper cost of living compared to coastal areas.
These companies bring in people moving for work, and homebuilders have flocked to the area to provide additional housing on more available land. This has spurred economic growth in southern Ohio and northern Kentucky – and made the housing market competitive.
“We’re such an affordable area compared to a lot of other areas that there’s a lot of relocation happening because we have some big businesses here,” said Donna Deaton of RE/MAX Victory + Affiliates. “We have General Electric, PNG, Amazon. That has really boosted a large part of our turnover.”
Jackson underlines her point about unpredictability by comparing two recent sales. One example was ‘severely’ overpriced and received 28 bids in less than 24 hours, ultimately selling for more than the asking price. But another client of hers had accepted an offer below the asking price on a comparable home.
It is a symptom of a market that is turning away from sellers. According to data from Alto’s research, Inventory for sale increased from 1,864 on a 90-day rolling basis in May to 3,019 today.
A substantial decline in new listings is a contributing factor. On November 1, the number of weekly new listings was 410, but has since dropped to 186, although new listings typically drop in December as the holidays approach.
The downward trend in listings has also pushed the average sales price down from $400,000 on a 90-day rolling basis in June to $350,000 now, which is a 2024 low.
Relatively more homes for sale give buyers more leverage, as evidenced by Altos Research’s Market Action Index score, which dropped from 55 in May to 45 today. Altos considers anything above 30 to be indicative of a seller’s market.
Sandi Wethington, a eXp Real Estate agent, said she recently participated in a transaction where the seller installed a new septic tank and roof to close the deal.
“I don’t know if I’ve seen that many concessions in any transaction in my 35 years, but the man wanted to get it done,” she said. “It’s just become a more common theme.”
While the market will obviously slow down during the holidays, agents in Cincinnati expect buyers and sellers to be active in the new year even if mortgage rates remain high. People who need to move due to a recent “life event” have been waiting for interest rates to drop, but many can no longer do so.
Despite the increase in inventory and the decrease in prices, the number of homes for sale is still significantly lower than normal.
“I still think the market is very healthy, but limited inventory is definitely an issue, and I would say that’s consistent across the board regardless of price,” says Meg Perez of Coldwell Banker Real Estate.
