Follow-up to May 29th Blog Entry: Cincinnati & Dayton, Ohio Real Estate Markets - No Bubble to Burst
On May 29th I posted a blog stating the local real estate market in Cincinnati and Dayton, Ohio had not seen the type of slowdown that many other parts of the country were seeing, or at least not to the same extent that other parts of the country were seeing. The following article was posted in the Cincinnati Enquirer newspaper’s online edition:
This article, dated June 22nd, 2007, points out that “equity” in Greater Cincinnati and Northern Kentucky homes grew approximately 20% from 2000 to 2005.
My take on this is that even with a slowdown recently, most homeowners that have owned their homes for more than a year or two would still have some built-in market appreciation as equity if they went to sell their home now, despite the recent slowdown. The caveat to this is that those people would have to be willing to wait a little longer to find a buyer and these value changes assume that the property has been at the very least kept up, if not improved. People read about someone buying a house in 2000 or 1999 for $150,000 and getting $180,000 for it in 2005 need to remember that during that time period the owner may have done some work to it to keep the value on the upward movement… perhaps new carpeting or cabinets, added more storage space by building onto a garage or finishing the basement.
These reports that continually come out only discuss sale prices and do not reflect changes to consumer behavior. 10 to 12 years ago a new house being constructed probably would not be hard-wired for high-speed or wireless Internet connection unless it was a top of the line luxury home. Today, such “modern conveniences” are almost standard unless such tract housing is being built as rental property, and even then some nicer rental units come with these amenities standard. These added features have driven up construction costs along with increased costs of building materials following Hurricane Katrina in 2005 (and the storms that preceded it). With new homes costing more, existing homes in the same area are better able to compete and fetch more money than if construction costs had fallen and people could buy a new home for less than an exisiting home (or more likely pushing existing home prices downward with the decrease in construction costs).
I will continue to post updates on the local real estate market as I find them. One quick note about the picture above: this was taken by me as I was driving south on I-75/I-71 past downtown Cincinnati, Ohio. I was passing the Duke Energy Convention Center, which has a light display on the side spelling out the city name. Considering I took this myself while driving and I was able to get the city name and my face in the picture, I was quite impressed with myself and with how the picture turned out. It adds a nice touch to my blog about Cincinnati too I think!
As always, I welcome your feedback…