Is Central Ohio "Bubble-Proof"?

On my "Real" blog, I'm switching formats and going to a WordPress platform and getting away from my more website-like blog.  It's a slow process but while I'm switching I thought I'd post some of my archived postings from months and years past that may be helpful or at least information. This is one of those posts . . . .

I go on about it all the time since I'm often asked about the perceived real estate bubble. Others hear warnings like I heard this morning on the radio -- the price of a Manhattan property has gone done 30% in the last month -- and then they think we must be next here in Central Ohio.

Here is the sum-it-up-quote -- the Columbus housing market would experience an overall price decrease of 5 percent only if mortgage rates rose to more than 17 percent and if 41,000 jobs were lost.

Home depreciation is not in our future.
Here are some quotes from a recent article --

Thanks to the low price of homes and a relatively steady economy, there's no immediate threat of a housing bubble in central Ohio, an industry report states.

"You can't have a bubble if you don't have an inflation,'' said Walter Molony, with the National Association of Realtors. The group released a report to its members this week that downplayed the possibility of home prices crashing in central Ohio. It stated that the Columbus housing market would experience an overall price decrease of 5 percent only if mortgage rates rose to more than 17 percent and if 41,000 jobs were lost. In the industry, a "bubble'' is said to occur when a collection of unreasonable home-price increases don't reflect the true value of the homes.

"Unless the (Federal Reserve) really starts ratcheting up (interest) rates, I don't visualize a bubble -- not in the Midwest,'' McCloud said. "You don't hear about it in Kansas City, St. Louis or Omaha.'' Among the reasons the national board paints a bright picture for central Ohio: "The median existing-home price, $155,900, is 30 percent below the national average. --The median home price increased by less than 1 percent in 2004 and is up 12 percent the past three years. --Central Ohio's ratio of how much people owe on their homes compared to their median income is below the national average. --Job growth is increasing.

--Central Ohio added 54,000 homes in the past five years, but job growth and economic expansion should fill them. "You're a lower-cost metropolitan area to begin with, and you avoid double-digit price increases,'' Molony said. "You have plenty of room to grow, unlike areas on the West Coast or the Northeast, which can go through wide swings'' in pricing.

09-28-2005 archived