Ohio Real Estate Market Trends & Analysis

The Ohio real estate market experienced about as much activity as any other state over the last decade. Affordability, in particular, invited buyers, sellers, and investors to partake in a bustling market with a significant upside. If for nothing else, real estate in Ohio was more affordable than just about every other state. Demand increased in Ohio at a time when affordable housing was growing harder and harder to find. Nonetheless, the resurgence was upended by the pandemic. In the first quarter of 2020, every housing market across the country experienced a setback, and Ohio was no exception.

The Coronavirus threatened to bring an end to nearly a decade's worth of growth in Ohio, but the setback appears to have been relatively short-lived. Heading into the fourth quarter of 2020, the Ohio real estate market looks to have recouped much of the ground it lost to COVID-19, and then some. Year-over-year activity has increased and looks to continue the momentum for the foreseeable future. While the pandemic was certainly unwelcome, it may have been a blessing in disguise for the Ohio housing sector. Today, there appears to be a window that will benefit everyone participating in the market: buyers, sellers, and investors.

The Top Ohio Real Estate Markets

While the best real estate market in Ohio is up for debate, here’s a list of the cities investors may want to pay special considerations to:

• Columbus

• Toledo

Ohio Real Estate Fees & Regulations

Real Estate

Closing Conducted by:	Title Companies, Lenders
Conveyance:	Warranty Deed

Foreclosure Procedure

Primary Foreclosure Method:	Judicial
Process Period:	5 - 7 months
Notice of Sale:	Sheriff
Redemption Period:	Until Confirmation

Taxes

Income Tax:	0.50% - 5.00%
Corporate Tax:	No
Sales Tax:	5.75%
Estate Tax:	No
Inheritance Tax:	No
Median Property Tax:	1.36%
Property Taxes by County:	http://www.tax-rates.org/ohio/property-tax#Counties

Average Transactional Costs

Closing Cost:	$2,392.00
Transfer Fee:	0.4% (0.1% plus 0.3% local)
Origination Fee:	$1,707.00

Ohio Housing Market Overview

• Median Home Value: $161,507

• 1-Year Appreciation Rate: +6.9%

• Median Home Value (1-Year Forecast): +7.4%

• Median Rent Price: $1,100

• Price-To-Rent Ratio: 12.23

• Unemployment Rate: 8.4% (latest estimate by the Bureau Of Labor Statistics)

• Population: 11,689,442 (latest estimate by the U.S. Census Bureau)

• Median Household Income: $52,407 (latest estimate by the U.S. Census Bureau)

• Percentage Of Vacant Homes: 10.87%

• Foreclosure Rate: 1 in every 9,307 (1.0%)

Ohio Median Home Prices

With a median home value of $161,507, real estate in Ohio is relatively affordable (at least when compared to the national average). For some context, the median home value in the United States is $259,906, or approximately 60.9% more than Ohio's median home value. It should be noted, however, that today's values don't tell the whole story. While the median home value in the United States is higher, indicators currently suggest the Ohio real estate may have more momentum at the moment.

In one year (August 2019 to September 2020), Ohio's median home value has increased by 6.9%. The median home value in the United States, on the other hand, increased a more modest 5.8% at the same time. The difference may be due, largely in part, to the state's overall affordability. If for nothing else, the average home in Ohio is more affordable than most of the state's neighbors: Michigan, Indiana, and Pennsylvania. With most markets across the country appreciating for the better part of a decade, there's a good chance more people decided to move to Ohio to escape increasing prices. That said, the influx in demand inevitably leads to higher prices in Ohio, as well.

Today, the most expensive cities in Ohio are (according to NeighborhoodScout):

• The Village of Indian Hill

• New Albany

• Moreland Hills

• Gates Mills

• Bexley

• Mariemont

• Terrace Park

• Marble Cliff

• Upper Arlington

• Powell

There's no doubt about it: Real estate in Ohio has been firing on all cylinders since 2012. In fact, local real estate appears to have been so hot that not even the Coronavirus could keep it down for too long. While there was a brief moment in the second quarter where uncertainty and inactivity had many people questioning the housing sector, real estate was able to recover nicely. Thanks to historically low interest rates and pent-up demand, activity returned with a vengeance, and actually increased year-over-year. However, much like everywhere else, Ohio doesn't have enough inventory to match demand, which will most likely drive prices up even further. In the next year, it's safe to assume prices will increase somewhere in the neighborhood of 7.4%, supported by demand, low interest rates, and growing consumer confidence.

The Ohio real estate market took a small step back in the second quarter thanks to the pandemic. However, the brief setback may have served as a catalyst; one that may help Ohio pace the national recovery.

Ohio Foreclosure Trends & Statistics

According to RealtyTrac, the Ohio real estate market has a moderately high foreclosure rate. With one in every 9,307 homes considered to be distressed, the state's foreclosure rate sits right around 1.0%. To put things into perspective, the national foreclosure rate is roughly 0.7%, with only one in every 13,947 homes in some stage of foreclosure.

Despite being higher than the national average, Ohio has drastically reduced its foreclosure filings in the last year, to the tune of 77.0%. The drastic decline was thanks to improvements in the economy, as evidenced by the drop in pre-foreclosures. Homeowners at risk of filing for foreclosure declined 85.7% year-over-year, and currently makeup just 24.5% of the state's distressed inventory. Bank-owned homes dropped 78.7% year-over-year, and represent 23.9% of Ohio's foreclosure inventory.

It is worth noting, however, that the pandemic has already resulted in an increase in foreclosure filings in the latter part of 2020. From August to September, in particular, foreclosure filings increased 37.0%, according to RealtyTrac. The largest increase in distressed homes was seen at auctions, which currently make up 51.6% of the state's distressed inventory.

Investors looking to capitalize on foreclosures in Ohio will increase their chances of landing a deal if they prioritize local auctions in neighborhoods with the highest distributions of distressed homes, not the least of which include:

• Cuyahoga: 1 in every 3,144 homes is distressed

• Columbiana: 1 in every 3,902 homes is distressed

• Clark 1 in every 4,382 homes is distressed

• Tuscarawas: 1 in every 5,023 homes is distressed

• Madison: 1 in every 5,347 homes is distressed

The extent to which the Coronavirus will cause foreclosures to spike is still unknown, but it's safe to say there will be more across the entire country. While unfortunately, the Ohio real estate investing community may be able to step in and lend a helping hand. Those who line up financing now and get everything in order may be able to simultaneously land their next deal and help a financially-strapped household.

Tax Lien Investing

• Tax Lien or Deed: Tax Lien state
*Sales only held in counties with more than 200,000 in population
• Interest Rate: 18%
*Only for Institutional investors
• Redemption Period: 1 year

Ohio Real Estate Investing

Real estate investors on a national level have done well for themselves over the course of 2020. As recently as the second quarter, in fact, "were sold for a median price of $232,402, with a gross flipping profit of $67,902 above the median investor purchase price of $164,500," according to Attom Data Solutions. "That gross-profit figure was up from $63,000 in the first quarter of 2020 and from $61,900 in the second quarter of last year," said the real estate data company. Some of the largest returns were realized in Youngstown, OH, where profit margins increased 92.0% from the second quarter of 2019 to the second quarter of 2020.

The Ohio real estate market has served investors from across the country well since the last recession came to an end. Case in point: The average home in the Ohio real estate market has appreciated as much as 46.8% since October 2012. Almost anyone who purchased a long-term asset at the time (and is still holding onto it) is most likely the beneficiary of a generous amount of equity. It should be noted, however, that the same appreciation rates that have increased equity have also made flipping profit margins hard to come buy in some of Ohio's biggest cities. The Toledo real estate market, for example, saw a 53.0% decrease in year-over-year returns in the second quarter, according to Attom Data Solutions' latest Home Flipping Report.

Nearly a decade's worth of appreciation has made it hard for investors to find attractive profit margins on rehabs, but there are still plenty of investment opportunities in Ohio. In fact, the new real estate market landscape left behind in the wake of the Coronavirus looks to favor a new investment strategy: rental property investing.

A lot has changed since the pandemic took hold of the Ohio real estate market, but the disruption has opened the door for rental property owners, or those who were looking to become landlords. Specifically, three indicators now look as if they are better than ever for long-term investors in Ohio:

• Historically Low Interest Rates: To stimulate housing activity, interest rates are now lower than ever. At 2.89%, it has never been cheaper to borrow institutional money, which can help offset today's higher prices. Interest rates are so low, in fact, that it's almost hard not to buy a house in Ohio.

• Cash Flow Potential: Savvy investors who take advantage of today's low rates will lower their monthly mortgage obligations. Lower monthly payments will increase cash flow, and make it a lot easier to pay down the mortgage with someone else's money.

• Demand: With a price-to-rent ratio of 12.23, it is more affordable to buy a house in Ohio than to rent one. Consequently, buyers are coming out in droves to participate in the market. However, Ohio doesn't have enough inventory to satiate demand. Even those who want to buy will be relegated to the renter pool, and increase demand for rentals.

Investors are lucky to have several viable exit strategies at their disposal, but none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

Summary

The Ohio real estate market has done really well for itself over the last eight years. In particular, the state's relative affordability has driven activity and catalyzed a hot investing market. Therefore, when the Coronavirus struck, many feared the decade's worth of growth would come to an end. Fortunately, it didn't, and real estate in Ohio may even be better off because of it. Activity has increased year-over-year, despite historic appreciation rates. More importantly, demand remains persistent on the heels of historically low interest rates. All things considered, Ohio may have taken a slight step backward in the second quarter, but the disruption caused by the pandemic seems to have enabled the entire sector to ignite. Now, more than ever seems to be a great time to participate in the Ohio housing market, at least before prices start rising at a faster rate.

Sources:

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https://www.zillow.com/oh/home-values/
https://www.zillow.com/home-values/
https://www.zillow.com/in/home-values/
https://www.zillow.com/pa/home-values/
https://www.zillow.com/mi/home-values/
https://www.realtytrac.com/statsandtrends/oh/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/oh/
https://www.realtytrac.com/statsandtrends/foreclosuretrends/
https://www.realtytrac.com/statsandtrends/
https://www.neighborhoodscout.com/oh
https://www.bls.gov/eag/eag.oh.htm
http://www.freddiemac.com/pmms/pmms30.html
https://www.attomdata.com/news/most-recent/attom-data-solutions-q2-2020-u-s-home-flipping-report/