In this market update, I wanted to take a step back and consider the market in a more historical perspective. Most people purchase a primary residence and reside there for 8-12 years, sometimes much longer. In the chart above I present average and median sales price and the average days on market for the entire area served by the Cincinnati Multiple Listing Service gong back over 18 years. Here are the key takeaways:
- Prices peaked in 2005 prior to the financial crisis in 2008.
- Homes are selling in less than half the time now compared to 2005.
- Prices bottomed out over a three year period from 2009 to 2011
- Prices dropped -18% to -20% from the peak just 4-5 years earlier.
- Prices recovered in 2015, matching the prices of the peak in 2005.
- Price increases have accelerated since 2015.
- Here are the price increases for different periods of time:
- 2003 - 2020: +47% to +54%, or 2.3% to 4.9% year over year (YOY)
- 2011 - 2020: +65% to 79%, or 5.7% to 6.7% YOY
- 2015 - 2020: +36% to 46%, or 10.5% to 12.3% YOY
What does this mean?
- If you bought your home between 2007 and 2015, you most likely have a lot of equity in your home without even considering the paydown on your mortgage.
- Staying in a home you purchase for at least 10 years can reduce the chance that a market downturn would cause you to sell for less than you bought it for.
- Renting is probably the best option if you believe you would need to move in less than 5 years due to a relocation or the expectation that your home would not fit your life in 5 years.
While it is important to remember that a market downturn is guaranteed sometime in the future, whether it's 2 years from now or 10 years, not all downturns look or feel the same. Please contact me if you have any questions at 513-830-8227 or firstname.lastname@example.org
. I will be the first to tell you that now might not be the right time for you to buy a home depending upon your circumstances. I would be happy to discuss further.