When it comes to real estate, the old adage of location, location, location, holds true. But it's also true that timing is everything when it comes to home sales.
After a brief pause in the market in late 2022 following a series of interest rate hikes, buyers are back in force this spring. The bidding wars are back for homes in the median price range as well as lower-priced homes that impact entry-level first-time home buyers.
Spring is traditionally the busiest selling season in real estate markets across the country as home buyers make purchases to settle in a new school district or make a move during the summer season.
Entry-level home shoppers are dealing with faster-rising prices and more competition than those after more expensive homes because there's a larger pool of qualified buyers for lower-priced homes. According to Zillow, prices for the least-expensive one-third of houses in the U.S. rose 8%, or almost $13,000, over the past year. Mid-level homes appreciated by 3%, and the most-expensive houses depreciated by 1%, the first loss of value for the top tier since 2012.
In Cincinnati, the spring market is roaring back after a sleepy fall season, said Scott Oyler, an agent with the Coldwell Banker Realty Hyde Park office.
"Spring has definitely sprung," Oyler said. "We're seeing bidding wars."
Homes in the median price range of $270,000 in the Cincinnati metro area in good condition are drawing the most traction, he said. The market slowed for a bit in the fall with mortgage interest rates peaking at the 7% range in November, but buyers have realized that prices are not dropping.
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A three-bedroom, 2,700-square-foot townhouse Oyler listed in Cincinnati in November at $525,000 failed to get any offers, and the seller took it off the market at the end of the year. It was re-listed in February, and with two bidders closed this month at a final price of $529,000. If the home had sold in November, it would have been below the asking price, likely in the low $500,000 range, he said.
"The best time to buy would have been last fall," Oyler said.
Entry-level homes across the country exploded in value over the course of the pandemic, gaining 60% more value since February 2020 in seven of the 50 largest markets, according to Zillow. Tampa, Florida, Richmond, Virginia, and Charlotte, North Carolina are leading in home value increases. Meanwhile, values are falling fastest in some of the most expensive markets such as San Francisco, which is down 14%, and Seattle, down 11%. Mortgage-interest rate hikes impact monthly payments more as home prices rise.
"Buyers shopping for the least-expensive homes this spring aren't noticing much difference from the pandemic-era market heat," said Skylar Olsen, Zillow's chief economist. "Competition is fierce, but there aren't many homes for sale, so buyers should be patient but prepared to move quickly and anticipate a bidding war once they find a home they love."
Oyler's advice to first-time buyers this spring is to prepare for the long haul. "Know that you may lose out on a few homes," he said. He suggests that buyers be preapproved for a loan, and do diligent research by visiting homes for sale. When that right house comes along, be prepared to make an offer that's likely over the asking price.
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