2022 Greater Cincinnati Real Estate Trends: Home Values, Housing Bubbles, and Everything in Between

Cincinnati home prices rose 17% in the last year. Despite a slight housing market slow-down around Christmas 2021, the market has been hot and happening for some time now. With all of the activity in our market lately, we’ve created a summary of what you need to know to stay up to date and on the ball in 2022:

Slowing of Home Valuation from Recent Peaks

Annual real estate appreciation rates in Cincinnati have been quite strong for the past few years. NeighborhoodScout’s data indicates that over the last decade, the cumulative real estate appreciation rate has been 45.82%, placing Cincinnati in the top 40% nationally. This equates to an annual average appreciation rate of 3.84% for Cincinnati homes.

The Cincinnati housing market has an unusual combination of consistently high home values with a low cost of living, which makes it attractive for savvy real estate investors as well as transplants from high cost-of-living states like California. Cincinnati has all the amenities of the urban lifestyle: access to nightlife, ample shopping, great restaurants, and a diverse culture, along with good schools and some beautiful green spaces.

With such great home values (and interest rates having gone from a low of 2.5% in late 2020 to around 4% at the beginning of Q2 2022), the numbers of people looking to buy have flooded the market. These increases in interest rates mean increases in mortgage payments, but that seems to not be affecting those still looking to purchase a home, as prices still remain inflated and multiple offers are coming in above list price for homes on the market.

Don’t let these market peaks scare you off, however! There is still time to snag your dream home. Experts are saying overall sales will decline this year, even though they will still exceed pre-pandemic levels. They are basing this opinion on an expectation of more housing supply available this year, generated by new housing construction as well as the end of mortgage forbearance which will then cause some homeowners to sell. With more housing inventory hitting the market, the intense multiple offers will start to ease. Home prices will continue to rise but at a slower pace, estimated at 5.7%.

New Property Construction Increasing Housing Inventory

As we mentioned, new home construction is expected to increase the rest of 2022, opening up additional housing inventory for the market. The expected resolution of supply chain issues suffered the past two years should have a positive effect on new home construction in the second half of the year. 

Factory output for building materials in the U.S. is broadly back to where it was prior to the pandemic. Economists who have looked at the most recent Purchasing Managers Index suggest that supplier delivery times are speeding up, and that by mid-year price inflation should begin to ease and provide relief for builders. Total estimated construction for 2022 is expected to rise 9%.

Increase in Investment Property Purchase 

With Cincinnati having such high property values and a lower cost of living, the dollar goes a lot further here as far as purchasing power. Investors nationwide have been purchasing homes in the Cincinnati real estate market to then rent out, both for long-term leases and for short-term rent like for AirBnB or Vrbo. On one hand, having properties available for people to visit and experience our fine city is a good thing. On the other hand, turning already limited housing inventory into vacation homes forces an increase in home prices and facilitates bidding wars to purchase those homes.

New Potential Housing Bubble?

According to Fox Business, higher construction costs, supply chain disruptions, relatively low borrowing costs and rising disposable incomes have all contributed to housing price gains the last two years. Fortunately, however, economists don’t expect a massive “housing correction” as consequential as the 2008 housing crash that led to a global financial crisis. 

Instead, household balance sheets appear to be in better shape, and excessive borrowing doesn’t appear to be fueling this housing market boom…so don’t panic!

Varma Realty Group is here to answer any questions you may have about the Greater Cincinnati/Northern Kentucky real estate market. Whether you just have questions or are looking to buy or sell a home, we would love to talk with you. Contact us at varun@varmarealtygroup.com or at 513-307-3599.