Incredibly strong demand has fueled home sales in central Ohio for the last decade, however rising interest rates and inflation have started to take their toll on sales this year.

June home sales dropped 9.7 percent last month and are now 2.4 percent behind the first six months of 2021. Pending sales in June were down almost 14 percent suggesting that July sales will also see a year over year decline.

Increased interest rates and high inflation combined with escalating home prices are leading to reduced buyer power. Have less purchasing power today than one did six months ago is shocking to many buyers, causing them to reconsider home purchases. 

Despite these obstacles, competition for homes remains fierce as two thirds of the homes sold in the second quarter this year had buyers paying more than the advertised list price.

All cash sales continue to rise as buyers compete for available homes. Although conventional financing has declined slightly, the number of buyers using FHA financing has dropped considerably over the last decade.

FHA loans have been attractive for first-time and lower-income buyers because they come with lenient credit requirements, low closing costs and competitive interest rates. The added expense of FHA mortgage insurance, however, is a key drawback to this avenue of financing.

For conventional loans backed by Fannie Mae and Freddie Mac, private mortgage insurance is not required once the homeowner’s equity reaches 80 percent. In the case of an FHA loan, mortgage insurance could be required for the life of the loan, regardless of equity.

FHA and VA financing buyers are finding it increasingly difficulty to compete against cash buyers and those with conventional financing. 

Government insured loans often have stricter requirements. Additionally, closing time involving these loan types tend to be longer. Although they often have less restrictive requirements, sellers often take those aforementioned factors in consideration.

The median price of a home sold during the first half of 2022 was $287,500, up 14.5 percent from a year earlier. The average price of $330,002 marked a 12.7 percent increase. The average sales price is the total volume divided by the number of homes sold. The median is the midpoint — half the homes sell for less, while half sell for more.

Homes in the higher price ranges have been gaining market share due to the lack of homes available in the more affordable price ranges.

The time it takes to sell a home is largely determined by its price. It’s going to take a little longer to sell a luxury home than a home more attainably priced. Even so, homes in all price ranges have been selling in record time this year.