Monday, August 6, 2012
By Jamison Cocklin
Two years ago the Poland office of Howard Hanna Real Estate Services was the strongest performer in all of Ohio, making sales at a time when most of the industry was still emerging from the low point of the financial crisis.
Today, markets in Poland and across the Mahoning Valley are even stronger. Altogether, Ohio’s housing market is posting solid numbers, recording 12 months of consecutive sales gains, according to June data from the Ohio Association of Realtors.
But as headlines have indicated in recent weeks, a shroud of uncertainty is covering the bright housing market nationwide and in Ohio, leading some to question how long the strong sales can last.
In July, the U.S. Commerce Department reported that during the second quarter of 2012 the economy expanded by only 1.5 percent.
On Friday, the Labor Department reported that 163,000 jobs were added to the U.S. economy in July, beating economist’s expectations, but stoking concern and confusion with news that the national unemployment rate jumped from 8.2 percent to 8.3 percent.
Wavering consumer confidence and a decline in consumer spending during the second quarter are linked in some ways to national home sales, which posted a gain of 9.7 percent during the same period, but remained well below its rate of growth during the same quarter in 2011.
Ohio, and in particular the Mahoning Valley, are bucking national trends for several reasons.
“Consumer confidence is just tremendous here,” said Howard Hanna, chairman and CEO of Howard Hanna Real Estate Services, which was ranked the fourth largest real estate company in the country by Real Trend magazine.
“People are feeling good about themselves in the Valley, and they see employment rising and they’re ready to act on that.”
The company has 134 offices from New York to West Virginia, and Hanna said that rather than consulting projections, hard numbers on closed sales are a far better indication of where the housing market in Northeast Ohio is heading.
As reported by the top 10 real estate agencies in the region, overall sales in the Valley increased by 12 percent during the first six months of the year when compared with the last six months of 2011.
Most importantly, Hanna said, the average sale price picked up nearly 9 percent, going from $78,135 during the final 6 months of 2011 to $85,133 in the first six months of 2012. He added that listings in Northeast Ohio are down by 25 percent from where they were two years ago and down by around 18 percent from 2011.
“All these gains have not occurred since the second quarter of 2006,” Hanna said. “The positive numbers we’re seeing at our company are usually a good indicator of where these markets stand. If you looked at the subregion, top-200 metropolitan markets, I doubt there’s even 10 percent with average sale prices up nearly 9 percent.”
George Zeller, an independent economic research analyst in Cleveland, said the housing market in Ohio was always in better shape than those of beleaguered states such as California, Nevada and Arizona where foreclosures inundated the marketplace.
“Across the state, we never really got hit as hard as the rest of the country,” Zeller said. “It doesn’t mean we didn’t have foreclosures, but we’re recovering from a base that never really boomed in the first place.
“Things have been weak in the housing market until recently,” he added. “What we’re seeing now is improvement in sales and pricing, which is good, but what is highly misleading is the number of foreclosures that aren’t on the market.”
Referred to as “shadow inventories,” Zeller said that many agencies are not listing foreclosed properties both in Ohio and across the country, which has helped to stabilize the market. Overall, Zeller said figures are “fouled up,” and it becomes difficult to predict which way the housing market will go.
Hanna said this is one reason why it’s important to consult “hard numbers” such as those recorded by the area’s top agencies.
He remains cautiously optimistic that the Valley’s housing market will remain strong until at least September. Hanna also believes both the overall economy and the housing market will improve when regulators and policymakers resolve differences on lending to allow banks to increase the amount of loans they make, which would help to further stimulate economic activity.
Both Zeller and Hanna agreed that the Valley, for now, remains immune to some of the trends in the national economy because of the uptick in shale activity and gains in manufacturing that are having a stimulative effect on the area’s wider economy. The Valley’s unemployment rate remains below the national average.
“This is a complicated issue, what people need to remember is we are experiencing a recovery,” Zeller said. “We are witnessing growth, but it’s a mixed bag, and that growth is still not occurring fast enough anywhere.”