2011 Economic Forecast
As the incoming president of the Cincinnati Area Board of Realtors, Pete Kopf will be among the top voices in the region for residential real estate in 2011. A licensed real estate agent for 14 years, Kopf is a third-generation Realtor. His family’s business, Hyde Park-based Kopf Real Estate, has operated locally since 1923.
As Kopf steps onto the board, he faces tough realties of a slowly recovering housing market and an economic outlook that remains uncertain. Recently, he shared his thoughts on the challenges continuing to impact the local housing market and where he believes the region is headed.
WHAT’s YOUR OUTLOOK FOR THE HOUSING MARKET IN 2011?
While our sales numbers did slide in the second half of 2010, the Cincinnati market did see the average sales price stabilize. Price stabilization is the first sign of recovery. In my opinion, the 2011 Greater Cincinnati real estate market will be similar to 2010 with the possibility of slight growth due to historically low interest rates as well as attractive home prices.
WHAT ARE THE MOST ACTIVE SEGMENTS OF THE LOCAL MARKET? WHAT SEGMENTS CONTINUE TO STRUGGLE?
Sales in the first nine months of 2010 were strongest in the $250,000 to $600,000 range. The positive growth in this range can be attributed to buyers who were “moving-up” and taking advantage of the historically low interest rates. While this segment had positive growth, the first-time home buyers segment, under $200,000, declined after the federal home buyer tax credit ended. The market segment for homes priced above $600,000 showed slight signs of positive growth in the first nine months of 2010 compared to the same months in 2009.
HOW LONG ARE THE RECORD-LOW INTEREST RATES EXPECTED TO LAST?
The current 30-year fixed mortgage rate is below 4.25 percent. This historically low interest rate is more of a financial incentive to buyers than the home buyer tax credit of 2009 and 2010 provided buyers. The National Association of Realtors’ chief economist, Lawrence Yun, believes if there is economic growth in 2011 and unemployment remains stable, the average 30-year fixed mortgage rate will be between 5.0 and 5.5 percent by the end of 2011.
WHAT IMPACT DO FORECLOSURES CONTINUE TO HAVE?
Foreclosures represented 28.4 percent of local home sales in the first nine months of 2010 compared to 31.7 percent during the same period in 2009. Our current local “houses-for-sale” inventory is 11.47 months. Inventory numbers greater than six months does favor buyers. It is very important for home sellers to realistically price their homes. Foreclosures will continue to be a part of our inventory in 2011 and will be a factor in our local market. As long as our supply is greater than our demand, prices will remain stable or decline.
WHAT ARE YOUR TOP GOALS FOR THE BOARD IN 2011?
We need to start cultivating future leaders now. We’d like to create a Leadership Academy. The CABR is also continuously trying to enhance the benefits it provides its members. One of the items I hope will be very beneficial to the membership is the launching of a new CABR Web site in 2011
