Home prices in Columbus aren’t likely to drop in the near future because the city is one of the least-risky housing markets in the nation, according to a recent study.
PMI Group, an insurance company based in Walnut Creek, Calif., analyzed housing trends in 50 U.S. cities to determine how likely house prices are to fall in the next two years.
Columbus is considered one of the most stable, with a less than 10 percent chance of a price drop, thanks to the number of affordable homes, low unemployment rate and its history of steady housing prices.
Cincinnati, Indianapolis and Pittsburgh are also considered low risk.
Ohio has historically “avoided the house price declines that occur in other areas,” said Don Haurin, housing expert and economics professor at Ohio State University.
“House prices in central Ohio have been among the most stable in the U.S., tending to rise at about the rate of inflation.”
Even so, all neighborhoods are not equal. Some pockets of central Ohio, such as Clintonville, Upper Arlington and Powell, saw swift price increases during the earlier part of this decade and have since watched prices slide.
Overall, however, Ohioans haven’t enjoyed the same price gains found in other parts of the country.
Home-price appreciation in central Ohio has lagged the nation as a whole by about 18 percent over the past 20 years, Haurin said.
Ohio has one of the highest foreclosure rates in the country, according to the Mortgage Bankers Association.
Foreclosures have led to a slight increase in homes on the market, Evans said.
But their effect on prices depends on many factors, including the number of foreclosures in a particular neighborhood, said Bill LaFayette, vice president of economic analysis with the Columbus Chamber.
Hotter real-estate markets haven’t fared nearly as well. Prices are expected to drop 33 percent in Phoenix, 15 percent in Las Vegas and 30 percent in West Palm Beach, Fla., in the next two years, according to PMI Group.
“We did not have a run-up in prices fueled by speculation in the housing market” like some other cities, Haurin said.
Home prices in Columbus increased about 1 percent in 2006, and about a quarter of a percent in the first quarter of this year, according to the U.S. Office of Federal Housing Enterprise Oversight.
The agency uses home purchase-price information from mortgage loans backed by Freddie Mac and Fannie Mae to make the calculations.
Home prices are also expected to “slowly begin to rise in the next 12 to 18 months,” Evans said.
By Denise Trowbridge, THE COLUMBUS DISPATCH
