In many markets in Ohio, real estate supply has outstripped demand significantly. This is forcing investors in those markets to slash their prices to get out of the property. In today’s article,
The Columbus, OH real estate market is one example of an area where supply has overtaken demand. Over the past few years, investor buyers came in from all over the country to buy properties in Columbus, OH. The perception was that market appreciation was happening so rapidly in the city that virtually anyone could come in and buy a house at near full price and then expect to sell it at a profit once construction was completed. For a few years, this strategy worked simply because there was more demand in the market than supply.
In most metropolitan areas in Ohio, demand is driven by job growth which brings in new workers who need housing. This is why there is high demand for Indian Lake property for sale. The technology boom of the late 1990s created significant job growth in Columbus, OH. By the early 2000s young up-and-coming technology workers were driving a retail housing boom inside Columbus, OH.
But as time went on, more houses were built and were being pre-sold to increasing numbers of investors as well as retirees. Then the real estate downturn happened.
Today, there is such an oversupply of houses in Columbus, OH relative to the demand. Most investors who have purchased houses in the last year or two cannot expect to sell them immediately for any profit. Instead, they will be lucky to take a small loss on the sale. What was a profitable strategy only four years ago has become a very un-profitable strategy simply because of a change in the supply-demand ratio.
This made it relatively easy for investors working the older inner-city neighborhoods. Because of the strong demand from young buyers, property appreciation was strong. This made it easier for investors to profit by selling rehabbed properties to affluent owner-occupants who wanted to avoid a long commute from the suburbs.
But today, several years after the collapse of the technology boom, there is less demand for inner-city housing. Therefore, property values have begun to drop as much as 15 to 20% in many inner-city neighborhoods as a result.
Property wholesalers in Columbus, OH have suffered significant losses due to the combination of inflated purchase prices and sagging demand. These two factors have made it difficult to generate decent profit spreads for the past couple of years.
The above is the reason why it’s important to check the supply and demand situation in a neighborhood or marketplace you are interested in investing.