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The Grandview Yard Apartments, scheduled to open in Fall 2012.
A new year brings about new change, and there’s no better place to look than across our urban landscape and into communities where people choose to live their lives in Central Ohio. We asked several local real estate and development experts for their opinions, insight and predictions about what 2012 will hold for urban development and the local real estate market. Here’s what they had to say:
The Big Real Estate Trends of 2012
When we asked for anticipated trends of 2012, we quickly saw patterns emerge among the predictions of our local experts and consultants. Short sales, rental investments and urban amenities were the most prevalent.
“The tea leaves are showing several things”, says Thomas Fortin, an investment realtor and developer. “2011 will see lackluster sales of single family homes and condominiums priced over $250,000. There will be some moderate demand for select areas and price points under $200,000. There will also be increased demand for upscale residential rentals, yet further decline in deteriorating communities. And lastly, we’ll see more existing homeowners remodel to fit changing residential needs.”
To further understand what lies in store in 2012, a reflection of last year’s market is warranted.
“As the Columbus real estate market continues to readjust to a new normal, and while we’ve fared far better than most other Midwestern cities, the short sale will be the most significant trend in real estate in Columbus in 2012,” states Joe Peffer, broker in charge at Re/Max Town Center.
On Dec. 31, 2011, 14 percent of homes for sale in Columbus were listed as short sales, and Peffer expects that trend to continue into 2012. Additionally, 28 percent of the 839 homes listed as “in-contract” on Dec. 31 and in the process of closing in January were listed as short sales.
“That’s almost as many homes that sold as short sales the entire 2010 calendar year,” he explains. “In 2012, I predict that one out of every three Columbus homes will sell for less than what the home owners owe their lender.”
Todd DeHays, an agent with Connect Realty, says that more properties have made it through the sheriff sale process recently, which will be sold on the market as bank owned properties in 2012.
“The foreclosure supply should increase throughout the first half of 2012 due to the decreased supply in 2011 from the moratorium on foreclosures that was executed by lenders in 2010,” he explains. “Prepare to see some creative efforts on behalf of banks to sell or utilize their extra inventory in the form of lending incentives and possible use as rental property.”
Real estate investors looking to enter the rental investment market in Columbus will be able to easily do so in 2012 due to rising lease rates and the historically low interest rates on mortgages.
“The rental market stands out more to me from the last year because it seemed like people were more desperate to find a rental and there was a lot more people looking for them,” says William Robbins of the Gledhill Robbins & Talis Group at Real Living HER. “The Columbus metro neighborhoods will continue to be desirable, for both renters and home buyers, for their historic qualities and easy accessibility to all Columbus destinations.”
That sentiment is shared by Christina Miller Ringley, a Realtor with Carriage Trade Realty who also sees a continued interest in certain urban neighborhoods remaining strong through 2012.
“Homeowners will be more willing to purchase homes that need some TLC rather than homes that are polished and pristine,” she says. “The reason being that there are so many homes in short sale status or in foreclosure. With a little bit of work and a small investment, these already relatively reasonably priced homes will be very attractive to home buyers.”
The trending shift comes from an buyer’s expectation for certain types of amenities located within the neighboring community, and not just amenities located within a house.
“Many clients are already thinking past the home and considering their community attributes including parks, shops, restaurants and other businesses when setting their search criteria,” says Shanna Lafontaine, real estate consultant at RE/MAX Affiliates. “I also expect buyers’ increased interest in staying within or close to the I-270 outer belt to continue.”
Regardless of neighborhood, 2012 is largely expected to be a buyer’s market for interested and qualified homeowners.
“Value pricing has been critical and we see this trend continuing well into 2012,” says Real Estate Consultant Mike McCoy. “Buyers need to perceive properties as values and sellers need to understand their home needs to be priced at or below market value to be one of the homes that sell. Many homes are selling month in and out, but it certainly takes longer and more patience for all parties involved.”
Totally agree that now is the time to buy some rental property. I am thinking the best bang for your buck is in Weinland Park at the moment. It is close to both campus and nightlife and is getting safer. Rents will definitely be on the rise.
“People want to walk to restaurants, the gym, coffee houses, and grocery stores and this will become more and more evident as communities redevelop. The redevelopment of the Kingsdale shopping center in Upper Arlington is a fabulous example of this trend.”
I don’t think Kingsdale is much more walkable since it’s redevelopment, unless he means walking from your car to the door.
I agree, Kingsdale is a stupid example of a walkable development. It’s just a glorified strip mall, at best.
While Kingsdale *is* a strip mall, there are sidewalks that lead to it from what is a fairly dense area surrounding it, and it’s not an unpleasant walk on what are generally slower pedestrian-friendly streets. That differs quite a bit from retail developments in the fringe exurbs where there is usually no continuous sidewalk connection from home-to-store, and most likely if you tried to walk you’d be walking down a major artery road where traffic moves at 50mph.
Kingsdale is a good example of a reinvestment in the urban core, and the reuse of a site that had become underdeveloped. While it’s not 100% perfect, it’s much better than seeing this site abandoned as developers move on to new greenfield sites on farm land in contiguous counties.
It is nice for a bunch of “experts” to give lip service to places like Southern Orchards and Franklinton, but until you actually see private money invested in those communities at some scale, it is unrealistic to for us to collectively believe these places are making a true comeback. Unfortunately private equity would rather been around Riverside or Kingsdale – it is the same safe mediocrity that has made Columbus the city that it is. I wonder when we will demand something better.
Screw Michigan.
I thought a lot of private money was being invested in Franklinton – more in the form of housing rehabilitation, rather than shopping centers.
There practically is no housing in East Franklinton and the majority of the housing in West Franklinton is in abysmal condition. East Franklinton has the best shot due to its proximity to downtown, but it will take investors with deep pockets (NRI, WagCo, etc) which have yet to materialize. It will be a lot of new construction or conversions of warehouse space. There is a lot of hope, but this will be very expensive.
I think the Parsons Road corridor is getting close to sparking some big redevelopment. Some nice, underutilized housing stock on the east side of Parsons, and a fairly intact retail infrastructure.
After having lived in Franklinton for most of my adult life, I can basically say that it is a very bad neighborhood with a very good location. I’m fortunate to live in a fairly nice, good condition craftsman house on a really nice deep south-facing lot, but most of the housing in Franklinton is not this way. There are diamonds in the rough for sure, but I think much of the neighborhood is going to need to be bulldozed. In fact, quite a few of the lots around me already have been.
@cmhcow – What sort of large-scale private money was invested in established urban neighborhoods like The Short North and German Village? Those two are largely the result of a lot of smaller investments being made by individuals and small investors. Of course, that process takes a much longer amount of time.
I’d also argue that the major investments being made by Children’s Hospital will have a positive impact on the Southern Orchards and Old Oaks neighborhoods. Maybe not immediately, but it will certainly help move the needle a bit faster overall.
People had little incentive to walk or bike to Kingsdale before redevelopment. The new Kingsdale has led to more activity overall in the area (walking, biking, and driving) because there are more shops/services than before. The redevelopment also helped to add density to the area with the 5 story condo developments that border it.
They cleaned up the layout, demolished some unsightly stuff and there are better stores and more shoppers now, but its still the same kind of animal – a grocery-anchored strip surrounded by a big parking lot. I do like that they have a hardware store and (kept) the outdoor Source.
Several years ago when they proposed a community center at Kingsdale a much nicer, town-center oriented design was floated. It’s too bad something like that didn’t happen.
2012 is too early for Franklinton, imho. It cannot be done by small private investors.
I don’t think anyone said that Franklinton would be “the next big thing” before the end of this year. It was referenced as a place to buy in now, while prices are still low, if you’re interested in a place that will appreciate over the next decade to come.
With such statistics it does make one nervous to buy. I’m looking forward to the development in the Discovery District. I will watch it all grow right around our gym :-) I’ll be a regular at Hills Market downtown.
It’s nice to see some candid talk among experts. For a purely objective analysis, you can look at the Case-Shiller index of housing prices. The story this index tells is that after a precipitous drop from 2006 to 2009, seasonally adjusted prices nationally have been more or less flat the last two years. If you read “THis TIme is Different” and specifically their analysis of what happens to real estate prices during a severe financial crisis (like the one we are in the midst of) you will see that real estate prices bottom out, on average, six years into a financial crisis. If I were in the market to buy a place to live in for some years, I would go for it (I bought in March of this year). Real estate prices don’t tend to bounce back as quickly as, say, stock prices (for example, the returns between early 2009 and one year later), but if you wait too long, you always have the risk of missing the bottom.