The Arch City has found a niche in rental housing.
Since the 2Q of 2006, the Columbus property market has suffered downbeat sales plunging down by -83.6 percent to 4Q last year. Home prices have also plunged from $240,000 for an average single family home to only $40,000 in December 2008. The Danter Company forecasted in the 2006 National Real Estate Leaders Research that through 2012, total downtown demand for housing units will be between 1,750 to 2,400 units. However, it should be taken into consideration that the report came out when the recession hasn’t unfolded yet. Slow sales have prompted homeowners and developers to offer rental units to those who have postponed their home purchases because of tight credit markets in the area.
The rate for a 30-year fixed mortgage has fallen in Columbus for the past six months. The middle of August last year had rates posting near 6.75 percent but at the start of 2009, it had fallen below 5 percent. This was affected mainly by the recent buyout of mortgages by the Treasury Department and it’s not only the housing sector that’s experiencing a slump. Colliers Turley Martin Tucker, a commercial real estate firm in Columbus, forecasts a slowdown in construction and an upturn in commercial property foreclosures. In their year-ender report, it states, “As debt markets remain frozen, office property foreclosures are expected to climb in 2009. Owners with debt financing coming due will have problems refinancing, forcing owners to dispose of assets, extend original loan terms, or turn the building over to the bank in-lieu of foreclosure. As owners are forced to sell or return assets to the lender we will see capitalization rates rise and prices fall as investors look to take advantage of troubled situations.”
With fewer housing starts in the country, many have sought refuge in renting houses for the meantime. Unlike in New York, where it’s pure luck to find an apartment that could fit the budget and personal choice, Columbus offers the most affordable metropolitan housing rents. In fact, it was recently voted as the country’s least expensive city for renters by Fortune.com . The median rent stands at only $626 a month, not bad for Ohio’s largest city that’s teeming with financial, retail and technological industries amidst the current recession. In the same report by The Danter Company, projected rental housing units until 2012 number between 1,950 to 2,475 units in the downtown area. Of this, 60 percent are classified as affordable to moderately priced while the remaining 40 percent are luxury and upscale units.
Columbus’ insurance industry may be feeling the pinch in the economy but the city is certainly hanging on in the property sector with this good news.