Interest rates and inventory challenge buyers in northwest Ohio

The Toledo metro area has a 90-day average Altos Research Market Action Index score that has hovered between 50 and 54 since early March. A score of 30 or more is considered indicative of a seller’s market.

According to Altos data, Toledo-area homes in the second-lowest quartile of the market — which have a median list price of $199,900 — have a 90-day average Market Action Index score of 84.44, with a median of 14 days on the market. In contrast, homes in the top quartile of the market — those with a median list price of $625,000 — have a Market Action Index score of 35.9 and are spending a median of 56 days on the market.

Agents attribute the varying market conditions to the current interest rate environment.

“Anything under $300,000 or $350,000 has really good activity, but above that, I think interest rates have really affected buyers in those price ranges,” said Eddie Campos, the president of Northwest Ohio Realtors and an associate at RE/MAX Preferred Associates.

“I was showing my client a home recently listed at $599,000, and to purchase the home today compared to three years ago is a difference of $1,400 in their monthly mortgage payment. And that is pretty significant.”

In addition to more days on market for homes at higher price points, Campos said he has also seen some price reductions on listings at the higher end of the market.

For Fleischmann’s buyer clients, mortgage rates really seem to be a problem when houses need updates.

“If there is work to be done and they are paying a higher interest rate, they just don’t have room in the budget,” Fleischmann said. “We are seeing a lot of first-time buyers right now who are only putting 3% or 5% down on an FHA loan, and they just don’t have the cash needed to do repairs and meet their monthly mortgage payment at a higher interest rate.”

While local agents say they are still seeing bidding wars at lower price points, they note that the multiple-offer situations of July 2024 lack the intensity of the battles seen a few years ago in the pandemic-driven market. But Fleischmann noted that he still sees the occasional escalation clause, as well as waived inspections and appraisal gap clauses.

“I wrote an offer on a property recently, for $36,000 over list, all cash, but the client lost out because it was a beautiful brick ranch in a great location,” Fleischmann said. “But most of the bids in a multiple offer are just flat offers with a 30-day possession window after closing.”

With decently competitive market conditions, especially at lower price points, local agents say they are dealing with some buyer fatigue.

“There absolutely is frustration,” Campos said. “Most people writing offers with us are on their third, fourth or even fifth offer.”

For Campos, the No. 1 challenge for his buyers is the current inventory situation.

“There is just a lack of availability of properties for sale, and because of that, competition still exists,” Campos said.

Data from Altos Research shows that the 90-day average number of active single-family listings in the Toledo metro area was 613 as of July 5, up from 542 active listings in early May. That number was down from 637 listings a year ago and 1,345 listings prior to the onset of the COVID-19 pandemic.

But agents say there is some good news on the horizon for frustrated buyers.

“From an inventory standpoint, we are starting to see more properties on the market,” said Jim Geyer, the broker-owner of Findlay, Ohio-based ERA Geyer-Noakes Realty Group. “It is kind of a slow rise and certainly not where we want it to be, but it’s an improvement.”

The 90-day average number of new single-family active listings on the market in the Toledo area was 108 in early July, up from an all-time low of 72 listings set in late February 2024.

Although some prospective sellers with lower mortgage rates are choosing to stay put as they try to wait out the current interest rate environment, local agents say rates are becoming less of a hindrance to listing a property.

“People, I think, by nature, get bored,” Fleischmann said. “They have been locked in those rates, and I think they are seeing and realizing now that the rates are never going to be that low again, so it is coming down to whether or not keeping the rate is more important than having the backyard they want or the lifestyle they want.

“At the end of the day, there comes a point for everyone where they will be willing to pay the price to get the house that they want.”

Heading into the fall, agents are anticipating the Toledo market to stay relatively strong but are hoping for some more breathing room for their buyers.

“Right now, we’ll see a house listed for $399,000 and it might get pushed to $415,000, but I think in the fall we’ll see the things listed at $415,000 go for that and not $430,000,” Fleischmann said. “I think buyers will have the opportunity to negotiate a bit more, get their inspections done and have a little bit of fight in the game.”

Although agents are expecting the upcoming presidential election to complicate things a bit, they remain optimistic about the long-term future of the northwest Ohio housing market.

“From an economic standpoint, as far as employment and things like that, we are doing pretty well,” Geyer said. “Our population is hanging in there, and the market challenge we are running into isn’t a lack of ready, willing-and-able buyers. It is inventory. But we’ve seen more sellers considering putting their house on the market, and the more success we have selling, the more motivated those would-be sellers will be to list.”