Lessons from Henny Penny

Have you heard the tale about Henny Penny? She predicted the sky is falling because a nut fell from a tree. The moral of the story is that one nut from above doth not equate to the sky’s impending collapse. Stop at the pithy headline or opening paragraph of any housing article du jour and you might fall into the same logic trap as Penny.

No, the Sky is NOT Falling

First, most experts predict a mild setback for housing prices if they believe we will end up in the red at all. Lawrence Yun, Chief Economics for the National Association of Realtors, says, “We’re witnessing a housing recession in terms of declining home sales and home building, however, it’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.” Even with fewer transactions, year-over-year values are up in the month of July, with the average sales price rising 10.4% to $346,359. That’s up from $313,737 one year ago.

While yes, it’s true sales have declined when you look at numbers in this way, we must look back to where we started. “More homes traded hands in 2021 than ever has been the case” reads a July 22, 2021 press release from Columbus Realtors. Continuing to equate 2022 to 2021, or even 2020 for that matter, is like expecting baseball players to repeat Mark McGwire and Sammy Sosa 1998 homerun tallies (more broken records for the non-baseball crowd) annually.

Housing Statistics Matter Most at the Local Level

One must also consider that what occurs in other regions doesn’t necessarily translate to locally. For instance, the Miami Herald reported on July 21, 2022 that home values in the Metro Miami market declined by nearly 40 percent from 2007 to mid 2009. Data from Columbus Realtors, on the other hand, shows that home values in Central Ohio declined by a fraction of that amount (7.4 percent). While both markets experienced depreciation, this is one example of how statistics can vary widely based on economic and even social factors.

Some markets around the country are at higher risk of declining values. Generally speaking, this applies to areas where prices have spiked most dramatically. Forbes reports that Greenville, Mississippi is expected to top that list at six percent. Others, which may be surprising to some, include Minot, North Dakota (-5.4 percent); Fairbanks, Alaska (-4.6); Charleston, West Virginia (-4); and LaGrange, Georgia (-3.9). Others, like Wooster, Ohio are anticipated to appreciate through 2023 to the tune of 13.3 percent.

Stop Comparing Now to the Great Recession

Further lessening the worry about a housing collapse is that inventory of homes for sale remains far below that of a balanced market (one where there are an equal number of buyers and sellers). This means that sellers still carry more weight in negotiations with buyers. In fact, we have not returned to pre-pandemic inventory levels. There were 4,784 homes for sale in June 2019 compared to the most recent Columbus Realtors report (3,570). Central Ohio was considered a sellers market at that time even with more homes for sale. As a point of reference, there were 5077 homes for sale in June 2017.

Fundamentals that led to the Great Recession were also quite different than today. First, unscrupulous mortgage companies fueled the fire with thousands of loans to people who couldn’t afford them, and by the time that fact came to light, the damage was done. Since then, mortgage checks and balances have been tightened, thereby decreasing the odds of a repeat scenario. Mortgage lenders also increased FICO score requirements at the onset of the COVID era.

Additionally, employment levels remain historically high, particularly when compared to that of the first part of this century. Unemployment peaked at 10 percent in October 2009, which compares to 3.5 percent in July 2022.

Boiling it all Down

What does this all mean for Central Ohio home prices? To be fair, no one knows with absolute certainty where we will end up in a year or two from now. That being said, interest rates and geopolitical forces should have only a mild long-term impact on our market. Those who are most susceptible to risks are those who buy and sell on a short term basis, Real Estate should be a long term investment, and if you hold your home for at least five years we expect that you will still see your value go up. Inventory levels and a rapidly growing Central Ohio population will only help to support this theory.


Wayne Henry


Equal parts dog lover, real estate aficionado, social butterfly and music enthusiast. My idea of a good day is putting the pups in the car, turning up the tunes, sharing funny stories and looking at some houses. If this sounds like fun, let's start a journey that ends with a lifetime friendship and a new home for you.