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Central Ohio’s largest home builder announced on Friday losses in the 4th quarter and for all of 2007. M/I homes is one 
of the nation’s largest home builders. M/I builds a quality a home and is a well managed company. But, even the best, well- run, new home builders were not immune to the recent real estate market crisis. M/I Homes has been in business for 30+ years and I’m sure they will be in business for another 30+ years.
It is still a great time to be a home buyer in the Columbus, Ohio area. But, in my opinion, the real estate market has now started to turn in Central Ohio. The market will gradually start shifting back to a normal market which is typically a Seller’s market. There are 3 to 4 reasons why the real estate market in Columbus, Ohio is finally starting to change. 
Reason number 1: Mortgage rates bottomed out at a few weeks ago at a low of 5.125% – 5.250%. We have seen the end to flat, low home prices and super low mortgage rates. Everything will start to rise (interest rates and house prices) from this point forward. I predict, in the next six to nine months will still see rates in the range of 6.00% – 6.75% and home prices just modestly increasing. As home buyers we can’t really complain, mortgage interest rates in the “6” range is still really good.
Reason 2: President Bush will sign the economic stimulus package in a few days. In financial terms, the 170 billion+ package will not actually do that much to improve the economy. But, it will help a little. The main benefit of the economic stimulus package is that the consumer confidence in the economy and our government will increase because we were able to get something accomplished, even though that “something” was very small.
Reason 3: My personal buyer activity has increased dramatically in the last 10 – 14 days. I’ve been receiving a lot of phone calls and emails from interested home buyers with questions and looking for help.
Reason 4: It’s all about supply & demand. The inventory in the last 9 months has continued to drop drastically. The end of last Summer we had 21,000+ listings on our multiple listing service(MLS) system. As of right now, we have a little more than 16,300 listings. Granted the drop in the listings is mainly due to the slow winter and holiday season. But, it is still a significant decrease. Even with the listings going down, we are still at insanely high inventory levels. The key months to watch inventory levels will be May, June & July. How these three months go will probably predict the rest of 2008.
This is my prediction on where we are headed in 2008 for the real estate market in Columbus, Ohio. Back in September of 2007 (about 5 months ago), I correctly forecasted in 2008 that we would see all mortgage programs with rates well under 6%. Review my 5.99% or Lower blog post. I did receive a few emails and phone calls from lenders that didn’t think I knew what I was talking about. These lenders didn’t think rates would go that low. I guess I got lucky on that forecast. Again, I could be wrong or I could be right on my latest prediction for 2008. I still think 2008 will be a great year for home buyers. But, the buyer’s market is sort of over. Good Luck!
Another builder is leaving the central Ohio market. Beazer announced on Friday, February 1st that they will stop building new homes in the Columbus, Ohio market. New home builders have really been affected by the real estate slow down. Beazer is the second major new home builder to pull out of our market in the last year. Last Summer, Centex homes stopped building in our area.
I’ve been receiving a lot of good information from experienced lenders that I trust. Everyone really needs to be aware of some drastic changes that will be occurring in 2008. The sub-prime lending mess, declining real estate market and foreclosures in the past few years has finally starting to “trickle down” and will affect almost all potential home buyers. In 2008 you will see a lot of changes to underwriting guidelines. The good news is that FHA loans will be less affected than conventional loans. The demand for FHA loans will probably increase in 2008. The guidelines will be more strict. For example:
*Conventional loan home buyers with a credit score of less than 680 and less than 30% down will see a significant increase in interest rates.
*Home buyers putting less than 5% down and a credit score of 620 will be ineligible for mortgage insurance. If you don’t qualify for mortgage insurance then you don’t qualify for the loan. This is not rocket science!!!
*Mortgage insurance companies will also require appraisers to document if a home is in a increasing, stable or declining market. If a home is in a declining market then a buyer putting less than 10% down and a credit score of 620 will be ineligible for mortgage insurance.
The problems in the lending market are really starting to take their toll on home buyers loan options. Again, most of these changes will affect conventional loans and not FHA loans. In 2008, FHA will incorporate a sliding scale for mortgage insurance rates based on credit score. This sliding scale system is more of a “reward” for higher credit guide scores than a “punishment”. As of right now, there are no major underwriting or pricing changes forecasted for FHA loans. So if you’re a potential home buyer next year, it is now even more important to make sure you use a good, experienced lender. Contact me if you need a reference for a good lender or if you have any further questions.
My Buyer Broker Advocate! 
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