Quote from @Steven Foster Wilson:
Quote from @Bob Stevens:
Everyone has heard, Location Location Location, and most live by it. NOT me. Its PRICE PRICE PRICE, people live everywhere.
Thoughts ?
It depends on what your goal is? If its to buy assets that will grow exponentially, then yes location absolutely matters, for example, I would invest in Columbus. If I was looking at getting the best COC return at the lowest cost possible, then I would invest in Cleveland or Akron. Thats why its important to figure your goals out first, then pick a city.
I get-it, your in OH, and riding that "OH-Rocket" up, only a fool wouldn't right.
But here is my issue Steve, it's 2 part.
1st part; is because your PROMOTING OH, as so many other similar agent's are, as "THE" great investment market. Not stating to assist/help people in actions, but PROMOTING it as "THE" REI market.
2nd part; What is OH's market FUNDAMENTALS? No, not "prices today are..." but the actual FOUNDATIONAL fundamentals? What is the OH market rent's and real estate valuations and basis WITHOUT out-state investors flooding the OH market with acquisition capital?
Because that IS the issue. OH prices WERE based on OH incomes, OH employment, OH fundamentals.
Than, people across the country, namely bi-costal areas where incomes are WAY higher, cost of living is WAY higher, real estate prices are WAY higher, looked at OH and thought "holly-cow, that's CHEAP" and started buying there. Because they were NOVICES, they incorrectly valued OH properties vs say Seattle market, LA market, San Diego market, NY, NJ etc.. So, naturally, prices got bid up, with a LARGE proportion of buyers being out-state VALUING based on out-state market's, NOT what OH market fundamentals and sustainability is.
So in these areas where rent has gone from $450mnth too $1,250, has the median income also doubled? Tripled? Has the OH market fundamentals changed in matching proportion to RAISE that market fundamental to meet the out-state valuation?
It's a bit of a loaded question because I know the answer, and it's not one to pop-champaign over.
See, OH is a kind of "Ponzy" R.E. Market. As long as out-state $ keeps coming in, buying on out-state valuations, the market keep's looking profitable. But when the music stops..... And things have to step back to fundamentals.......
I strongly doubt most know median income for Columbus was just $31,462 in 2020. That from 2020 too 2021 the population growth was from 889k too 898k, only 1.02% increase. And in same time median HOUSEHOLD income grew from $54,902 too $58,575, which yes is a substantial increase of 6.69% ALTHOUGH how much did median home prices, and rent's go up in same period?????? yeah, a hell of a lot more right, a multiplier to this.
That is, by definition, a valuation BUBBLE. A substantial increase as induced from outside factors, not supported by in-market factors.
To put this in contrast I will add a market of my focus the last few years AND TODAY:
maple Grove MN - Median household income $114,479
When we look at rent sustainability we need to see income meeting or exceeding 3X.
That places "cap" on Columbus rent's viability at $1,610.81
Maple Grove $3,148.17
Median household price Columbus OH $270,058 = m.rent too m. price 0.6
Median household price Maple Grove MN $391,311 = m.rent too m.price 0.8, a 33% improved performance # over OH.
Is OH "cheaper" homes, YES. Does "cheaper" mean "better", HECK-NO, as the data clearly shows.
As I started, my issue with OH market is the 2 issues, (1) Promoting of it as "THE" great REI market and (2) prices have been elevated well beyond in-market fundamental's, a kind of "Ponzy" market of R.E., and sitting in a valuation bubble that when the out-state $-train shut's off, many will have a tough realization as things move back to in-market support for the #'s.
I travel the country analyzing and valuing market's, I have seen similar play out numerous times, but this anomaly in OH is the scariest I have seen in a long time. Market's throughout TX, TN, are doing and have been doing actions to elevate there base fundamental's, OH I just have not seen the same, to any measurable degree to take a substantial bite out of that disparity gap.
