The weather may be cooling in Ohio and it may not be a state famous for having land that pumps money out of the ground like Texas, but real-estate and debt investors may find that this state can provide all the fuel they need for the New Year.
The nation’s real estate market has been surging, with investment appetite almost ravenous in some regions. At the same time industry players continue to influence the media, causing much confusion and misleading information to be spread in order to dictate consumer and newer investor actions.
So what do Ohio banks’ latest REO and non-performing loan figures reveal is really going on in the market, and could this state become the mecca for property investors?
Ohio Realtors’ Take On Local Market Trends
The November 2013 Ohio Realtor Confidence Index reveals that local real estate agents are bullish on the state’s property market, with expectations of ongoing improvements.
Year-over-year comparisons show that Ohio real estate agents are significantly more positive than in 2012. The index is somewhat buffered by seasonally tempered gains, but, looking forward, local industry professionals expect the market to get better over the next six months, with 70% confidence in home prices in the next 12 months.
State home sales have been experiencing double digit and high single digit monthly increases, and this certainly hasn’t gone unnoticed by many out of area investors. However, looking at the graph of trends back to 1998, we see the market both looking healthy and with room to grow.
Like Florida, the Ohio real estate market was one of the first to crumble; taking the hit back in 2005, while other markets didn’t burst until a year or two later. Historical figures and graphing show the Ohio market began turning around in 2010 for sales, and 2011 for home prices, and suggest there are still years of growth left in this cycle.
One of the biggest challenges facing investors today is finding value and real deals. In many places the hype and heat of competition have investors frustrated and perhaps even overpaying. However, while on the surface the confidence in the OH market may suggest that local housing is headed in the same direction, the raw data uncovers some significant opportunities.
New OH Bank REO and NPL Data
Given media reports and investor complaints in online real estate forums many are having a tough time coping with the speed the marketing is heating up, volume of competition, and lack of distressed inventory. This has been especially highlighted in parts of New York and California. In fact, investors in these markets are downright desperate for deals with spreads. Ironically, the latest statistics show that Ohio has a pretty significant pool of distressed properties and notes to choose from.
Q3 2013 Ohio Bank REO and NPL Highlights:
- As of Sept. 30, 2013 OH banks held almost $2B in REOs
- Ohio has one of the largest percentages of multifamily REOs at 4.01%
- Ohio has a huge pool of residential REO making up 64.2% of all REOs
- Ohio banks reported almost $35B in non-performing residential loans
- The overwhelming majority of OH NPLs are first time 104 family defaults
Top 10 OH Banks with Foreclosed Multifamily Bank Owned REOs:
- U.S. Bank National Association
- First Financial Bank
- Fifth Third Bank
- JP Morgan Chase
- First Merit Bank
- CF Bank
- Heartland Bank
- State Bank and Trust Company
- The Park National Bank
- New Carlisle Federal Savings Bank
Top 10 Ohio Banks with First Position Residential Loans 90+ Days Late:
- JP Morgan Chase Bank
- U.S. Bank
- Fifth Third Bank
- Huntington National Bank
- First Merit Bank
- First Place Bank
- Key Bank
- First Financial
- The National Bank of Adams County
- First National Bank
Trend Watch: 7 Ohio Real Estate Trends to Watch
1. The Hunger for Affordability
Affordability is one of the most hunted factors in real estate today – and will be even more so in 2014. Affordability not only means room for larger and growing spreads, but also may suggest which markets are the safest and have the longest growth potential. Ohio certainly checks the boxes here.
2. Less Competition
While hot markets are great on the sales side they can be very challenging on the acquisition side. Those that can find areas with larger pools with less dense competition can drive deeper bargains and set their own terms while enjoying higher volumes of deal flow with better operational profit margins.
Authorities are getting tougher when it comes to holding investors and real estate agents accountable for what they sell and how they maintain their properties. This was recently seen in Michigan when a realtor got lumbered with the liability of selling condo units with environmental issues after the builder vanished, and in Ohio where one investor failed to maintain properties to code or complete proper due diligence.
4. Going Green
Sustainability, “going green” and being more eco-friendly aren’t just trending as “nice-to-haves,” they are becoming increasingly necessary for all parties in the real estate industry – from buyers to agents to investment firms.
Rather than fading after much anticipation. crowdfunding actually seems to be finally maturing. Look out for it and find the best way to leverage it on all ends of your business.
Now is the time to seize on the Ohio market and its pool of distressed REOs and non-performing loans before the snow thaws, the market picks up, and the rest of the world wants in.
Winning in 2014 and picking up the best discounts overwhelmingly depends on access to the best data. For those wanting access to the above pools of REO and NPLs BankProspector is a great place to start.