FHFA Announces Higher Loan Limits & Why Real Estate Investors Continue to Choose Columbus, OH
Higher Loan Limits Likely Won’t Decelerate the Columbus Rental Market
In a recent announcement by the Federal Housing Finance Agency (FHFA), the conforming loan limits for 2023 have increased by a whopping $79,000, or a maximum loan limit of $726,200 for one-unit properties in most areas. [1]
While many real estate and mortgage experts speculate that the higher conforming loan limits will improve homebuyer affordability, thereby tempering rental demand, the jury is still out on what impacts higher conforming loan limits will bring.
There are multiple factors that impact homebuyer affordability, including mortgage interest rates and wage growth, so it’s likely higher loan limits will have little impact on local rental markets without other improving economic factors.
It's also important to note that no county throughout Ohio, including Franklin County, where the capital of Columbus is located, is designated as a high-cost area. Prospective homebuyers living in higher-cost areas have the most to benefit from the new loan limit increases.
Furthermore, the Columbus Realtors Association indicates that through October 2022, the median and average home sales prices are actually going up (increased by 9% YoY). At the time, YoY new listings were down. [2]
Suffice it to say, raising the benchmark conforming loan limits probably won’t open the floodgates, with realtors suddenly experiencing an overwhelming jump in homebuyer demand.
Rather, it's safe to assume that homebuyer demand in Columbus will remain tepid for some time, resulting in an opportunistically robust rental market.
Why Real Estate Investors Are Choosing Columbus, OH
Columbus rental properties are the preferred investment tool for building long-term wealth through real estate. If you haven't already, there are several reasons to start investing in Columbus rental properties.
For starters, Columbus is a much more affordable place to call home. Compared to the national average, the cost of living is significantly lower in Columbus than in other parts of the country. Also, Columbus is known for being a safe place to plant roots, with a blossoming city culture and fervent passion for college football. [3]
Economic and cultural factors are attracting a whole new wave of new renters to Columbus, which is perfect for the already robust rental market. In fact, U.S. News and World Report recently ranked Columbus as the third best place to live in Ohio. [4]
Another factor attracting new renters to Columbus is new private investments. For example, Intel recently announced it plans to invest over $20 billion to build two new chip factories outside Columbus. [5]
Other major companies, including Honda (North America), American Electric Power, and Nationwide, also call Columbus, Ohio home. With ample job opportunities attracting new talent, the pool of qualified prospective tenants widens. This is especially key as a real estate investor managing your vacancy costs. [6]
Lastly, the wave of new investors wanting to purchase properties in Columbus, fix them up, and rent them suggests this is a market primed with opportunity.
Data shows that Franklin County has the highest ratio of renters out of all 88 counties throughout Ohio. Needless to say, you do not want to miss out on your chance to penetrate this market as it continues its upward swing. [7]
Sources
https://www.columbusrealtors.com/clientuploads/HousingStats/22-10_HsgRpt.pdf?_t=1669060094
https://www.bestplaces.net/cost_of_living/city/ohio/columbus
https://www.intel.com/content/www/us/en/corporate-responsibility/intel-in-ohio.html
https://www.nbc4i.com/news/local-news/list-largest-private-employers-in-columbus-and-central-ohio/
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