Emerging Toledo market at 'epicenter' of national real estate trends

TOLEDO — For anyone who lived in Toledo in the 1990s, it is nothing less than jarring to hear George Ratiu describe what data reveals about current real estate trends in the Glass City. Ratiu is a senior economist for Realtor.com, which, along with the Wall Street Journal, recently named Toledo as the No. 25 emerging market in the United States, one of four in Ohio to crack the top 25 along with Springfield (No. 3), Akron (No. 12), and Columbus (No. 17). The rankings aimed to get beyond simple supply and demand, which accounted for just 33 percent of the methodology, to gain a broader perspective with quality-of-life factors like wages, unemployment, small business activity, and amenities to gauge the impact on the sensibilities of home buyers. Where the data turns especially interesting for those who remember the Rust Belt era is in cross-market demand. Of the people searching for homes in Toledo, Ratiu said only half of them, 49 percent, are from the immediate area. The rest are from other locales in Ohio (22 percent) and out of state entirely (28 percent). Beyond the usual southeastern Michigan suspects like Detroit and Monroe, Ratiu said they're seeing out-of-state interest in Toledo from places like Chicago, New York, and Atlanta — part of a national movement in which more people are considering mid-sized markets where their dollar goes further than it does in big cities. "What this really tells me is that Toledo is very much in the middle of this macro trend we're experiencing right now, which is pushing many people towards affordable areas with strong economies for two reasons," Ratiu said. "No. 1, because of affordability, but No. 2 — and I think this is where the pandemic has played an incredible role — the pandemic has, in a sense, brought remote work to the forefront." What Ratiu described from afar — sellers are on track to bring 25 percent more homes to market than in a typical year — is something that Toledo-area realtors have seen up close: The market is booming, but the way in which it is booming here is particularly notable and seen by economists and city officials alike as a sign of economic growth. Asked about the current state of home buying, local realtor Tyler Tresize couldn't help but laugh. "I mean, I just had a house in South Toledo that had 22 offers in 48 hours," Tresize said. The market is especially competitive for first-time home buyers. While inventory is low, demand is high, especially so in and around Toledo, where many first-time buyers have real purchasing power. Additionally, interest rates have hovered around 3 percent for a 30-year fixed mortgage, an enticing start for someone looking to start a real estate portfolio. "If you have a house that's reasonably priced, you can almost guarantee it's going to go into multiple offers, especially in that first or second-time homebuyer market," Tresize said. "If it's at that entry-level price point, it's moving fast." Toledo's ranking in the emerging market is a cocktail of ingredients that all came together at the same time. One is simple demographics. Between 2020 and 2025, more than 28 million millennials will turn 30 years old, ostensibly around the age to consider a first or second home. Affordability also plays an outsized role for Toledo. Whereas $250,000 puts someone in the market for a one-bedroom, one-bathroom condo in a market like Seattle, the same price — and often less — gives a buyer home options with 2,000-plus square feet in Toledo proper. Third is the general economy of Toledo, which Ratiu noted is vastly more diverse than it was 25 years ago. Combined, those factors are giving an increasing number of prospective homeowners confidence that this market can provide three things: A steady career that will provide disposable income here, a home investment that will appreciate over time, and a high quality of life. Brandon Sehlhorst, the city of Toledo's commissioner of economic development, said most roads tend to lead back to overall job creation, and that there have been high levels of investment in the city in recent years. "All of those investments create indirect jobs through things like construction or supplier-related positions, but they also create long-term direct jobs," Sehlhorst said. "I think what we're seeing is that all that investment is really spiraling into the pockets of people in northwest Ohio, which is creating more income and more certainty around their income that is then being channeled into the housing market." Further, the pandemic is still a factor on the real estate market in multiple ways. A market already facing low inventory saw the pandemic create a logjam on the supply side and added astronomical construction costs for new homes. Ratiu said baby boomers typically had the option to build new homes at multiple price points, whereas most millennials do not — and the market already was facing a shortage of available homes before any of us knew what coronavirus was. Additionally, there are sweeping and still ongoing changes to the way Americans work. Some businesses have moved away from physical office space, particularly in areas with high costs, while employees working from home has been more prevalent than ever, which has allowed a certain portion of the workforce to consider moving their job along with their belongings. Shawn Tysiak, and associate lecturer of finance at the University of Toledo who operated a property investment company before selling off most of the profile, said buying a home is often a better option than renting in general, but that's particularly true in Toledo, where more people can own real estate. In this market, homeowners might have six digits of equity in their current home simply based on the likelihood they can sell for much more than they paid, while stimulus funds were a down-payment-padding bonus for many prospective buyers. "I think, for the families who have been able to maintain their jobs, the stimulus money is extra for them," Tysiak said. "For those people, I think they can continue to drive the market and say, 'You know what? We can afford that nicer house,' one that is maybe $30,000 more with the extra bedroom or the pool that they want. "That's going to help them keep the real estate market going." And while the Glass City might not have a major pro sports team and probably is not high on the list of locations for a blockbuster movie premiere, mid-sized markets are becoming more attractive as more millennials enter the market. Owning real estate does not require a fortune in Toledo, though Ratiu said simply having cheap housing options does not lure someone to a market — but quality of life and the strength of local economy do. "Looking at the Toledo market specifically and even putting it in the context of Ohio, what's happening in these markets is a reflection of, No. 1, much stronger economies," Ratiu said. "To me, that is relevant, because without a stronger economy, the real estate market is not going to do very well." In 2020, Ratiu said there was an increase in the democratization of economic opportunities that often were given to large, coastal cities, which is significant for a lot of markets in the Midwest that lagged behind for years. The internet always dangled the possibility of holding a high-wage job in a competitive field without necessarily having to live in New York or the Bay Area or anywhere close to a downtown office in a big city. Now, that is more of a reality than ever — and a market like Toledo could be one of the benefactors. "In the mid-1990s when the internet first burst on the scene, it made the promise, 'One day, you'll be able to work from anywhere.' Well, that one day was this last year," Ratiu said. "I think, for a lot of people, markets like Toledo are attractive because, if they don't have to be in an office, they can look for markets that are more affordable, offer bigger homes, and offer better quality of life. "I think Toledo is absolutely at the epicenter, in a way, of these macro trends, and they're reflected so well by its positioning on the emerging markets list." ___ (c)2021 The Blade (Toledo, Ohio) Visit The Blade (Toledo, Ohio) at www.toledoblade.com Distributed by Tribune Content Agency, LLC.