Economic Vibrancy Comparison/Report: Housing

By REDI Cincinnati Research Department, with contributions from Bryan McEldowney, Rosa Christophel and Rodney Wilson

This is the second of a six-part series examining an economic comparison report led by REDI Cincinnati’s research team. The comparison benchmarked Cincinnati in six strategic areas—growth, talent, innovation, housing, prosperity, and inclusivity—against 39 peer MSAs ranging from 1-4.5 million people. In this first edition, Growth, or general economic indicators of vibrancy, will be examined.

Read the series:

• Growth with Job Growth Comparison Deep Dive
• Housing
• Innovation
• Inclusivity
• Talent
• Prosperity

Please note that each of the areas examined in this blog series considers data from different time periods. The data used in this report is made publicly available at both different points in time and at varying intervals. For transparency, the time frames are noted in parentheses in each sections’ headline.

Single-Family Housing Pricing (Data points from 2022 Q2)

Housing availability and accessibility are critical components of economic health to an MSA, as housing data indicates both a region’s attractiveness to talent considering a move and the average amount of income individuals can invest in the local economy to improve individual quality of life.

Housing affordability, then, is a primary metric for consideration compared against other MSAs for what it reveals about regional appeal to talent considering a move to the Cincinnati region, as well as the region’s retention expectations for natives and locally educated workers.

Compared to the other MSAs in our study, we found that data supports the popular anecdotal claim that Cincinnati is an affordable place to live. In terms of single-family housing prices in 2021, our region ranks just below the top 25 percent, with a median sales price of $220,000[1]. Pittsburgh ranked as the most affordable, $166,000, while San Jose was the least affordable at $1.3M.

Housing Permits (Data from 2015-2020)

The Cincinnati MSA ranks in the bottom 50 percent of housing permits issued per 1,000 existing units at 7.7. However, that piece of data doesn’t provide the full picture as the Cincinnati region experienced significant growth in permits during that time. Fewer than 4,000 housing permits were issued in 2015 compared to an estimated 7,300 in 2020, representing a substantial growth of 83% during the five-year period.

Furthermore, Sydney Franklin and Randy Tucker recently pointed out in their co-authored article “Enquirer coverage: The Future of Downtown Cincinnati” that residents in Downtown grew by more than 20% between 2010 and 2020 as downtown reinvigorates itself as a “residential food-and-entertainment district.”

Rental Data (Data points in report from 2022 Q2)

Of course, home ownership only tells a fraction of the real estate story for a region, as rentals account for many of an MSA’s housing opportunities. And the data tells a positive story for Cincinnati on this front as well, as a 2019 report found Cincinnati had the fourth-lowest median rental costs among all the examined benchmark regions, just below Cleveland. This data point, reported by the US Census Bureau, followed a comparatively modest rental cost increase between 2014 and 2019.

Renters’ Hardship Gap (Data points in report from 2022 Q2)

The data clearly shows that housing affordability in Cincinnati is better than in most of the metro areas we surveyed. But this doesn’t mean that there’s not room for improvement.

It’s true that the percentage of residents termed as “cost-burdened”—those spending 30 percent or more on housing costs—is relatively low in Cincinnati, especially compared to larger MSAs like New York City. In 2019 the number of cost-burdened households was at 30 percent, a decline of about 8 percent from just five years prior. But the pandemic caused an increase in this number of about 1.7 percent, with home values creeping up 2.6 percent and rental prices increasing by a whopping 28.4 percent.

Rental costs in Cincinnati have gotten a fair share of attention, and a nearly 30 percent increase is troubling. And though this trend follows national housing trends in relation to inflation, the time is now for measures and reforms aimed at closing the widening gap between housing security and financial precarity. Regional leaders are addressing the crisis, though, creating locally owned affordable housing for those moving towards renting options and offering assistance where needed.

Finally, though the issue of chronic homelessness is significantly less severe in Cincinnati than it is in states like New York, Florida, Texas, Washington and California, initiatives such as the United Way’s Housing First Mission and Greater Cincinnati’s Homeless Coalition extend support to Cincinnati’s unhoused populations.

Housing Data in the Real World

What do these numbers mean for the average homebuyer in Cincinnati? Well, in 2020, an existing single-family home could be purchased for just under $210,000. And in the fourth quarter of 2021, an impressive 81 percent of homes sold in our region were affordable to a family earning the local median income—a point placing us in the top 25 percent of studied MSAs.

While housing prices have increased locally in the past few years, following a national real estate trend driven by overall reduced inventory available to potential buyers, Cincinnati still stands above all but a few regions in our study in terms of affordability.

Our region consistently earns accolades for this important characteristic, too, with US News & World Report calling Cincinnati the “Best Place to Live in Ohio,” Business Facilities recognition as the “7th Most Affordable City,” a No. 3 ranking in terms of “Cities with Lowest Rent-to-Income Ratio” from Clever and more.

[1] According to data from the National Association of Realtors, which did not include data on Detroit, Seattle, Nashville and New Orleans.