The housing market changed in two important ways this week.

The Federal Reserve raised its benchmark interest rate on September 16, and mortgage rates moved back toward 7%. At the same time, the newest Central Ohio numbers show more homes available to buyers while prices continue to hold.

That combination doesn’t make this a bad market. It makes it a market where the property you choose, the price you negotiate and the condition of the house matter more than ever.

Mortgage Rates Just Took Another Step Higher

On September 16, the Federal Reserve raised the federal-funds target range by 0.25 percentage point to 3.75%–4.00%, citing inflation that remains elevated. (Federal Reserve)

It’s important to understand that the Fed doesn’t directly set mortgage rates. Mortgage rates respond to a broader mix of inflation expectations, Treasury yields, economic data and investor expectations.

But borrowing costs have moved higher.

Freddie Mac’s latest mortgage-rate data shows the average 30-year fixed mortgage reached 6.95% on September 17, up from 6.76% one week earlier and 6.26% a year ago. (Freddie Mac)

For perspective, Freddie Mac estimates principal and interest on a $300,000 mortgage at approximately $1,896 per month at 6.5% and $1,996 at 7%. That’s about a $100 monthly difference before taxes and insurance. (My Home)

What buyers should do

Don’t automatically stop your home search because rates moved.

Instead, change the conversation from “What’s the rate?” to “What’s the total deal?”

A seller willing to contribute toward closing costs or a rate buydown may create more financial benefit than a small reduction in purchase price. Comparing lenders matters too.

Most importantly, buy based on a payment you can comfortably afford today. Refinancing later should be considered a possibility—not something your purchase depends on.

Columbus Inventory Is Growing While Prices Are Still Holding

This is the part of the market I find especially interesting.

The newest Columbus REALTORS® August housing report shows Central Ohio had 6,124 homes available for sale in August, up 6.8% from a year earlier.

At the same time:

• Closed sales declined 2.5% year over year to 2,749
• Median sale price increased 2.2% to $345,500
• Inventory reached 2.4 months of supply
• Sellers received an average 96.9% of their original asking price, compared with 97.2% last August. (Columbus Realtors)

Those numbers tell an important story.

Buyers have more choices, but Columbus has not suddenly become a buyer’s market.

Prices are still appreciating. Inventory remains relatively tight. But sellers are competing against more listings than they were previously.

That creates negotiating opportunities.

Ohio Is Seeing the Same Shift

The statewide numbers released September 17 reinforce what we’re seeing around Columbus.

Ohio REALTORS® latest housing report shows August sales declined 4.2% year over year to 11,718, while the statewide median sale price increased 4.4% to $268,000.

Active listings increased to 39,168, compared with 38,427 last August and just 29,812 in August 2023. Ohio ended August with approximately 3.67 months of housing supply. (Ohio REALTORS)

So we’re not seeing falling values.

We’re seeing inventory rebuilding while affordability limits how aggressively some buyers can compete.

That’s a very different market from the bidding-war environment where buyers sometimes felt they had to waive everything just to get a house.

Buyers: The Dated House Is Becoming More Interesting

More inventory creates one opportunity I think buyers should seriously consider:

Stop automatically eliminating houses because they’re ugly.

There is a big difference between a house that needs cosmetic updating and a house with expensive underlying problems.

Old cabinets, dated bathrooms, bad paint, worn flooring and ugly fixtures can usually be priced.

Foundation movement, extensive water intrusion, failing sewer lines, major electrical problems and structural issues require much more careful analysis.

This is where understanding construction becomes extremely valuable.

Imagine two similar homes.

One is completely renovated for $425,000.

Another is dated at $360,000 and needs $30,000–$40,000 of improvements.

Most buyers will naturally gravitate toward the finished house. But depending on the neighborhood, financing and renovation scope, the dated property could offer considerably more opportunity to create equity.

The key is knowing what you’re actually buying before you make the offer.

Sellers: Buyers Are Going to Notice Deferred Maintenance

Increasing inventory also changes the strategy for sellers.

When buyers only have three houses to choose from, they’ll tolerate more.

When they have twelve, they’ll compare everything.

That doesn’t mean sellers need to renovate their entire house.

In fact, I frequently think that’s a mistake.

Before listing, I’d rather identify the handful of improvements that will actually influence buyers: paint, flooring, lighting, landscaping, cleanliness and obvious deferred maintenance.

Then compare those costs against competing listings and recent sales.

A $40,000 renovation doesn’t automatically create $40,000 of additional value.

Sometimes spending $8,000 strategically produces a better return.

Sometimes selling the property as-is at the correct price makes more sense.

Construction decisions should be investment decisions.

Investors: Build More Margin Into the Deal

Nationally, buyers are also gaining options.

The National Association of REALTORS® August Existing-Home Sales report showed sales declined 2% from July and 1.2% from a year earlier.

Inventory increased to 1.62 million homes—4.9 months of supply—while the national median existing-home price still increased 1.6% to $429,100. (NAR)

For investors, this environment can produce acquisitions—but it also increases holding risk.

Higher borrowing costs matter twice on a flip.

They increase your financing expense while also reducing purchasing power for the buyer who eventually needs to buy your finished property.

That’s why I’m underwriting projects more conservatively.

I want contingency in the construction budget. I want enough room for a longer hold. And I don’t want the deal depending on aggressive appreciation to make the numbers work.

A project should still make sense if construction costs a little more, the renovation takes a little longer or the final sale comes in slightly below the optimistic ARV.

The Biggest Opportunity Right Now

I don’t think the biggest opportunity is trying to predict whether mortgage rates will be 6.25% or 7.25% six months from now.

It’s being able to recognize value that other people overlook.

For a buyer, that might be a dated house with great bones.

For a seller, it might mean spending $7,500 fixing the right things instead of $40,000 renovating the wrong ones.

For an investor, it could be a property that’s been sitting because other buyers can’t accurately estimate the rehab.

The takeaway

Buyers: More inventory means you can be more selective and negotiate—but stay disciplined about your monthly payment.

Sellers: Pricing and condition matter more as buyers gain alternatives. Fix what matters instead of automatically renovating everything.

Investors: Higher financing costs require better underwriting. Increase contingency, protect your margin and don’t depend on appreciation to rescue a marginal deal.

Central Ohio remains a strong housing market, but it’s becoming a more strategic market.

As a Realtor with a construction and real estate investing background, I don’t just look at what a property costs today. I look at what it needs, what those improvements should realistically cost, what comparable properties support and where there may be value left on the table.

If you’re thinking about buying, selling, renovating or investing in the Columbus area, let’s look at the property and the numbers together before you make the move.