YOUNGSTOWN, Ohio – Realtor John Burgan saw many businesses shutter and industries suffer because of economic downturns during the more than 50 years he’s been in business.
“But we’ve always bounced back,” Burgan, of Burgan Real Estate, says.
In the early 1980s, about 30% of Burgan’s business was land contracts. That was after the steel mills closed and people struggled to pay their bills.
Land contracts are a rarity 40 years later. “I haven’t had a land contract for 20 years now,” he says.
In the 1980s, mortgage rates hovered between 11% and 11.5%. Burgan recalls a bank president at the time telling him that the bank would probably never offer fixed-rate mortgages again.
“The big difference between the early 1980s and now is sellers had equity,” Burgan remembers. “They were allowed to do a land contract because they had equity. They’d take some of their equity out and get a down payment from the buyer…Now, the down payment is not as high as it used to be. There are a lot more insured loans than there were back then.”
Those who bought houses during that period paid less for their homes “because they financed it,” he says. “The buyer that came in – the seller was willing to give them their interest rates,” which were lower than if the buyer sought new financing.
Sellers were backing off of their prices, he adds.
“So those people actually benefited because interest rates were high,” Burgan says. “As the ’80s went on, those people who bought in the early ’80s probably refinanced two or three, four times. Because the rates kept going down – a boon to the financial business, a boon to title companies because they were redoing all their loans.”
High interest rates and other factors led many builders to close, he says.
The 2008 housing crisis also caused businesses to shut down but Burgan says the Mahoning Valley is resilient and recovered.
He believes that will continue.
“I think we’ll thrive. We’ll survive,” Burgan says. “We always do. We always come back.”