‘Never Seen Anything Like This’ – Real Estate Pros

YOUNGSTOWN – Local real estate professionals concur they’ve never witnessed a market such as this one throughout their careers.

The incentive to sell has never been better as housing prices climb in an economy slowly recovering from the COVID-19 pandemic and a market dominated by low interest rates.

But the challenge is that housing inventory is also at an all-time low, making it hard for sellers to secure new dwellings as they stand a strong chance of a quick sale and obtaining top dollar for their homes.

“In 43 years, I’ve never seen anything like this,” says Marlin Palich, general manager of Berkshire Hathaway HomeServices Stouffer Realty. “When you put a house on the market, it’s likely you’ll get multiple offers. We’re all looking for inventory. We’re getting offers from people who have never seen the house.”

While the lack of inventory in the housing segment appeals to sellers, Palich says, it’s equally challenging to find new houses for those same sellers looking to downsize.  

This is especially relevant for baby boomers, many of whom are empty nesters looking to leave larger homes and buy a more practical one-floor plan, Palich says.  

“If the majority of the region’s generation are baby boomers, then they’ll be looking for ranches or condos,” he says, which are in short supply. “If you’re looking for something smaller, it’s hard to find.”

This lack of inventory is driving up prices across the region, says Michael Stevens, owner of Coldwell Banker Evenbay Realty. Moreover, these changes have had a direct impact on in-demand price points for houses in the Mahoning Valley – a “sweet spot” that normally would command on an average a home listed at around $125,000.

“That $125,000 target has now moved up to $150,000 or $160,000,” he says. Normally, a house in this average price range would be out of reach in the Mahoning Valley, given the economy in the region and its per capita income. “What’s balanced this out are the low interest rates,” Stevens says. “There are still plenty of buyers and they’re buying.”

Much of the buying frenzy hitting the market today has its roots in the housing crisis of 2008, Stevens says. “I think this has been building for a long time,” he says. “After the housing crisis, a lot of people lost their homes and the rental market boomed.”

As the economy recovered and unemployment plummeted over the next decade, those who were once reluctant to buy new homes jumped back into the market, Stevens adds. “A lot of people gravitated back to that.”

This is unusual for real estate in the Mahoning Valley, which has been largely immune to the volatile peaks and valleys of national and even statewide trends, Stevens says. “We used to have our own little bubble,” he says. “We’d always run less volatile than the rest of the country.”

This appears to have changed because the average sale price for a house during February in Mahoning and Trumbull counties increased at a much higher percentage rate than statewide numbers.

According to the latest data provided by MLS-Now, the average selling price in February for a single-family home in Mahoning County stood at $152,195, up 27.5% from a year earlier. In Trumbull County, the average sale price was $132,113, an increase of 20% from February 2020. The average sale price for a house in Columbiana County increased 16.3% compared to last year, the data show.  

The MLS-Now region consists of 18 counties in eastern Ohio, stretching from Ashtabula County to Belmont County. Only Harrison and Ashtabula counties posted higher percentage price increases for house sales in February than Mahoning County, according to the data.

Statewide, the average sale price of a house stood at $209,945, or 12% higher than in February of last year, finds a report released March 22 by Ohio Realtors.  

“Prices have definitely appreciated and moved in the upward direction over the last months,” Stevens says.

Encouraging new housing development is a logical answer to the tight market, he says. New planned residential housing projects, however, would require a sizeable financial commitment for new infrastructure such as sewer and water, which might be too high a price to assume. “That’s going to take someone who’s all in,” he says.

Nevertheless, there is ample evidence of new housing builds in areas already served by these utilities. Stevens and other investors, for example, are constructing a single-story spec home in the Cortland area targeted to attract buyers looking to downsize.

“It’s between 1,700 and 1,800 square feet at a price point of around $245,000,” he says. “It will hopefully be finished by the end of next month.”

Other developers are experiencing a year like no other in recent memory.

“Anybody that is a qualified builder is buried with work right now,” says Sam Pitzulo, owner of Sam Pitzulo Homes, Canfield. On average, the developer takes on about 10 new projects a year.  In 2020, the number hit the high teens, he says.  

“We’re hoping to hit the same number this year,” Pitzulo says.

Among the challenges new house construction faces is the soaring price of lumber, Pitzulo says. “Lumber is the second-largest expense you have in a home. And it’s at an all-time high.”

This still hasn’t deterred new developments because long-term savings through lower interest rates more than offset any price increases added to new construction, Pitzulo says. He references three new houses he’s building at Firestone Farms in Columbiana, as well as other projects in progress around Lake Milton, Guilford Lake and Berlin Lake.

“There’s a lot of building going on,” he says.

One reason that builders are swamped is because there are simply fewer residential development companies operating in the Mahoning Valley, Pitzulo says. “We lost a generation of builders during the 2008 recession,” he says. “We had 28 developers – 22 went out of business. The supply of builders is down. And it’s directly related to what’s going on now.”

Pitzulo says he’s building several single-and-a half story houses, a market that he sees driven by families with children in middle school or their early teens but with parents eyeing a practical home for retirement.

Providing a transition from a two-story dwelling and into a single-story home convinced Pitzulo to commit a major investment in Lowellville, a small community of about 1,100 that is largely dominated by small, well-kept two-story houses.

He looks to break ground on an 18-unit condominium complex on a site just four blocks from the Mahoning River – all of which will have single-floor plans. Since a sizeable portion of the  population of Lowellville is on average older and live in two-story dwellings, the development made sense.

“This is probably the first new investment here in more than 50 years or so,” Pitzulo says, adding the project should come in just shy of $3 million.

But is there a return for such a real estate investment in smaller communities, especially in the Mahoning Valley? Pitzulo says he’s confident there is.

“We are breaking ground in late May,” he says.  “And one-third of them are already sold.”