YOUNGSTOWN, Ohio – Low inventory is still driving house prices up but real estate professionals in the Mahoning and Shenango valleys see the beginning signs of the market cooling. At the same time, they don’t foresee the kind of crash that took place during the Great Recession.
Properties still are attracting multiple offers when they go on the market, but not as many, and days on market for properties are ticking up.
“It’s been a sellers’ market all year,” says Fontineese Green. Green is an agent with Berkshire Hathaway HomeServices The Preferred Realty in New Castle, Pa., and president of the Greater Mercer County Association of Realtors. In some cases, available houses stay on the market only for hours, she says.
Pressures on pricing are such that sale prices in Hermitage, Pa., alone were up 46% over the past six months, she says. Residential properties on Shenango Boulevard in Farrell, Pa., where a year ago she had a listing for which she couldn’t get $40,000, are going for double that price. In general, houses are going for $15,000 over asking price.
Sale prices have increased nearly 20% since January, says Patrick Burgan, broker/co-owner of Burgan Real Estate, Boardman, and president of the Youngstown Columbiana Association of Realtors. The average sale price for a house last year was $130,000 compared with “just north of $160,000,” he says.
“A lot of people are actually getting priced out of the market,” Burgan continues. “With these bidding wars, we’re seeing prices well over asking price. So unfortunately it’s becoming so competitive for buyers that a lot of the time they’re missing out on houses because the prices are escalating so quickly,” he adds.
Lack of inventory has been an issue for about two years, Michael Stevens says. With his wife, Janice, and another partner, he co-owns Coldwell Banker EvenBay Real Estate, which has offices in Howland and Boardman. “The demand’s not going away and we’re hoping for an increase in supply,” he says.
“Listings are becoming more frequent. We have more inventory coming on the market,” Burgan notes. He sees the issue as one less of low inventory than of days on market. Sales this year are up 10% over last year, meaning there had to be listings.
Additional inventory from new construction could help, but likely won’t come on until the prices of materials come down, Burgan says.
Sellers still are seeing “multiple offer situations” but the number of offers is decreasing, he continues. A few months ago, getting 10 offers on a property that went on the market was normal; that is down to five now. At the same time, days on the market is increasing, from nine to 11 or 12, although he says that might be attributed in part to the seasonal slowdown in sales at back-to-school time.
Most multiple offers are coming in the range of $200,000 to $350,000, according to Green. Buyers also know they have to come in with their “best and final offer” because of the competitive market, which has also led to sellers being more selective about what they will accept in terms of financing, she says. Loans such as those from the Federal Housing Administration and Veterans Administration require appraisals, and potentially repairs.
“So what we’ve been seeing is that conventional [loans] and cash have been king,” she says. Dropping inspections typically means the buyers are not going to ask for repairs, meaning more money in the seller’s pocket.
The agents and brokers point to several factors driving the market activity, including the desire to return to family and the increasing ability to work remotely.
“There are a lot of first-time home buyers and there are also a lot of buyers who are moving up,” Green says.
Younger people who moved from the Mahoning Valley to establish careers are now approaching the age where they’re starting to have children of their own and are returning to be close to family or take advantage of the area’s competitive cost of living, Michael Stevens says. In addition to being able to work remotely, some personnel are getting “decent offers” from local companies.
“Because of the cost of living around here, you can live like a king if you’re doing well, because of the affordable housing and everything from country clubs to golf courses that are equivalent to elsewhere but more affordable here than anywhere,” he says.
Buyers have been able to absorb the higher prices because of low interest rates for home loans. And even if interest rates begin to rise, “I can’t see them going up drastically,” Janice Stevens says.
None of the real estate agents foresee a drop in the market like what happened in 2008.
Michael Stevens says his firm is preparing for a “soft landing,” rather than a crash, because of driving forces like strong demand remain. Time on the market has gone from two hours in some cases to 10 days, indicating the beginning of the market becoming more stabile. “The buyers aren’t going anywhere,” he says.
“There will be a leveling,” Green predicts. “We’ve noticed some price decreases happening in the market.” Open houses, unnecessary for a time, are taking place again, “which tells you properties are staying on the market a little longer.”
The Mahoning Valley doesn’t experience the sharp increases in values or the sharp decreases like markets in Arizona and Florida do, Burgan says. He recently saw a handful of houses that didn’t get the appraised price, a sign that the market is softening.
“We’ve probably plateaued and will have a slight decrease, he says. But we’re not in a bubble and we don’t need to panic anytime soon.”
Pictured at top: Michael and Janice Stevens, Coldwell Banker EvenBay Real Estate.