Low Inventory, Low Rates: It’s a Seller’s Market
YOUNGSTOWN, Ohio — Marlin Palich hasn’t seen this market for residential properties in quite some time. Inventory is shrinking, houses are getting multiple offers and the competition for what’s available is driving selling prices above asking prices, he says.
Palich is the Ohio division general manager for Northwood Realty Services, which has offices in Mahoning, Trumbull and Columbiana counties in Ohio and in western Pennsylvania. “It’s just refreshing to see this market back again,” he says.
Palich isn’t alone. Agents and brokers for Mahoning Valley real estate companies report a more robust housing market driven by still-low interest rates, pent-up demand and a low supply of listings.
How low? One Howland Township property that Palich listed recently received three offers within 24 hours after it was listed. Another in the township got nine offers, he says.
“The problem right now is inventory,” Palich observes. Competition for properties and multiple offers are driving prices “way over the asking price,” by 2.5% in some cases.
“You still have to price your home accordingly,” he advises, “but what we’re seeing is these multiple offers driving the prices up.”
Palich attributes much of the market activity to low interest rates, which for qualifying buyers are below 4%. Millennials and members of Generation X are finding that with interest rates at current levels, a mortgage payment is lower than the rent for a comparable property. “Why would you pay for someone else’s mortgage?” he asks.
Buyers can get “a very nice home” in the Mahoning Valley for less than $100,000, “so it’s very conducive for these Gen X’ers and millennials,” he says.
“It’s a very active market,” agrees John Burgan, president of Burgan Real Estate, which has offices in Boardman, Canfield and Liberty Township. “In all price ranges, if the property is priced fairly, it will sell in a reasonable amount of time.”
Properties up to the high $200,000 range seem to be more active, according to Burgan.
Asking price is based on how the property is appraised, Burgan says. “One thing I’ve seen, more so lately, is that when the market is going down the appraisers sometimes anticipate the lower values and they give a lower appraisal,” he says. “When the market is trending up, appraisers don’t catch up on the market as fast as they catch up on a declining market.”
Among the factors in the inventory shortage is the lack of newly built houses. New construction is coming back but “very slowly,” Burgan acknowledges. Lenders have been slow to get into new construction “because of how they were burned before by builders overextending themselves” and were “left holding the proverbial bag,” Burgan says.
Builders must find subcontractors who haven’t gone into other businesses, he continues.
“A lot of these skilled workers are a hesitant to come back into the market,” he says. “The combination of banks being concerned about loan money for spec construction and builders lacking an adequate supply of subcontractors has created a void.”
David Zamarelli, owner of William Zamarelli Realtors in Howland, agrees about the paucity of housing stock and its effect. But the higher end of the market is performing better than it has in years.
“It’s actually become a seller’s market,” Zamarelli says. “It’s not unusual to see multiple offers on properties. It’s almost become common, which is driving prices up, too.”
Over the past couple of weeks, several properties sold for above the asking price “because buyers are competing against each other,” Zamarelli says.
In fact, prices locally are close to reaching the levels they were before the real estate bubble burst that precipitated the Great Recession and foreclosed properties no longer drag down the market.
“Do I think we’re there yet?” he asks. “No, but we’re pretty close to where we were.”
Zamarelli doesn’t attribute the increased market activity to just one factor, such as the presence of a major employer. Many first-time buyers see that interest rates are low and sense that now is a good time to buy. “It just seems that people feel more comfortable with their financial situation and the economy,” he says.
The upturn recently helped Real Living Brokers Realty Group, which has offices in Mahoning and Trumbull counties, double unit and sales volume month-over-month, reports Yvonne Smith, broker/owner.
Many young buyers, acting on pent-up demand, are re-entering the market. “They’re just now getting confident enough to make the decision and jump in,” Smith says.
Prices are stable and “somewhat increasing,” because of the lack of houses for sale and “willing and able buyers,” she notes. “We’re begging for listings right now.”
The number of houses for sale could be spurring people to act when they find a property that comes close to their wants or needs. “They know there’s competition,” she says. “That gives them quicker motivation to go ahead and make their decision.”
Cheryl Stevens, broker/owner at Stevens & Associates Inc., Cortland, also finds the market is steadily improving. Business this year is perhaps 15% better than 2015, which was also a good year, she says.
“The biggest activity is in midrange-type homes,” she says, pointing to “very good activity” in the $130,000-to-$200,000 range. “We’ve still got a lot of people around here who don’t have such great jobs, so there’s plenty of buyers in that $90,000-to-$100,000 range, too,” she says.
Stevens sees many young couples looking to buy houses, in some cases their second.
Like her colleagues, Stevens points to low interest rates as one factor that allows buyers to “buy more home than you could when [rates] were 7% or 8%.”
Listings, down in recent years, are finally opening up, but even with the increase in inventory it isn’t enough to meet demand, says Sean Carney, partner in Gallagher Clark & Carney Realty Group, which has offices in Columbiana and Calcutta. Construction must pick up to satisfy demand because activity is up across the board.
“There are not enough newer homes available for how many people want them,” Carney says.
The agency has seen a “big increase” in both sales and listings. Business is up 200% year-over-year, he reports. “We have a lot more agents than we had last year and the market is up,” he said. “So it’s been really good.”
Pictured: High-end houses such as this at 2503 Forest Springs Drive in Howland are selling quickly and often above the asking price.
Copyright 2023 The Business Journal, Youngstown, Ohio.