YOUNGSTOWN, Ohio – Laynie Kratko of Sharpsville, Pa., saved up a downpayment for her first home and started house hunting about a year ago.
The single, 24-year-old thought she’d be able to afford the type of house she wants.
“I’ve looked over in Ohio, toward Masury, Hubbard, Brookfield,” Kratko says. “I’ve looked at Campbell. I’ve looked at Sharpsville, Hermitage, Sharon, Transfer.”
Despite her savings and her salary as a physical therapist assistant, what she found either needed too much work or cost too much. She’s still looking and growing her savings while living at home.
“I feel like I have realistic expectations that I’m not going to have some giant house,” she says.
Kratko wants to buy a two-bedroom, one bath home and is prepared to pay a 5% downpayment.
About $85,000 is the maximum she believes she can afford, and she wants a safe neighborhood.
She’s found some houses that seemed to be a decent price but required about $40,000 of work to make them livable.
Another house she found was in her price range, but she couldn’t afford the taxes, which would have added about $2,200 per year to her expenses.
She estimates she’s viewed 15 houses and made bids on three.
“The first one, when we got the inspection done, it had pretty much anything you could imagine wrong with it,” Kratko says.
The foundation was bad. The roof needed to be replaced. And a prior owner painted over rather than repaired fire damage.
“The second one I looked at was nice,” she says. “It just was when we finally got all the stuff together with the numbers, it was well over what the anticipated number was going to be due to the interest rate.”
The seller backed out on the third house.
Kratko isn’t alone. People in the Mahoning and Shenango valleys, like much of the nation, are facing a shortage of affordable housing.
Low-End Shortage
Marlin Palich, a real estate agent with Berkshire Hathaway HomeServices Stouffer Realty, says houses in the Mahoning Valley that hit the market in the $80,000 range either need a lot of work or sell quickly.
“There aren’t that many,” he says. “That’s the problem.”
The market changed when interest rates went up about two years ago, Palich says.
He believes solving the problem will require a multifaceted approach that addresses wages, lending, education and collaboration among communities.
And efforts on both sides of the Ohio-Pennsylvania line aim to address the shortage of housing that’s both affordable and desirable.
Eastgate Regional Council of Governments contracted with the Greater Ohio Policy Center and the Reinvestment Fund for a housing study of Mahoning and Trumbull counties that produced several recommendations.
“The first question any prospective business, developer or site selector asks is where are their employees going to live,” says Jim Kinnick, Eastgate executive director.
Study recommendations include establishing a housing consortium, coordinating and adjusting zoning regionally, developing a downpayment assistance program, instituting an emerging developer program and assembling land proactively.
Developers Shy Away
The western Pennsylvania market struggles with housing affordability and availability too.
“One of the things that we have seen is that the cost to build a new house has now exceeded the housing market in our rural community,” says Jake Rickert, director of workforce development at Penn-Northwest Development Corp., based in Hermitage, Pa. “And what I mean is, to build a house, an average house around here – a three bedroom, two bath, 2,000-square-foot – the frame alone can cost $150,000 to $200,000.”
Add in essentials such as utility hookups, flooring and insulation, and the cost grows to about $250,000. Mercer County’s average salary is $57,000, according to Rickert.
That means the cost to build doesn’t match the market rate, making it less appealing for developers to build there, he says.
“So, we’re losing developers to more densely populated areas,” Rickert explains.
Instead, they’re building closer to Butler, Pa., where the average home price tops $350,000.
“For us, to make development worth it here, we need partners – local government, nonprofits, the state – to pull together and find some way to kind of lower the cost of production for these homes,” the workforce development director says. “I mean, it just doesn’t match what our rural communities need.”
Benjamin Bush, executive director of the Forward Lawrence Chamber and Economic Alliance, says three single-family housing developments recently were built in Mahoning and Shenango townships. And building rehabilitation is ongoing in downtown New Castle, Pa., to create apartments.
But Lawrence County wrestles with the same housing issues affecting the rest of the country.
“Just as it is everywhere, we have a large need for housing and different types of housing,” he says
Lawrence County wants to attract people between age 22 and 39 to fill positions at its businesses, and that segment of the population wants different things in a house.
“They’re looking for walkability. They’re looking for townhouses,” Bush reports.
Many existing single-family homes are occupied by the older population, he says. If they moved into senior housing and patio homes, that would allow turnover of the single-family homes. But there are often waiting lists for that type of housing as well.
“You’re seeing a need in all areas, all price ranges and all types,” Bush says.
Watching Interest Rates
Bush sees hope on the horizon.
“I think a couple things are going to happen. As the interest rates start to come back down to a reasonable level, folks are going to be able to borrow,” he says.
The commonwealth also is helping specifically with mixed use developments through the its Department of Community and Economic Development. That could help with some development costs such as roads and water, gas and sewer lines, Bush says.
Kratko says she’s willing to put some work into a house and it’s something with which her family has experience.
“I’m just looking right now and waiting for a good deal, someone that’s looking to sell quick,” she says. “And I can do the cosmetic stuff like flooring and paint and stuff like that – it isn’t a big deal. I’m just hoping to find one where the bathroom and kitchen don’t need totally remodeled, because that together is around $30,000.”
Until then, her search continues.
“I’m keeping my ear to the ground and checking them out and looking and hoping I can get a good deal,” Kratko says.
She wants to live in her first home for a while and fix it up and then rent it. “I’m setting my expectations that it doesn’t need to be the nicest house,” Kratko says. “This is not where I’m going to be forever.”
Pictured at top: Laynie Kratko lives at her family home in Sharpsville while she searches for a house of her own that she can afford.