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Mortgage Forgiveness Debt Relief Act of 2007 Extended
Others feeling the effect of sharp decline in area
By Dave Scott
Beacon Journal business writer
Published on Monday, Oct 06, 2008
A sharp decline in area home sales is depressing related businesses and forcing some to change their business plans.
''Nobody is moving, so people just aren't fixing up,'' said Andy January of January Paint & Wallpaper in Akron.
''We've hunkered down about as far as we can hunker because we've had such a bad 21/2 years.''
Carmine Torio, executive vice president of the local Home Builders Association, estimates home construction is down 70 percent since 2005 and that has consequences throughout the economy.
He estimates these businesses have been affected: manufacturers of carpets, appliances, garage doors, furniture and other kinds of building supplies, in addition to the construction industry.
National Association of Realtors figures for Summit County show 418 homes were sold in August, a 36 percent decline from August 2007.
July 2008 results were down 22.6 percent from the previous July.
''What is disappointing is the price of the homes that are
sold,'' said Susan O'Neal, president of the Akron Area Board of Realtors.
NAR statistics show the average home sold for $136,545 in August, compared with $144,006 in August 2007.
New home sales were even more dramatic. Green had only 37 single-family building permits in the first half of 2008, after an annual high of 220 for the full year of 2003. Cuyahoga Falls issued only 12 such permits through the first six months of 2008, after issuing 251 through all of 2006.
Loan money available
Some national figures have warned of ''liquidity'' problems that could prevent local institutions from making home and business loans. But there is no evidence of that locally for home buyers.
Stephen Hailer, president and chief executive of North Akron Savings, said the national credit crunch is not affecting his customers.
As a member of the Federal Home Loan Bank of Cincinnati, he said, his bank has no problem acquiring the money it needs to loan to customers and he has not issued the kind of subprime loans that got some institutions into trouble.
''Actually, we've never changed our standards,'' he said. '' . . . We have a lot of folks who are hurting, but every financial institution does. But at the same time, we are doing great.''
Realtors like O'Neal and Jon Wnoroski of Geneva Chervenic Realty of Green say they haven't heard stories of people unable to get loans. It's the falling prices that are riling customers.
''People are seeing their homes going for less than what they would like to get out of them,'' Wnoroski said. ''House values have declined in not only our market, but in markets all over.
''My best advice to a potential buyer of a home is that if you have a home, sell it first and then start looking for your next home, . . . I don't want people in the situation where they have two mortgages.''
Owner frustration
Mike Webb, general manager of Carter Jones Lumber, said his company saw the housing decline coming last year and has adjusted by concentrating on commercial sales.
''I can tell you, this year our sales are up significantly over 2007, but I can tell you it is not from new home sales,'' he said.
That included selling a lot of material for store and business construction out of state, in places like North Carolina.
''In fact, we are seeing declines in home sales,'' he said.
''I think there is a lot of pent-up frustrations from people who want to expand. But right now, given that money is extra-hard to borrow, people are holding back.''
He doesn't see any immediate improvement.
''I don't foresee an end to this until early third quarter of 2009,'' Webb said. ''That's just a gut reaction of experience of over 30 years.''
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.10 percent this week, the highest level since 30-year mortgages averaged 6.35 percent for the week ending Sept. 4.
Rentals and low-income housing are on the upswing.
The largest segment of August home sales came in the under-$29,999 price category, with 94, almost a quarter of all sales that month.
Homes trashed
O'Neal and Julie Oliver, a Realtor with Stouffer Realty, said that is evidence of investors buying run-down homes, fixing them up and selling them for a profit.
''As long as they can get the money with loans and so on, people are looking for good deals. Homes that are in the $100,000 range are fairly attractive to a good number of people,'' Oliver said.
But Oliver added: ''Not all of those homes that are under $100,000 are what I would call fixer-uppers. . . . I've shown a number of those, I'm sorry to have to admit. . . . It appalls me to see people who would leave those homes in such a condition.''
That includes homes that are trashed before they are foreclosed, with pipes and even a furnace removed.
Of the 418 Summit County homes sold in August, 200 — or 48 percent — went for less than $100,000. There were 190 sold for under $100,000 in August 2007.
Oliver said she thinks that could be the spark when the real-estate market begins to recover.
''When we see some growth, that is going to have a trickle-up effect,'' she said.
Oliver said many of the people who sold foreclosed homes went to rentals, one part of the real-estate market that is improving.
Deborah Loughborough, a broker at Akron's Twin Lakes Realty, said her rental houses and apartment buildings are at 98 percent occupancy, with most of the remaining structures under rehabilitation.
Shawn Whiteman, vice president for Niederst Management, owner of Wyoga Lake Towers in Stow, said his company's occupancy rate for about 7,000 units in Northeast Ohio is well over 90 percent.
He said industry leaders predicted even more demand early this year, but he hasn't seen it yet.
''We geared up for it and put a foreclosure forgiveness program in place'' to make rental applications easier to get, but the increase has not come.
If rental demand does increase, he might consider expansion, but money for loans is tight right now.
''There's just less money out there to borrow,'' he said. ''In about six months. people will stop panicking and people will start borrowing again.''
Dave Scott can be reached at 330-996-3577 or davescott@thebeaconjournal.com
A sharp decline in area home sales is depressing related businesses and forcing some to change their business plans.
Get the full article here.
Comments
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Posted 04:33 AM, 10/06/2008
you hope.
Barberton, OH
Posted 04:39 AM, 10/06/2008
There will be no improvement in 2009. Everyone kept saying '07, '08, I said "no way." So far I've pegged that right on.
You know, something to keep in mind is that building materials are on the rise. Lumber is cheap right now, so if you need lumber, now is the time to buy it. Shingles and vinyl siding materials are high due to the fact that oil is used to make those. Oil came down in price recently, but the cost of vinyl materials and shingles did not. They are keeping their prices right where they are because they will rake in the profits. From the beginning of 2008 until now, there are some types of shingles that went from 35.00 per bundle to now selling for 73.00 per bundle. BIG increase and they aren't looking back either.
Tallmadge, OH
Posted 06:57 AM, 10/06/2008
What a mess Bush got us into. McCain offers us more of the same. Can you stand 4 more years of this crap? Vote for Obama and change. Obama can only be better then Bush is now while McCain offers you more of the same.