LIMA — When March and the coronavirus hit, real estate agents expected a downsized market. Then it caught fire.
Today, the number of real estate listings sits at an all-time low with under 400 homes up for sale. During a buyer’s market, Allen County has had four to five times that amount.
In other words, if there’s a house for sale, there’s a good chance someone’s going to buy it.
The tightening market
Kelsie Coby, 29, and her husband began searching for a house in May. The two have a toddler, and they wanted more space for more children down the line.
“We wanted something more in the country with an extra building, but those were all selling super fast. We wanted three to four bedrooms, looking for master bath. I’m a chef and a pastry chef, so I wanted a decent kitchen,” she said.
They saw a few homes that fit their specifications online, but when they sought more information, more often than not the house had already been sold. The sale of their own home put on the market on Memorial Day weekend took just four days.
After a three-month search, they’re moving into their new place this weekend.
“The market is crazy right now,” she said. “It’s definitely a seller’s market.”
A consistent problem for Lima’s and Allen County’s housing market has been its short supply of quality homes. Due to the costs of construction outpacing the value of already-standing homes, it’s just cheaper to rent, buy or renovate an older home instead of building one from scratch.
At the same time, the overall market has never faced the same sort of housing demand found in major metropolitan areas.
For decades, societal pressures have pushed people — especially younger professionals — into cities, and the county’s population contracted.
Over time, that lack of demand for housing brought down the overall cost of living for those still in the area, but now, the pandemic has started to shift Allen County’s relationship with metropolitan areas. Instead of young people leaving to find higher-paying jobs in the cities, the pandemic has encouraged the opposite.
The need for social distancing has translated into a new need for space, which northwest Ohio has in spades. Add new work-at-home expectations, cheap property, years of solid growth for some of the county’s largest industries and super low interest rates into the mix, and you get a new kind of housing demand that hasn’t been seen in the area for quite a while.
Such hyper-low inventory, however, presents its own problem. There’s just not enough houses to grease the wheels of growth, and it may be years before expected revenue on new builds grows to the point when it’s worth the investment for housing developers.
“The demand has outpaced the supply of homes for the last 18 to 24 months,” Tim Stanford, a real estate agent with Superior PLUS Realtors, said. “The coronavirus exacerbated that.”
The new demand
If there’s increased demand, then where is it coming from? Berkshire Hathaway HomeServices Realtor Debbie Lane said she’s seeing first-time home-buyers, primarily in their 20s and 30s, come into the market to take advantage of low interest rates
“The last closing I sat in, the interest rate was 2.25% on a 30-year mortgage. People are taking advantage of that. They can buy more house now,” Lane said. “We used to say anything under 8% was a great interest rate, then anything under 4%. When you have 2.25% you can afford more house. It’s allowing those buyers, instead of buying a $200,000 home, they can buy $275000.”
Homes in the middle of the price range have been most in demand. Realtors interviewed for this article said anything costing between $100,000 to $200,000 gets picked up in a manner of days, and those edging between $50,000 and $250,000 have seen renewed interest.
Even some low-priced properties, those under $50,000, are being grabbed as some buyers look to bring the buildings up to their expectations.
As for the styles of homes, Lane said she’s seen a lot of buyers look for acreage and other stay-at-home features, like backyard pools, that provide safe yet fun spaces for families.
Oddly enough, Real Living CCR Realtor Maria Sanko said a big hit these days have been ranch-style homes. Normally, it’s older home-buyers who seek out the sprawling one-story homes to avoid the dangers of going up and down stairs, but they’ve also been a hit with younger ones, she said.
The high demand has also changed how people go about buying a new house. Prior to the pandemic, it was rare for someone to purchase a house at the asking price in the region, but now, buyers are meeting the asking price and sometimes running into bidding wars.
“(The low supply) is driving prices up. It’s the first time in Allen County since I’ve been a Realtor that we’re seeing multiple offers and homes going over asking price, which typically doesn’t happen in Allen County,” Lane said. “It’s the craziest market we’ve ever experienced.”
Lane said she’s been fielding around 200 calls a day.
Similarly, Sanko said house showings have been practically constant as the market warms up.
“I have more younger buyers than I’ver ever had,” Sanko said. “They’re possibly thinking they weren’t going to stay here, but Lima is looking like a better place to live than a big city.”
A seller’s market
Compared to major metropolitan areas, new builds in Allen County in the last few years have been pretty sparse.
That doesn’t mean there’s been no new construction. Anyone driving through the more rural areas of the region probably have spotted a work crew or two erecting some Tyvek-wrapped two-story new home standing in what used to be a field. Such projects — along with expanded commercial ventures during the height of the economy — created a surge in demand of skilled construction workers.
But such homes tend to be expensive to build. Even with almost no gables and open-floor spaces, such homes can end up costing over $300,000 to erect. HomeAdvisor estimates that the average new build will come in at $314,961.
And that pricing is usually just not in reach for the average Allen County resident, whose median household income is $50,552, according to the latest American Community Survey numbers. (For comparison, median household income in the United States is $60,293.)
For those first-time home buyers without such large savings, they’ve instead sought out cheaper alternatives.
With that said, a few developers are trying to catch up by creating new housing. A number of recent land transfers have hinted at multi-plat builds, and a number of developers in the county have taken the initiative to get some cheaper spec-built homes erected. Some of the more public projects have involved the work of Developer Mike Blass, who said he’s had to be creative to ensure a new build is worth the effort.
But agents had varying opinions on whether the heightened demand will bring forth a wave of new construction.
“There’s a pretty big gap there. It will take a while to overcome,” Stanford said.
On the hand, Sanko said she’s been hearing more from developers interested in the area.
“I had one (developer) this week looking for plot of land to build a whole bunch of houses. I had one come up from Florida,” she said. “People are looking to this area for that kind of thing to happen, and we’ve seen it happen in the past year.”
Stanford said one problem holding back the seller’s market is also a lack of inventory for those looking to sell their homes. When deals are made on house sales, more and more sellers are putting in contingency clauses that pause the sale until they can also find a place to move into.
He said if developers can create housing for those looking to sell, it could provide some breathing room and add some liquidity into the market.
The rental market
While housing demand is through the roof, it’d be easy to forget that large segments of the population in Allen County are facing extreme deprivation related to housing.
Simply put, the pandemic has hit some businesses like a sledgehammer. The real-time economic tracker launched by Opportunity Insights estimates that consumer spending in Allen County is actually 10% higher than the start of the year, but smaller mom and pop businesses, especially, have taken a massive hit. They saw a 50% decrease in revenues back in April. By early July, those numbers seemed to be on the upswing, but as of Aug. 1, Allen County small businesses are still dealing with an almost 15% decrease in revenues compared to the start of the year.
The dichotomy has some residents on the ropes while others are living the high life.
Even as the local economy rebounds, Kim Bruns, community services director with the Western Ohio Community Action Partnership, expects a doubling or tripling in the number of evictions as the most vulnerable residents lose federal support, their livelihoods and now their homes.
If trends continue, Lima’s own housing market could be hollowed out even further, especially as the state of the economy continues to be a political talking point pitting those looking to boost their up-swinging revenues against those falling further behind.
Lane said she’s wary of where the housing market may be in the area by December. While predictions can be messy in any industry, she’s worried that today’s high demand will leave too many people with houses they can’t afford if the economy contracts, thereby fueling another housing foreclosure crisis reminiscent of 2008 concentrated primarily in the city.
In 2020, however, it’s anybody’s guess.
Reach Josh Ellerbrock at 567-242-0398.