“For individuals, homeownership has been the No. 1 creator of wealth and social mobility over the last century,” said Katie Fallon, director of housing policy with the Ohio Housing Finance Agency.
The share of Ohioans who own their homes rose to 69.3% in the first quarter of this year, up from 68.4% at the end of 2019, according to U.S. Census data.
That was the highest rate since the first quarter of 2011, and was a big improvement from the recent low of 65.1% in the first quarter of 2017, the Census said.
In 2006, before the economic crash, Ohio had a homeownership rate north of 71%.
Also, Ohio’s homeowner vacancy rate was 0.7% in the first quarter of 2020, the lowest of any quarter since at least 2005.
Rising homeownership and falling vacancy rates indicate a strong housing market, said Sham Reddy, president of Dayton Realtors.
This metric matters because homeowners build nest eggs faster than renters, mostly due to the appreciation of property and paying down the principal, resulting in equity, Reddy said.
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In the Dayton area, owning generally is cheaper than renting, he said, and on average, rents are $130 higher than monthly mortgage payments.
Reddy said homeownership has other benefits, including supporting the stability and appearance of neighborhoods. Owners tend to feel more invested, he said, and connected to where they live.
“Homeownership builds a sense of community,” he said. “The longer people live in their homes, they get to know and help their neighbors.”
Communities with high homeownership rates see more investment and commitment from residents, who are more likely to get involved in volunteer projects, neighborhood associations and other activities, said Julie Deacon, executive director of the HomeOwnership Center in Dayton.
Homeownership typically improves household health, decreases crime rates and provides one of the best opportunities to build wealth, Deacon said.
Dayton generally has an affordable housing stock , Deacon said, and homeownership seems to be on the rise locally.
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But the unprecedented coronavirus crisis unfortunately is resulting in large job losses, which she said likely will lead to a spike in foreclosures.
“I believe it will take several months to see this ripple effect,” Deacon said. “We’ll start to see a reduction in home purchases.”
By all indications, some Ohioans are going to fall behind on their mortgage payments because of this health and economic crisis, Reddy said.
Unless lenders provide additional time to make payments, and consider loan modifications and negotiated principal reductions, more short sales and foreclosures could happen, he said.
However, unlike the last economic downturn more than a decade ago, more homeowners have equity in their homes, Reddy said, and refinancing could help because of low interest rates.
Reddy predicts the inventory of homes for sale will be tight when the pandemic ends, which would mean intense competition among buyers, resulting in higher prices.
Homes are still selling in Dayton at a rapid pace, according to some real estate professionals.
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A duplex on Morton Avenue that hit the market on May 8 sold the same day after eight showings and multiple offers, said Tan Vo, a local real estate agent with Home Experts Realty.
A single-family home in the South Park neighborhood on Alberta Street that was listed in mid-April received multiple offers, Vo said, and an offer was negotiated and accepted within a week.
Another home in St. Anne’s Hill was listed the evening of May 5 and was under contract the next day, also after multiple offers, she said.
The housing market is still very strong, she said, and with limited inventory in many areas, homes sell quickly.
“A hot home will sell within hours with multiple offers,” she said. “Many buyers are having to pay above the list price to have a chance.”
However, she said, some people have been laid off or furloughed, possibly leading to reluctance to make a move if they are worried they won’t have a job in the future.
Zillow forecasts that home sales will fall as much as 60% this spring and will not recover until the end of next year.
Until March, when the pandemic hit, this spring was expected to be the “hottest home shopping season in years,” the company said.
But Zillow predicts that home prices will drop only 2 to 3% through the end of 2020, and should recover next year.
Homeownership can act as a buffer when households fall on hard times, because they can borrow against their home and they have an additional asset to weigh against their debts, said Fallon, with the Ohio Housing Finance Agency.
Nationally ownership of a primary residence accounts for about 62% of owner's assets, and steady, long-term increases in home values provide a large boost in owners' wealth, she said.
When homeownership increases, it tends to mean residents are benefiting from decreased monthly housing costs (because it suggests buying is cheaper than renting) or an increase in wealth through equity building, she said.
But, she said, a sharp downturn in the market and the economy can cause home values to fall, potentially putting owners underwater.
Owning a home is the most valued long-term investment families make, said Eric Farrell, CEO of the Home Builders Association of Dayton.
“Personal wealth and home ownership, perhaps, should be looked at as one in the same,” he said.