The Dayton area’s foreclosure crisis is evolving as more properties move from the control of banks and other lenders into the hands of buyers who are fixing up the homes, a month-long investigation by the Dayton Daily News showed.
The investigation revealed that sales of salvageable homes are increasing, prices are moving higher by small increments, and bargain hunters are coming to Dayton intending to settle here. Meanwhile, condemned properties are being bulldozed.
The crisis isn’t over. The inventory of vacant, abandoned homes is daunting — there’s an estimated 7,000 in Dayton. And with unemployment still high, loans can be difficult to get. But’s there’s evidence of a nascent recovery. It includes:
• The city of Dayton is exceeding year-to-date goals for nuisance property demolitions. As of May 31, 261 structures were taken down, about 55 percent of the goal of 475. Of the demolished structures, 201 were houses or multi-unit buildings, 49 were garages, and 11 were commercial buildings.
• FannieMae’s inventory of foreclosed real estate properties in Ohio, Illinois, Michigan and Indiana has dropped from 30,963 on March 31 2012 to 29,089 that date this year. FannieMae’s Ohio sales of properties in the first quarter of 2013 recovered 55.5 percent of the unpaid loan balance, up from a 46.2 percent loan recovery in the first quarter of 2009.
• The number of permits Dayton has issued for residential remodeling and structural repairs is climbing, from 28 for all of last year to 55 so far this year, excluding 300 permits recently issued to the University of Dayton so it can bolster floors in university-owned rental properties.
“We’re seeing a modest uptick in there and we see it as good news,” said Michael Cromartie, acting director of building services for the city of Dayton.
A New York Times story earlier this month said Wall Street firms are taking advantage of rock bottom real estate prices in areas like Phoenix and Las Vegas, spending billions of dollars in some of the nation’s most depressed markets. The Wall Street money hasn’t shown up in Dayton yet. A review of property sales shows that it’s smaller equity firms and individuals who are acquiring local properties.
Sean Clark, 38, is a real estate agent and general contractor who has helped restore four foreclosed homes purchased from the government since 2009. He’s living in one of them on Adams Street and is working with a crew on Morton Street in the South Park neighborhood in Dayton to fix up two side-by-side shotgun-style homes.
His work on the foreclosures prepared him for the homes he’s working on now, which he purchased from a private seller. They did not go through foreclosure, but are being gutted and completely restored. Work will finish up by the end of summer and the homes put up for sale.
“It’s not the get-rich-quick you see on TV, but it makes the neighborhood look nice and you feel good. There is a lot of this going on these days,” Clark said.
Business is also good for Peter Julian, CEO of Octagon Holdings LLC, the largest local purchaser of distressed real estate, according to county property records. His company at 2443 S. Dixie Drive in Kettering employs 12 contractors, who in turn have about 60 employees at work repairing homes.
Octagon also operates Pathfinder Realty Inc., bought 73 homes last year and 46 homes this year, almost all in Montgomery County. Julian has been working that part of the real estate market since 1979. Today, he manages 263 single-family rental homes. On Tuesday, 11 crews were in the field rehabbing homes for Octagon properties, he added.
“I’ve never seen anything like it,” he said at his office telephones rang nearby with inquiries from potential renters. “It’s a great opportunity.
“We’re in an uptick,” Julian said. “There’s still a significant amount of foreclosures out there, but I am competing with more people to buy them. People see opportunity out there.”
But bank lending is still tight, especially for foreclosed properties. Buyers need cash for homes priced under $50,000 to $70,000, said real estate agent Sham Reddy, who serves on the board of the Greater Dayton Real Estate Investors Association. .
Montgomery County Recorder Willis Blackshear predicts that within two years home sales here will be at pre-recession levels. Real estate sales are up 17 percent this year. Home prices, however, could take many more years to recover, he said.
“We are not going down any more. We are on the upswing,” Blackshear said.
Three months ago, Aaron Sorrell, Dayton’s director of planning and community development, received a call from a representative of Fannie Mae alerting him to the fact that the mortgage holder was selling a large number of properties - known as a bulk sale - in the city.
The representative did not disclose the exact number of properties involved. But Sorrell said the bulk sale was a positive sign for the market. It made it easier for the city to legally hold the new owners responsible for maintenance.
“The big issue for us is the limbo period when a person is foreclosed on and the bank takes possession of property,” he said. “When the mortgage crisis ballooned, institutions were just overwhelmed with the volume.”
Razing unrestorable homes improves neighborhood home values. Anna Stookey, 73, who has lived in her home on Elsmere Avenue in Dayton for 43 years, was happy to see one such home go down this spring.
The abandoned, deteriorating two-story next door that she complained about for three years was torn down after being condemned by the city. She and neighbors feared drug dealers would move in.
“When it came down, we were doing the Teaberry Shuffle,” she said referring to the Tijuana Brass tune with a mock dance-step.
Joseph Mullins, 43, and fiance Tamberlyn Coates, 40, both southwest Ohio natives, moved back to their home state from Tennessee in the past month for employment and housing.
For now, they’re living in a once-foreclosed single-story home on Mertland Avenue in a quiet Dayton neighborhood. Coates said her brother bought the property.
The couple was eyeing a similar home down the block that was selling for about $30,000. They expect to have a down payment in six weeks.
“We go online and check the real estate and there are houses for sale for $14,000 or $15,000,” said Mullins. “If you are willing to work, there are bargains to be found. Lots of stuff for cheap.”
Thank you for reading the Dayton Daily News and for supporting local journalism. Subscribers: log in for access to your daily ePaper and premium newsletters.
Thank you for supporting in-depth local journalism with your subscription to the Dayton Daily News. Get more news when you want it with email newsletters just for subscribers. Sign up here.