The Dayton region’s housing market is booming, fueled in part by a scarcity of homes for sale.
A Dayton Daily News investigation found that there are currently 68 percent fewer homes listed for sale in the Dayton region than at the pre-recession peak. Homes sell soon after they go on the market, prices are on the rise and buyers snatch up Dayton’s new downtown condos and townhomes as fast as they are built.
“Things are selling really, really quickly. Like in hours or a day,” said Jodi Rosko, a Springboro-based real estate agent and co-owner of The Rosko Group at Keller-Williams Community Partners.
The region’s housing market has largely recovered from the recession, which lasted from December 2007 to June 2009. But our investigation found that its lingering repercussions can be seen in fewer homes built, some neighborhoods hollowed out by foreclosures and a “sellers” housing market that has driven up prices.
The Dayton Daily News Path Forward initiative seeks solutions to the most pressing issues in our community, including making sure our region is prepared for the economy of the future. This story examines the housing industry, the hurdles faced by sellers and buyers, and how this crucial segment of the local economy has fared since the Great Recession sent the housing market reeling.
The biggest problem for the region’s housing market right now is inventory — simply not enough homes for sale to meet demand.
In April, a total of 3,235 homes were listed for sale. At the pre-recession inventory high point in April 2007, 10,000 homes were on the market, according to Dayton Realtors data from the Dayton Multiple Listing Service for Montgomery, Greene, Preble, Darke and northern Warren counties.
“The economy is better than it has been in a long time and I think the inventory shortage is probably limiting how active we really could be today,” said Frank Petrie, director of retail mortgages for Wright-Patt Credit Union. “So more inventory would certainly continue the expansion of the market. But it’s been very solid around here.”
When the real estate market crashed in the recession new home construction plunged and remains below pre-recession levels.
“Part of our lack of inventory issue has to do with the fact that when we did have the market downturn, building stopped pretty much for a while,” Rosko said. “So all those houses that would have been built weren’t.”
Homeowners displaced by Memorial Day tornadoes that destroyed or damaged thousands of homes and other structures across the Dayton region are likely to have a hard time finding new homes to buy, so they might need to rent as they await something more permanent, said Jan Leverett, president of Dayton Realtors, which represents 3,000 area real estate agents.
“It’s going to take a full year to really recuperate and it’s going to take a year to rebuild these houses,” Leverett said. “It’s the whole range of houses that were impacted.”
Decline and recovery
Despite rising home sale prices, the overall valuation of Montgomery County residential, commercial, industrial and agricultural property has not fully recovered from the Great Recession, Montgomery County Auditor Karl Keith said.
In 2011 the county saw its first decline in overall property valuation since the Great Depression. Between 2010 and the lowest point in 2015, the county lost 13 percent of valuation — nearly $3.6 billion.
The total valuation has ticked up since then to $26.1 billion but remains below the 2010 peak of $28.3 billion.
Based on preliminary numbers, Keith said it’s likely the 2020 property revaluation will put the county back to pre-recession levels.
“If you go back to the Great Depression, it took something like 14 years for the county to recover the loss of value,” Keith said. “We’ve really rebounded quicker than I would have imagined. You’ve got a variety of housing stock here that has helped us to stabilize values and helped us to recover.”
Local sales and construction statistics show how the region’s housing market has recovered and where it still struggles. The Dayton Daily News investigation found:
• The market hit bottom in 2010, when home sales dropped by nearly a third to 9,785 compared to 2005 in the five-county Dayton MLS.
• By 2018 sales of single-family homes and condos rebounded to 15,955.
• Average sale prices hit a low of $114,496 in 2011. Prices rose steadily since then, climbing to $164,566 last year, a 22 percent gain over the pre-recession high in 2005.
• New listings of homes for sale have not recovered from the Great Recession, with 20,629 homes newly listed last year, a third fewer than at the high point for new listings of 30,602 in 2006.
• Home sale prices vary widely in the region, from an average of $318,495 in Springboro/Clearcreek Twp. to $65,439 in Trotwood, according to the Dayton Realtors 2018 annual survey of 30 communities in Montgomery, Greene, Preble and Warren counties.
• The value of new residential construction in 2018 was $68.3 million in Montgomery County, 77 percent lower than it was when it peaked at nearly $301 million in 2005, according to Keith’s office.
• Permits for new residential building units plunged 52 percent between 2006 and 2010. Last year they remained 22 percent below 2006 levels in Greene, Montgomery and Warren counties, according to data compiled by NPG DataQuest for the Home Builders Association of Dayton.
“We are doing quite well recovering from the foreclosure crisis because we see year after year of equity gain in the homes on the market,” said Anjanette Frye, president of Ohio Realtors and former president of Dayton Realtors. “Dayton’s doing a great job on moving and dollar volume and sales price.”
Sales across the state in April were robust as the traditional spring home buying season kicked off, she said, and the average sale price statewide ticked up 5.2 percent to $179,958 for the first four months of the year compared to the same period last year.
But even with the good April numbers, homes sales statewide remained flat for the first four months of the year compared to the same period last year, according to the Ohio Realtors. Home sales in the Dayton MLS also stayed flat, but still better than Columbus and Cincinnati, which saw 1.6 percent declines over the same period last year.
The Dayton MLS had a 6.1 percent increase in sales dollar volume and average sale price, outstripping those two cities and the statewide sales data.
“The profession is hopeful that we’ll see an uptick in the number of homes being marketed for sale, a key factor in ensuring that the momentum we’ve attained continues,” Frye said.
Dayton’s neighborhoods and downtown
One way to relieve the inventory crunch could be to redevelop vacant and dilapidated homes in older neighborhoods.
But that can be challenging, especially where widespread blight makes it difficult to recover the rehab cost, said Darrin Carey, owner of Dayton Capital Partners, a real estate investment, lending and redevelopment company.
A dilapidated house on a block also makes it hard for neighbors to sell their homes, said Aisha Ahmed, a Realtor at Bella Realty Group of Bellbrook.
“If there is a nice home in that neighborhood, they get appraised lower,” she said. “Sometimes some of those homes should be just pushed down. You are not going to bring it to life.”
Those neighborhoods are particularly prevalent in Dayton, which was among the hardest hit in the state by the foreclosure crisis. But city leaders hope the recent success of downtown housing will spread outward.
The number of single-family townhomes and condos on the market has grown in downtown Dayton, part of the national trend toward urban, walkable living. The number of market rate housing units increased by 57 percent to 1,585 since 2010, said Sandy Gudorf, president of the Downtown Dayton Partnership. Occupancy of owner-occupied and rental units is at 97.5 percent.
“As home developers, we are always taking risks, but we are always going where we think the market is telling us to go,” said Charlie Simms, recalling his decision in 2010 to take the city up on its offer of the former Sears parking garage land to build 18 townhomes.
“All my friends, families and business associates told me I was crazy to build next to a four-story parking garage in downtown Dayton,” he said.
The townhomes sold out in 10 months. His Charles Simms Development has since built and sold 118 units in six different downtown projects. Sale prices for his townhomes range from $160,000 to $660,000.
His success, along with tax incentives and taxpayer-funded amenities like RiverScape and the Dayton Dragons Fifth Third Field, sparked a downtown residential construction boom. Companies, bars, restaurants and brew pubs followed as demand remains strong for the unique downtown lifestyle, Gudorf said.
“As long as we continue to do what we are doing, which we are definitely heading in the right direction, eventually the downtown will fill up all its housing area and it will filter out to the surrounding areas north, south, east and west,” Simms said. “I think those neighborhoods will be revitalized.”
That is exactly what Dayton City Manager Shelley Dickstein said the city is betting on, with a strategy of focusing on historic neighborhoods and the neighborhoods closest to downtown.
“It’s a gut (feeling) and a market reality that we are starting to see. Because downtown is performing so well, we think now we can do the same thing we did in 2010, incentivize and create public-private partnerships,” Dickstein said. “So that we can drive investment into these inner ring neighborhoods where I believe the market is ripe for development.”
Frye, a real estate agent at RCF Properties Inc. in Washington Twp., said she and other agents have to be fast on their feet to get the homes their clients want to buy in this sellers’ market. On a recent night she arrived at 6 p.m. to show a house and before her client could even get upstairs, she said three more agents came in the door with their clients.
She wrote nine offers on homes for another client before the woman snagged one in the Franklin-Middletown area for the approximately $150,000 she wanted to spend.
“We get outbid for homes we can afford,” Ahmed said. “It’s such a discouraging process because you have individuals who are excited, who are interested, who can afford it, can put down the 20 percent — and yet you get outbid.”
She said one client offered the asking price but lost to a person offering more for the house that had been on the market for a day.
“We are a little more skeptical of getting in a bidding war because we want the houses to appraise,” Leverett said.
Some buyers might have cash to pay more than the bank is willing to loan, she said, but the typical buyer needs to pull out of the deal or renegotiate if the appraisal falls short of the bid.
Agents said people are sometimes going to extremes to get houses.
“We wrote contracts for houses we never even walked into,” Ahmed said. “No one should ever feel pressure to write a contract for a house they’ve never even been to.”
People even have offered to buy without inspections, Petrie said, something that can leave the new homeowner with expensive surprises.d
The speedy timeline means buyers “don’t have time to think about it, or even to get there to look at it if it sells in a day or two,” Rosko said. “It’s challenging to walk through a house one time for a few minutes and then decide to buy it. It’s a big investment.”
The Dayton region has a wide range of home prices. Of the 30 communities the Dayton Realtors surveyed, 13 had average sale prices that were less than $151,000 in 2018 and eight of them were less than $135,000. Eleven communities had average sale prices exceeding $200,000.
“Houses here are affordable,” said Julie Deacon, executive director of the HomeOwnership Center of Greater Dayton. “So unlike bigger cities on the coast, you can still buy a home, and typically you’re going to pay less for your mortgage payment than a rent payment in the Dayton area.”
Real estate agents say the inventory crunch drives up sale prices, which is good for sellers. That’s especially true for those whose values dropped during the recession and put some people in a position of being “under water,” owing more on their mortgages than their homes were worth.
“Now most of the people that I talk to that are listing their home are not having to bring money to the table (to pay off mortgages) anymore,” Rosko said. “I feel like we have recovered finally from when we took the fall last time.”
In 2018 average sale prices rose by 25 percent in Jamestown/Cedarville, 17 percent in Waynesville and 12.6 percent in Dayton, according to the Dayton Realtors’ survey. Only Yellow Springs had a decline, with its $251,260 average sale price a decline of 3.5 percent compared to 2017.
Housing price increase “is indicative of a robust economy and that is what we are looking for, especially in the Midwest, when we have had our share of economic difficulties,” said James Thurston, vice president of public relations for the Ohio Bankers League. “By and large the state housing market has made a good recovery.”
The rising prices are not necessarily good news for buyers.
Some people might have lost good jobs during the recession, or grapple with bad credit, making it difficult to afford to buy a home, Deacon said.
“We still have a lot of people in the Dayton area that are under-employed or unemployed,” said Jackie Easter, a home ownership adviser at the HomeOwnership Center. “There are people still not making enough money for their home to be affordable and they are still struggling with foreclosure issues.”
The nonprofit center serves an 11 county area, providing homeownership counseling, credit counseling, financial education and foreclosure aid. It also distributes down-payment assistance through partnerships with Dayton, Kettering and Montgomery County. Last year its 107 clients bought $8.7 million worth of homes, according to Deacon.
The center’s clients might have difficulty getting a home loan due to college loan and credit card debt, medical bills, loan defaults, court judgments or liens that have hurt their credit, Easter said. The goal is to help people work through those issues and Deacon said, “If people follow the action plan, they will be mortgage-ready.”
In the wake of the foreclosure crisis, new state and federal laws eliminated some predatory lending practices, required that mortgage brokers be licensed and added more rules to protect consumers. But Deacon, Leverett and Rosko said they have seen some worrisome practices returning, including loans requiring no income verification.
“I am hearing that these loan products are back and people are getting qualified for a mortgage that they should not be qualified for,” Deacon said.
The post-recession years have brought an era of low-interest rates that have lasted far longer than anyone expected. Rates fluctuate but a 30-year fixed rate was 3.75 percent on Thursday and the rate on a 15-year loan is 3.375 percent, according to Eric Bugger, chief lending officer at Wright-Patt Credit Union.
“Rates have been this low for a long time and honestly many people didn’t grow up on the rates of 18 to 20 percent,” Petrie said. “That 28-30 crowd is a bigger buying group now than the Baby Boomer group. As the economy is changing and growing, the Millennials are going to be the buying force for the foreseeable future.”
A common myth is that people need a 20 percent down payment to buy a house, he said. While 20 percent is necessary for buyers wanting to avoid paying private mortgage insurance, Petrie said an FHA loan requires 3.5 percent down, Fannie Mae 5 percent and a conventional loan 3 to 5 percent.
Depending on loan terms, Petrie said the monthly mortgage payment, taxes and home insurance on a $130,000 to $140,000 home is about the same as the $850 the average renters pays in the Dayton region.
That was a big issue for Erin Mills, 42, who used Kettering’s first-time homebuyers’ down-payment assistance program to buy a home on Keswick Lane for $75,000 in July 2017. She had rented a home in Clarksville for many years.
“We paid $725 in rent and it was going up and going up. I was like, ‘We live in Clarksville, Ohio. It shouldn’t cost this much,’” said Mills, who now pays $597 monthly for her mortgage, home insurance and private mortgage insurance. “When you are on a tight budget like I am, every little bit helps.”
Like many Americans, Mills said owning a home has been a long time goal.
“It’s pretty awesome,” Mills said. “I already told my son, ‘You know you’ll have a house. And not only that you have a home, this is a good investment. This house, this area is a good investment.’”
Residential building permits - Total units 2006-2018
Montgomery County jurisdictions - Total property valuation 2010-2019
Note: The county's total valuation reached its peak in 2010 for residential, agricultural, commercial and industrial property. Totals exclude public utilities and are rounded to nearest hundred-thousand. Township and municipality total differs slightly from county's overall due to slight differences in how jurisdictions are counted.
Annual residential property sales - 2018
Source: Dayton Realtors
MORE: On Monday see what is being done to turn around blighted neighborhoods
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