Foreclosures flood market, force prices down in Valley

Average prices dropped between 5 percent and
14 percent last year.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

A large number of foreclosed homes is pushing down home sale prices locally, Realtors said.

“The market is flooded,” said Kathy Carroll, president of the Youngstown-Columbiana Association of Realtors. “We have an overabundance of houses.”

About 20 percent of the home sales in the area are foreclosed homes, said Dan Crouse, past president of the Warren Area Board of Realtors.

“Banks are offering them at an incredible price. They want these homes off their books,” he said.

The effect of the foreclosed homes can be seen in 2007 real estate sales numbers, which were released this week by the Youngstown-Columbiana association.

The average home sale price in Mahoning County was down 5 percent to $98,011. The number of homes sold last year was down 6 percent to 2,301.

In Trumbull County, the average sale price fell 9 percent to $90,269, while the number of homes sold fell 8 percent to 1,770.

In Columbiana County, the average sale price dropped 14 percent to $86,021, while the number of homes sold dropped 6 percent to 803.

Crouse said that the housing market is hard to compare year-to-year because the same homes aren’t sold annually.

He added that some people think the market is suffering more than it really is.

“Is the market that bad?” he asked. “It wasn’t the best year ever, but it wasn’t the worst you could possibly imagine — not even close.”

Carroll said, however, that the impact of foreclosures isn’t over yet. She said bankers are expecting another wave of foreclosures to start in March.

Foreclosures are expected to rise again as interest rates adjust upward for people who have subprime lending deals. These are deals that were offered to people with weak credit that carried lower interest rates early in the mortgage term.

Besides subprime lending, a struggling local economy also has led to an increase in foreclosures, Carroll said. Simply put, some people have lost their jobs and can’t keep their houses.

Job reductions at General Motors’ Lordstown complex and Delphi Packard Electric also have hurt the market, Crouse said. Those companies cut 4,400 hourly jobs in 2006 with buyouts and retirement incentives.

In a lot of cases, those workers are looking to buy a smaller home, Crouse said.

In general, the lower end of the housing market has held up fairly well, he said. It’s the upper end, with homes of $300,000 or more, that has been slow, he said.

While an abundance of homes on the market is tough on sellers, it’s good for buyers, who have more to choose from.

The Realtors said, however, that some potential buyers aren’t ready to buy.

Carroll said financial institutions have been reworking their mortgage offers after the subprime lending crisis and haven’t rolled out their new programs yet.

Crouse added that some people are hesitant to buy a home because they are uncertain about their jobs.

“There isn’t that confidence among buyers that next year will be better,” he said.

shilling@vindy.com