Real-estate agents say they’re getting more calls from prospective buyers. Banks are slightly relaxing lending standards. Interest rates are near historic lows. Homes are being sold at substantial discounts. But three years after the nation and the local area began its slide into the worst housing market in memory, it’s still not clear when home prices will recover.
With the start of the spring homebuying season, the real-estate industry is hoping that 2011 is the year that Stark County home prices make a recovery.
Unfortunately for Melody Barricklow, who was forced last week to sell her sick mother’s beloved Canton home, the recovery didn’t come soon enough.
On Thursday, the 102-year-old, two-story home at 224 Park Ave. NW near Interstate 77, was auctioned for $14,300. The Stark County Auditor’s Office appraised it at $40,900 in 2008.
Barricklow, 60, of Flushing in Belmont County, had hoped to get $20,000 for the house she grew up in 50 years ago. But auctioneer George Kiko told her he expected no more than $15,000.
“I about cried then,” she said. “I was mortified. If I had been a buyer, I would have been in seventh heaven. ... It wasn’t a picture-perfect house, but it had been kept up by Mom and Dad.”
Kiko said the sale price could have been worse. Three investors didn’t bother to bid because they were hoping to get the house for less than $10,000.
“If they can’t steal it, they don’t want it,” he said.
More than three years after home values in Stark County began a precipitous decline, the local housing market still is struggling. More than 3,000 single-family homes are being sold in Stark County per year, but often at steep discounts, as banks repeatedly slash prices on foreclosed homes to liquidate them.
HOPE OF TURNAROUND
Despite the difficulties, local real-estate professionals say they see signs of a turnaround. They can’t see how prices can get much lower. Interest rates are near historic lows. They’re receiving more inquiries from buyers this spring. And banks are relaxing standards and pre-approving more loans.
“It actually has lightened up a touch for financing approval,” said Bob Catlin, president of Signature Mortgage in Jackson Township. “The primary problem we see is people still can’t sell the existing home to move to the new home. I think there’s an appetite to buy, but because they can’t sell ... there’s no movement.”
While refinancings have increased substantially due to low interest rates, Catlin said, his volume for financing home purchases for the first quarter of 2011, compared with 2010, is stagnant. “It hasn’t gotten worse. It certainly hasn’t gotten any better.”
The most recent data on local home sales are mixed. The National Association of Realtors says median home prices in Stark and Carroll counties actually increased to $90,900 in 2010 from $86,200 in 2009. But its data do not include auctions and sheriff’s sales.
The Stark County Auditor’s Office, whose data include more sales, said the median home sale price for Stark County declined 4.4 percent last year to $80,300, indicating the rate of decline is slowing.
Page 2 of 4 - The median sale price stood at $124,900 in 2007 before dropping 22 percent to $97,000 in 2008. It declined 13.4 percent, to $84,000, in 2009.
“We’ve been at the bottom the last 16 months,” said Catlin, who added that last year’s homebuyer tax break failed to add the jolt that many had hoped for. “We’re cautiously optimistic that things will start to recover very slowly.”
Real-estate agent John Wolanin said despite the depressed values, he’s been able to sell many of his listed homes, but at a markdown to investors looking to turn foreclosed homes into rentals.
“What I’ve seen is the market is picking up for those (properties) that are in good condition,” he said.
Even high-end properties are selling at a discount.
Wolanin said he recently sold a foreclosed 6,000-square-foot home on 12 acres in Clinton, once valued at $750,000, for $383,000.
Wolanin has tried to sell a foreclosed bungalow at 3001 33rd St. NE in Plain Township. Valued at $89,000 in 2009, it was priced in January at $43,900. The bank has since slashed it to $29,900.
Wolanin said prospective buyers have shown interest in the home, but many have subpar credit and can’t get a loan approved.
Still, some houses are moving.
“I’m having a great year so far,” said real estate agent Eric Haines, who says most of his listings are homes near Atwood Lake. “I’m out there showing homes every day, which wasn’t the case at this point last year.”
He said he has closed five or six deals this year versus about one or two the first three months of last year.
Richard Kiko Jr., CEO of Kiko Auctioneers and Realtors, said the number of the company’s real-estate auctions has increased from about 820 in 2009 to about 900 in 2010. “It’s going to be a slower recovery on the values,” he added.
“More people are exploring selling their real estate this spring rather than last spring,” he said. “But the challenge is that people are still reluctant to accept today’s values.”
Richard Kiko said high unemployment is resulting in foreclosures, pumping more discounted homes onto the market, pulling down home values.
SENSE OF URGENCY
Catlin said this spring is still an ideal time to buy a home. He said there’s a substantial risk that the Federal Reserve Board, fearing inflation, will start scaling back its cheap money policies, resulting in higher interest rates later this year.
“Certainly there’s the possibility (prices) could fall further,” Catlin said. “As long as you plan in staying in the house for the next six to 10 years ... it’s a good bet to make the purchase today.”
Any savings from waiting for prices to drop more could be more than offset by higher interest rates in the future, he said.
Page 3 of 4 - “You want to make your move this spring when rates are at record lows?” Catlin asked. “Or do you want to wait until rates start to rise? Last call.”
And there’s a silver lining for sellers who intend to buy again soon and can overcome their emotional attachment to the higher values of a few years ago.
“Price your home realistically based on today’s market and know whatever beating you take on the sale of your house, be prepared to take it back on your new purchase,” Catlin said. “You lost 20 percent on the sale. You gained 20 percent on the purchase. Congratulations. You locked in one of the best rates in 40 years.”
Barricklow’s attachment to the Park Avenue NW home dates back to 1960 when she, her two siblings, her father and her mother, Verna Mae Schlatt, moved into the three-bedroom home.
Her mother remained in the home as her children grew up and left. But during the last two years, Schlatt’s health declined and she moved into a nursing home. For Medicaid to pay for her mother’s care, Barricklow had to sell the home within three months. She chose an auction so the house wouldn’t languish on the market for months.
“She’s pretty depressed. She didn’t really want to leave her house,” Barricklow said.
Barricklow conceded the neighborhood has declined. Some homes on the block are boarded up. She said burglars had stolen copper pipes from some nearby homes. The morning before the auction, she found someone had tried to kick in her mother’s basement window.
The auctioneer, George Kiko, said the density of the surrounding homes, many separated by narrow alleys, didn’t help the house’s marketability. According to the auditor’s office, the median home sale price in Canton has dropped from $75,000 in 2007 to $20,000 last year.
“City property’s a little tough now,” he said. “Alliance and Canton have been hit the hardest by far.”
At 12:15 p.m. Thursday in Schlatt’s living room, George Kiko called for a bid on the house, which he described in detail: Vinyl siding, three bedrooms, two stories with an attic, kitchen, dining room, level lot, an updated furnace. Dozens of people were there to bid on furniture and other items.
A man bid $10,000. Within seconds, a couple with a baby and an investor Gary Pendleton, 52, of Malvern, bid the price to $11,500.
“It’s the price of a used car. Think about it,” Kiko said in the quick auctioneer’s cadence. The couple bid $12,500. Pendleton bid $13,000.
“Thirteen-five,” Kiko said. “You’re shaking your head the wrong way. ... Can I get $13,500? Steve, what do you say? ... Oh, you should. Oh, you should. The value’s here. ... My third and final call. 13-5. Do you want her?”
Page 4 of 4 - “Come on, the memories are worth that,” said Barricklow’s sister, Lynette Jovingo.
The bidders, who didn’t share her sentiments, refused to budge.
Pendleton got the house for $13,000, plus a 10 percent buyer’s premium of $1,300. He said he plans to rent the home out for about $550 a month.
“It wasn’t long ago (in the 1990s) these houses were selling for 70 (thousand), but I don’t think I’ll see that again in my lifetime,” said Pendleton, who owns 28 properties and hopes to recover his investment within a decade or two.
Despite Barricklow’s disappointment, real-estate professionals believe the recovery is somewhere around the corner.
“I’m hoping we have a nice April,” Richard Kiko said. “I think this year will be better than last. A lot of people are waiting on the sidelines, waiting for the bottom to hit.”
“It’s got to get better. It will get better. It will take some time,” Catlin said. “And the sun will come up soon. I hope.”