Young buyers face tough market

• By Megan Bachman
• Published: November 18, 2010

• No Comments

Examining Affordability

This is the second in a series of articles looking at various aspects of affordable housing in Yellow Springs.

Last winter, when Sheryl Cunningham and Tom Clevenger were looking for a house in town, none of the three homes in their price range was particularly appealing. One appeared to be a converted office, another lacked enough space for a garden and in the third, floors were warped and walls twisting. And none had the three bedrooms the young couple was hoping for.

Having moved recently from Seattle, Tom, a former college solid waste and recycling program coordinator and Sheryl, a PhD communications professor, wanted a walkable community with arts opportunities, and were willing to make sacrifices to be here, eventually buying the 850-square-foot one-bedroom house which they were renting.

Young couples like Cunningham and Clevenger, who are in their late 20s and early 30s, represent one demographic rapidly disappearing in the village. The population of those between 25 and 34 declined by 33 percent from 1990 to 2000, according to Census figures, while the village’s percentage of African-Americans declined from about 26 percent in 1970 to 16 percent in 2000.

If Cunningham and Clevenger’s experience in finding a house is typical, then the lack of affordable housing in Yellow Springs could be one factor responsible for the community’s shift towards an older, wealthier and less ethnically-diverse town over the last several decades.

What do young families and others wishing to move to the village face when trying to locate here, and what are some reasons for the perceived lack of affordable housing?

As the Village Council and school board discuss how to increase the town’s income diversity, ethnic diversity and its population of young families through affordable housing, local realtors, builders and affordable housing developers recently explored the complexities of the issue.

Becoming less affordable

Historically the average home sale price in Yellow Springs tracked with the average in the Greater Dayton area. But prices began increasing at a faster rate locally around 1990 and by 2009, the average sale price was $197,887 in Yellow Springs, compared to $123,273 in the Dayton region, or 38 percent higher.

“Yellow Springs is such a unique market — it’s definitely a niche within the Dayton market,” said ReMax Victory co-owner Tyler Morton. “It’s a sense of community that it has that you don’t find in some of the bigger towns around.”

While average sale prices are higher in Oakwood, Springboro, Bellbrook and Beavercreek, most homes in those communities are larger than in Yellow Springs. Only Oakwood competes with Yellow Springs for the higher price per square foot, Morton said.

The very amenities that attract people to Yellow Springs and are valued by existing community members are what make its houses more expensive, according to several area realtors. These include excellent schools, walkability, green space, a vibrant downtown, arts, entertainment, restaurants, a tolerant community and more.

Morton observed that the increase might be due to a recent trend in the real estate market toward small town living in closer-knit neighborhoods within walking distance of shops.

“In the ’80s you were looking for a four-bedroom house and certain amenities,” Morton said. “Now it’s a lifestyle, it’s ‘what can I walk to.’”

Local affordable housing developer Marianne MacQueen also sees the increase in local real estate prices relative to other communities as related to the village’s attractiveness to a wider range of consumers.

“Yellow Springs did not used to be a place that attracted ordinary people,” she said. “It attracted those who wanted to be in what was perceived as a radical community.”

MacQueen observed that the time when Yellow Springs started to be perceived less as a radical community and more as a safe, walkable community with good schools, coincided with efforts to control development on the village’s borders by planning for a greenbelt.

This planning began in the 1960s and most prominently includes an easement on the 940-acre Whitehall Farm to the north of the village. According to Krista Magaw of the Tecumseh Land Trust, preserved farmland and natural land tends to drive up costs of properties adjacent to it.

“Overall, I think that we have got high property values in Yellow Springs because of having a lot of different amenities, one of which is green space,” she said.

With residential development on village borders limited by easements and a Village Council that has stated their commitment to grow within current village boundaries, in-fill development is the most obvious option to increase the housing stock.

But in-fill development can be more expensive to build due to high lot costs and because each home is often custom-built, according to former builder Pat Murphy. This premium can be around 20 percent more than tract housing, where homes are built as part of a development and typically employ limited designs.

“Most Americans live in tract housing because that’s what they can afford,” he said.

In addition, in-fill development typically only happens one house at a time, proceeding at a slower pace than tract development. This slow growth is confirmed by statistics that suggest 13 percent of the village’s housing stock has been added since 1980, compared to 32 percent for the rest of the state, according to 2000 figures.

Making sacrifices

Many home buyers approach the Yellow Springs housing market with, “suburban wishes in a rural community,” according to local realtor Bambi Williams. After viewing new tract houses they come expecting a large lot, three bedrooms, a garage and air conditioning for a price similar to nearby communities.

Eventually those who decide to buy must, like Cunningham and Clevenger, make sacrifices, often settling for an older home with fewer bedrooms and amenities.

“Every purchase is a compromise, even if you build,” Williams said. “What they’re giving up are the things they realize they can do without.”

Many villagers may have strained their finances to live here. According to 2000 census figures, 17 percent of homeowner households in Yellow Springs have mortgage payments greater than 30 percent of their income, a situation which the U.S. Department of Housing and Urban Development considers “burdened,” where families may have difficulty paying for other needs such as food, clothing, medical care, transportation or saving for the future. Around 30 percent of renters in town face a similar situation. In total, 284 local households are “burdened,” a number which may be higher when utility costs are factored in.

“For those who are low-income, it does get harder and harder to keep making that decision to live here,” said Village Council member Lori Askeland.

Many local homeowners cut costs in other areas to pay their mortgage, especially those who may be considered burdened. They reduce expenses for nonessential household services, such as cable TV and Internet, save energy by lowering their thermostat or forgoing air conditioning or grow and preserve a portion of their own food, according to several homeowners.

While the cost of housing and taxes are high relative to nearby communities, some amenities of Yellow Springs may actually save a homeowner money, MacQueen said. For example, many people live in Yellow Springs without a car if they have a job in town.

“Even if you have to pay more, you can live here without a car, don’t have to travel for entertainment and have educational, cultural and recreational advantages that are free,” she said.

Upkeep declines

As burdened homeowners continue to reside in their homes and the housing stock ages, many homeowners defer building maintenance. As Cunningham and Clevenger discovered, many homes in the lower price ranges are in need of major renovations, a situation which may particularly turn away young families who can barely afford the purchase price.

“There are a lot of people who have owned homes for a long period of time, not taking care of it,” said local realtor Rick Kristensen. “They’re happy to live in Yellow Springs and however they got into their house, might not have any money to repair it.”

While this may be fine for existing homeowners, when the house goes on the market, the situation can turn away potential buyers. Erik Owen, who has been building and remodeling homes in the village for the last few years, sees that many of the homes needing major repairs are still valued highly due to the desirability of the housing market.

“If you can sell your home for between $100,000 and $150,000 no matter what, why put in the work?” he said. “Many houses are really too expensive for what you get.”

And because homes in Yellow Springs are older, the need for maintenance is greater. As of 2000, 79 percent of the village’s housing stock was built before 1970. About 28 percent of homes were built before 1939, 28 percent were put up in the 1940s and 1950s and 32 percent in the 1960s and 1970s.

Recent trends

While Cunningham and Clevenger’s sacrifice may be typical of many local homeowners, those with the lowest incomes may still be priced out of the market.

More than half the houses in the village are affordable to the average villager, according to 2000 Census figures. Using a mortgage calculator and the federal government’s definition of affordability as not exceeding 30 percent of a household’s income, a family with the median household income of $54,600 could afford a $175,000 home, which 58 percent of village homes fall under.

However, more relevant to prospective homebuyers is the number of homes that are actually on the market. From 2004 to 2010, many houses sold on the market were affordable for moderate incomes, while those with lower incomes may have been left out, according to data from the Dayton Area Board of Realtors. In total, 150 of the 320 homes sold during those years went for $185,000 or less. This accounts for 47 percent of all home sales and could be considered reasonably affordable for those making the median household income, which has increased since 2000. About 25 percent of sales were under $150,000.

However, just 9 percent, or 28 homes, sold for under $110,000, in the range affordable to those making 60 percent of area median income. This is an average of four homes per year. Many of these houses have just one or two bedrooms and one bathroom, which may not be ideal for many families. (While federal subsidies often become available to those at 60 percent of median income, increasing the range of options these households can afford, homebuyers need to first be made aware of the subsidies.)

Currently, there are 33 Yellow Springs homes listed on the Multiple Listing Service, with one home listed below $110,000, five below $150,000, and 11 below $185,000. Twenty-one homes are priced above $200,000, with the median price on the list $228,500.

As housing prices continue to rise faster than incomes, a growing national trend according to MacQueen, housing will be less and less affordable for more and more people. The median home values in Yellow Springs increased from $76,500 in 1990 to $151,000 in 2000 — an increase of 96 percent, about twice the rate for the county, state and country. Local household income, on the other hand, only increased by about 50 percent during the same time period.  But the situation is worst for those with the lowest incomes.

“The lower your income and the higher you spend on your home, the more squeezed you are,” MacQueen said.

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