The Star Beacon; Ashtabula, Ohio

June 25, 2008

Foreclosed!

County’s low-end housing suffers in subprime mess

By CARL E. FEATHER - Lifestyle Editor - cfeather@starbeacon.com

Paul Bryant is fascinated by statistics, especially those dealing with the housing market in Ashtabula, Lake, Geauga and Cuyahoga counties.

Bryant is a Realtor and past president of both the Lake County Association of Realtors and Ashtabula County Board of Realtors. Semiretired, he previously managed the Realty One office in Ashtabula Township.

In the fall of 2007, Bryant pored over the listings in the Multiple Listing Service for Ashtabula, zeroing in on properties with a listing price of $80,000 or less. What Bryant discovered surprised this industry veteran.

“Almost 39 percent were bank foreclosures,” says Bryant. “It was a huge percentage. ... (A) majority of the sales where of bank-owned properties.”

When it comes to home foreclosures, Ashtabula County once again has the misfortune of being in Ohio. During the summer and fall of 2007, one in nine Ohio homeowners with a mortgage was at least 30 days behind on payments. The state had 3.7 percent of all home loans in foreclosure during the third quarter, according to a report released Dec. 6, 2007, by the Mortgage Bankers Association in Washington.

During 2006, there were 718 foreclosure filings in Ashtabula County. In 2007, that number crept up to 740. That is one foreclosure for every 140 residents, or 16 foreclosures for every 1,000 housing units. Those are figures that put the county in the league of Louisiana, Michigan and Nevada, the nation’s top foreclosure states.

It’s not getting better, either. In January, 70 foreclosure actions were filed. Sixty-two were filled last month.

While much of the foreclosure issue is being blamed on the subprime-lending debacle, in Ohio there’s also the sour-economy factor at work. The January 2008 unemployment rate was 8 percent.

Bryant says buyers, even investors, have been running scared.

“The uncertainty of employment is the biggest problem,” Bryant says. “People just don’t know what’s going to happen to them in the next couple of years.”

The result has been and continues to be a glut of homes on the market. As of mid-December, there were 1,015 single- and multi-family homes for sale in Ashtabula County. Last summer, the supply peaked at more than 1,100 homes. Based on closed sales of houses, the market time was 14.6 months. Bryant says with the current supply of homes and the average number of sales per month, it would take more than a year to clear the existing inventory.

“It is a buyers’ market right now,” Bryant says. “We have a lot of people getting great deals.”

The 30 percent of the population that rents can find significant housing bargains, especially given the glut of housing in the area: 12.7 percent of the units were vacant in 2006, up from 10 percent in 2000. Anecdotally, the number of classified ads for rentals far outnumber the help-wanted ads these days. Many landlords are offering incentives to get tenants into their properties.

The rent bargins reflect the lower per capita personal income and lack of good-paying jobs in the county. Lyn Zalewski, executive director of Catholic Charities of Ashtabula County, says the U.S. Department of Housing and Urban Development has set the fair-market rent for a two-bedroom apartment in Ashtabula at $618 a month. To be able to afford that apartment, a head of household would have to earn $11.88 an hour, according to the formula used to establish capacity to pay rent.

Steve Sargent, executive director of Samaritan House, the county’s only shelter for the homeless, says, based on his experience with placing homeless people, the average cost to rent a two- or three-bedroom apartment or house in the city is around $500. He feels that a wage of $16 to $17 an hour, plus benefits, is the minimum required to support a family with a couple of children.

However, many of the Catholic Charities and Samaritan House clients don’t begin to earn that kind of money. Earn is the keyword here — Zalewski says we’re not talking about unemployed, drifting people, but working poor. Fifty-four percent of the clients who received housing assistance from the agency in 2006 were below the federal poverty level; for First Step and emergency assistance, the percentages were even higher: 87 percent. These are people who are making less than $10,000 annually, or about $192 a week.

“It all goes back to what they make,” she says. “If it takes $12 a hour to afford a two-bedroom apartment and you are making minimum wage, how does that work?”

Sargent says people often show up at Samaritan House following the loss of a job. In 2007, the shelter served 202 persons, up from 168 the previous year and the highest number in the past decade.

“It’s almost always economic,” Sargent says. “People don’t have sufficient income; they are under-employed. The amount of money coming in is insufficient to take care of rent or the mortgage payment, utilities, gasoline and everything else that needs to be paid.”

As of early January, Samaritan House was filled to capacity (14 persons) and was referring applicants to other community resources. Among the residents was a family of five — father, mother and three elementary-aged children — who were evicted from their housing following a job loss. Sargent worked with the family to help the father find employment in Geneva. But with that job paying only $10 an hour, getting the family into a house or apartment was going to require concessions from a landlord.

“There are not a lot of jobs available out there, and the ones that are out there often do not pay the amount of money it takes to care of a family,” Sargent says. “Ten dollars an hour; that is very difficult to take care of a family of five with. It’s very hard, but these are the types of situations we see all the time.”

Sargent says his 17 years with the shelter have shown him that homelessness defies stereotyping.

“The average homeless person looks like you and I. That’s the one constant I have seen since I’ve been here.”

The other constant is that any person can become homeless.

“The longer I stay here, the more I realize it could happen to me,” he says.