The Path to HOME OWNERSHIP
How REALTORS® Champion the American Dream
How toBUY A HOUSE
Local experts share tips to help demystify and overcome the barriers to buying a home.
By Jill Sell
When he was young, Akron Cleveland Association of REALTORS® (ACAR) Treasurer Drew Gaebelein, a REALTOR® with eXp Realty in Westlake, visited his grandmother every Sunday. She lived in Euclid, “three houses from Lake Erie,” recalls Gaebelein.
“We would just have fun playing on the beach by the lake and I thought it was normal for every kid to have that wonderful opportunity,” says Gaebelein.
“Recently I had a client who gave me a list of things she wanted in a house and
community. Euclid fit her budget. Euclid has a lot going for it. It’s a big city with great housing — bungalows, Craftsman-style homes — built with incredible materials. There are also parks and new access to the lake with a new pier and a lakefront walkway,” says Gaebelein.
The City of Euclid also provides opportunities to make homebuying in the community more affordable and convenient for individuals and families. The Euclid Development Corporation (EDCOR) offers a first-time homebuyer down payment assistance loan program for eligible
owner-occupant purchases. In addition, EDCOR administers a low interest home improvement loan program. Programs like those help hopeful homebuyers -— firsttime buyers as well as second or third-time buyers — get the keys to their new home.
WHAT ARE THE BARRIERS TO HOMEOWNERSHIP?
A number of barriers exist that can create roadblocks for potential homebuyers, including credit and financial issues. In a recent survey, 47% of millennials considered high interest rates to be obstacles to
homeownership. For others, the high price of homes these days also seems like a brick wall. (First-time buyers currently make up make up 26% of all homebuyers — a decrease from 34% in 2022, according to the National Association of REALTORS® (NAR), of which ACAR is an affiliate.)
Obstacles also include the current low inventory of existing homes on the market, according to Gaebelein. In addition, not enough new construction is being completed by builders valiantly trying to keep up with the housing demand, but who are hampered by lack of skilled workers, some vital materials shortages and high costs.
But one barrier in particular looms large for many buyers — the lack of a sufficient down payment. According to NAR, about three-fourths of all potential homebuyers say they are planning to save for a down payment and most say it will take between six months and three years to save. But millennials are worried. Four in 10 people in that age group said they didn’t think they could save enough for a down payment.
ACAR is working with communities, lenders and homebuyers to ensure that barrier is lessened.
“The percentage of a down payment isn’t necessarily higher than it has been in the past. But the value of homes has gone up, so the amount of money has increased,” says ACAR Board Member Jeannet Wright, a REALTOR® with FASS Real Estate Services in Cleveland, who says that down payment percentage (depending on the loan type) can usually range from 3 to 3 ½% of the purchase price.
ACAR recently commissioned the Akron Housing Affordability Study, a spotlight on the largest city in Summit County, but which is also a reflection of what is happening in many other cities. The study was created by Anderson Economic Group, a research and consulting firm in Chicago.
“ The more barriers associated with homeownership that can be eliminated the better.
According to ACAR's Vice President of Government Affairs Jamie McMillen, “the study suggests that down payments and closing costs may be a contributing factor to why less than 12% of households earning $30,000 or less are homeowners, despite being 40% of the city’s population.”
“The more barriers associated with homeownership that can be eliminated the better,” emphasizes ACAR President-Elect Mark Vittardi, a REALTOR® with Century 21 DePiero and Associates in Parma. “And the way we do that is through our association’s leadership.
“That way if a city or town has a real estate issue, it can look to ACAR to get the information they need before they make a decision that might have a negative effect.”
THERE IS DOWN PAYMENT HELP OUT THERE
Ohio REALTORS®’ 2023 President-Elect. Ali Whitley is a REALTOR® and director of education and training for RE/MAX Crossroads Properties in Fairlawn. Whitley sees more initiatives at the local, state and national levels.
“Sometimes people come out of school with serious college debt. They have excellent earning potential, but they haven’t had the opportunity to build up that down payment yet,” says Whitley. “Down payment assistance would be the perfect opportunity for them. It would be fantastic if all communities had some sort of down payment assistance.”
In addition to a down payment, Wright reminds homebuyers that they are generally responsible for closing costs (about
—Mark Vittardi
3 to 6% of the loan amount), home inspections, appraisals and insurance. She also debunks the misconception that a 20% down payment is mandatory to buy a home. It can be a lot less if government programs, community economic-development assistance and/or lenders’ programs are utilized by eligible applicants, she says. Some loans, including several from the VA and USDA, require no down payment.
Wright also says more buyers should tap into overlooked personal resources that may be underutilized for down payment funds. Those can include significant funds from income tax returns or money saved that once was earmarked for a car payment.
HOMEOWNERSHIP PROVIDES BENEFITS FOR HOMEOWNERS AND COMMUNITIES
Numerous studies over the past decades have suggested that people reap many benefits as homeowners — financially, socially, emotionally and health wise. Homeowners can build strong credit histories and wealth over time and benefit from tax incentives.
Communities also benefit from homeowners who are more civically engaged and who make more property improvements. Neighborhoods of homeowners have a lower crime rate than those of renters because there are more ties to the area and more incentive to deter crime.
“Homeowners put down roots. They stay in communities longer than renters,” according to Whitley. “Homeowners are able
DREW GAEBELEIN
MARK VITTARDI JEANNET WRIGHT ALI WHITLEY
“ Buyers need to have their own advocate. Hiring a buyer’s agent to make sure they have someone in their corner will help them throughout the whole process.
—Ali
Whitley
to start increasing equity and building a life in their community that benefits their community in many ways. Communities that offer homebuyer education and some financial assistance can have an advantage attracting homebuyers.”
WHAT HOMEBUYERS WANT
We want many different things in our neighborhoods, but most of us want walkability. The Community and Transportation Preference Survey is a NAR national poll every three years. The 2023 survey showed that 70% of those surveyed in America’s 50 largest metropolitan areas say “being within an easy walk of other places and things, such as shops and parks, is very/somewhat important.” Also, 85% gave a thumbs up to sidewalks.
Whitley says communities need to promote their assets and work with REALTORS® to get that information to potential homebuyers. Amenities that many buyers want, including good schools, access to public transportation, major vehicle routes and good city services, also encourage residents to remain in their communities when it’s time to be moveup buyers.
Sometimes outdated zoning regulations or unenlightened zoning boards also can be barriers to homeownership. That can especially be true when it comes to affordable housing or non-conventional housing, including the transformation of shipping containers into homes, as well as allowing houseboats, tiny house, earthbermed houses or barndominiums.
“One example is that we are seeing some communities where zoning laws don’t allow for high density housing,” says Gaebelein. “There is a community in Northeast Ohio with an issue on the ballot to ban townhomes. Townhomes are standard entry-level housing in our country.”
IT'S STILL A SELLER’S MARKET
Understanding the homebuying process and “demystifying” it goes a long way to helping homebuyers overcome real or perceived barriers. Legal and financial concerns, and, even in some cases, discrimination, can be complex issues that require professional expertise.
“The biggest misconception for consumers is that they don’t need REALTOR® representation. And I think that falls squarely on us as REALTORS® to educate the consumer about the benefits they have working with us,” says Vittardi.
“Buyers need to have their own advocate,” says Whitley. “Hiring a buyer’s agent to make sure they have someone in their corner will help them throughout the whole process.”
Whitley notes that the state of homebuying is “a seller’s market,” with transactions favoring the seller, not necessarily the buyer. Most real estate professionals and housing economists say it will be seller’s market vs. a buyer’s market for several years.
“So that means there are multiple buyers looking at one particular house. And when that happens, we have all kinds of competition. If a buyer is just waiting to see something online, it may be too late,” warns Whitley. “It’s much better together with a REALTOR® who is searching for properties they can afford and will be interested in. We can often get our buyers over to a house before we are in a multiple offer situation.”
REASONS FOR OPTIMISM
Barriers to homebuying for some consumers are real, but not universal and not insurmountable, according to Wright. She cites reports that show new construction is increasing, “if ever so slightly, but still increasing,” providing more homes on the market. The REALTOR® also points to the on-going and innovative conversions of buildings that were former warehouses,
factories, schools and churches into single-family or multi-family units.
And although this trend also can have a slight negative connotation, Wright says the competition to buy a house may be lessened because “some buyers are getting out of the market.”
“These former buyers may face some new financial changes or problems that cause them to drop out. Or sometimes they are just fatigued after looking for a house for so long,” Wright says.
And as more communities get on the bandwagon to provide down payment assistance and other financial help to home buyers, ACAR members have reason to celebrate their buyers’ success stories.
COMMUNITIES SHOULD STEP UP TO THE PLATE TO HELP CREATE MORE HOMEOWNERS
Homeownership is the American dream and key to building community pride, engagement and generational wealth. However, saving for a down payment may be a barrier to homeownership for some. ACAR encourages our local governments to consider implementing a local down payment assistance program or other homebuyer incentive to support homeownership. If you agree, join our efforts by completing the form below. Your contact information will be protected and not shared publicly.
Overcoming HOMEBUYING OBSTACLES
ACAR REALTORS® can help potential homeowners find programs and incentives from many different sources to help with the home buying process. Here is a sampling:
AKRON
Akron’s Community Reinvestment Area Residential Tax Abatement Program allows homeowners to pay taxes solely on the pre-improvement assessed value of the residential property for 15 years after improvements are completed. New construction of single-family homes or multi-family investor-owned properties are eligible. So are existing single-family and multiple family housing rehabilitation projects with a minimum cost of $5,000. After 15 years, the property is taxed at its total post-improvement assessed value. Properties must meet zoning requirements.
Major improvements that may qualify for a homeowner’s tax abatement include: new construction, additions, new additional bathroom, new or enlargement of a garage, and the remodel of basement or attic into living space.
According the City of Akron, tax abatement has impact because new home construction and renovation increases the value of surrounding properties and fills vacant lots. New construction creates population growth and demand for small businesses, schools and community services.
Information: City of Akron Tax Abatement, Department of Planning and Urban Development, 330-375-2090, akronohio.gov.
CLEVELAND HEIGHTS
The City of Cleveland Heights offers its Down Payment Assistance Loan Program for eligible owner-occupant homes. The program provides up to $10,000 down payment assistance for a single-family home with a maximum sales price not exceeding $166,000. A $10,000 down payment assistance loan is also available for
a two-family home with a maximum sales price that does not exceed $213,000.
All applicants must meet HUD Gross Income Limits. In addition, applicants must:
• Receive certification of completion of pre-purchase and home maintenance counseling from a HUD-approved agency
• Contribute a minimum 3.5% of the sales price toward the home purchase
• Receive approval and first mortgage commitment for the purchase of the house from a mortgage lender.
Applications are available on the web at clevelandheights.com and hrrc-ch.org.
Eligible properties must be occupied by the seller or vacant for a minimum of 90 days. The property will be inspected for health and safety code violations and defective paint.
In addition, several new home developments in the community feature tax abatement. New construction can be found in these neighborhoods: Bluestone — 79 loft flats and 31 cluster homes, 7-year, 100% tax abatement and special financing available; 500 Severance Place — 39 luxury condo flats, 7-year, 100% tax abatement; lease purchase option available; and Kenilworth Mews — 17 townhomes at the top of Cedar Hill. Information: City of Cleveland Heights/ Home Repair Resource Center, 216-381-6100, clevelandheights.com
EUCLID
The Euclid Development Corporation (EDCOR) Down Payment Assistance Program helps first-time homebuyers purchase a single-family home, an attached single-family home or a condominium. The purchase price of an existing home may not be greater than $166,000 or $269,000 for a newly constructed home. The loan is deferred, interest free and half is forgiven after five years of owner occupancy.
Loan amount is based upon household income — 17% of the purchase price with a maximum of $10,000. Funding is on a first-come, first-serve basis. Additional requirements include:
• Completion of HUD-approved pre-purchase and home maintenance counseling
• Contribution of 3.5% of the purchase price for a down payment
• Approval and first mortgage commitment for the purchase of a house from a mortgage lender
• Federal income limitations for household size
• No more than 30% of a homebuyer’s gross monthly income can go to monthly payments for principal, interest, taxes and insurance.
EDCOR also offers a Low Interest Home Improvement Program. This program, made available with HUD funding, provides a 3% low-interest, home-improvement loan to income-eligible residents unable to afford conventional loans for home improvement. EDCOR will also assist with wiring, HVAC and plumbing corrections and updates, structural issues, foundations and driveways and more. Information: cityofeuclid.com
NEWBURGH HEIGHTS
The Student Loan Assistance Grant Program allows homebuyers in Newburgh Heights to obtain grants for 50% of student loan debt, up to $50,000. Grants are
awarded in two installments. The first is given upon 10 years of residency in a qualifying home. The residence must be a single-family home sold for $50,000 or more, If all requirements are met, the grantees receive 80% of their award amount. After 15 years of residency, the balance is paid as a second installment.
The student debt, incurred upon the completion of a bachelor’s or more advanced degree, must be completed within 10 years prior to applying. Additional requirements include proof of student loan, being current on student loan obligations and being current with all taxes associated with the property.
The Student Loan Assistance Grant Program, established in 2019, is funded by local income taxes and administered by the Newburgh Heights Community Improvement Corporation.
Information: Housing and Building Department, 216-641-2716, newburgh-oh.gov/home/ student-loan-assistance-program
OHIO HOUSING FINANCE AGENCY
Since 1983, the Ohio Housing Finance Agency (OHFA) has provided more than 150,000 Ohio homebuyers with more than $11 billion in affordable mortgage loans. The OHFA is not a direct mortgage lender, but purchases qualified mortgages originated through its private sector lending partner. (Participating Ohio lenders include: First Ohio Home Finance, US Bank Home Mortgage, First Federal Lakewood, Portage Community Bank, CrossCountry Mortgage and more in 600 plus locations.)
Ohioans are eligible for an OHFA firsttime homebuyer program if: they have not owned their primary residence in the past three years; they are a honorably discharged veteran; purchase a house in a target area.
Grants for Grads provides grants to borrowers who have graduated within the past 48 months with an associate’s bachelor’s master’s, doctorate or other post-graduate degree from an accredited school. Additional requirements are also necessary, including income and purchase price limits.
The OHFA Ohio Heroes program is geared toward homebuyers who are veterans, active duty military members or members of reserve components, including surviving spouses; police; firefighters; EMTS and paramedics; physicians and nurses; and K-12 teachers, administrators and counselors.
Information: 614-466-7970, ohiohome.org
Inside The Numbers
The National Association of REALTORS® 2022 Profile of Home Buyers and Sellers analyzed the demographics, preferences and experiences of buyers and sellers across America.
10 Weeks
Buyers typically searched for 10 weeks and looked at a median of five homes, and viewed four homes only online. The number of weeks searching for a home grew from eight weeks seen in the 2020 and 2021 reports.
86% • 10% 6% • 17%
86% of buyers recently purchased their home through a real estate agent or broker, and 10% purchased directly through the previous owner.
The typical downpayment for firsttime buyers was 6%, while the typical downpayment for repeat buyers was 17%.
For 47% of buyers, the source of the downpayment came from their savings. 38% of repeat buyers cited using the proceeds from the sale of a primary residence, while 22% of first-time buyers used a gift or loan from friends or family for the downpayment. 47% • 38% • 22%
26%
For first-time home buyers, 26% said saving for a downpayment was the most difficult step in the process.
88%
Buyers continue to see purchasing a home as a good financial investment. 88% reported they view a home purchase as a good investment.
