The last home at Cleveland's new Mill Creek development has a 15-year tax abatement, 2,000 square feet and a backyard view of one of Cleveland's Metroparks. And now, the home's developers are throwing in $10,000 in free furniture to anyone willing to buy it.
Mandy Barney: They can buy one really awesome piece (laughs) or they can buy 80 pieces, whatever they want.
Mandy Barney is the marketing director at Zaremba Corporation, which built the development. She says the $252,000 home has been sitting for over nine months and has to face a lot of competition. According to the Northern Ohio Regional Multiple Listing Service, there were about 50% more homes sitting on the market in January 2007 than there were in 2006.
Mandy Barney: We looked at our buyer and said really what would entice one of our buyers to walk in the door, with all the selection they have out there and that is an added value.
The growing glut in homes and a slight drop in home sales last year have taken their toll on the home construction industry. The number of new homes started in Northeast Ohio in 2006 dropped by about 25% from the year before. Real estate appraisal firm CRM Development Research says that's the lowest level they've seen since they started collecting the data in 1990. CRM projects new home construction to slow even more this year. Vince Squillace of the Ohio Home Builders Association isn't surprised.
Vince Squillace: The loss of people, particularly the loss of younger folks, is a demographic factor that has been working against household creation, which is why Ohio has one of the lowest housing starts per capita in the country.
In the past year, national home builders like Ryan Homes, Pulte Homes and Centex Corporation have cut their Ohio offices. Ken Smalling is a spokesperson for the Dallas-based Centex.
Ken Smalling: Because there are more homes on the market and some buyers are sitting on the sidelines, its required companies like ourselves to look at the sales force we have and all of our employees and how many homes we're going to deliver so we've had to right size the organization to meet the current sales price.
Many are also watching the growing number of foreclosures and rising number of people unable to pay their loans on time, especially those in riskier subprime loans. Barbara Ann Reynolds is the president of one of the area's largest realtors, Realty One Real Living. She says the good news is that the Cleveland market is not as volatile as other parts of the country.
Barbara Ann Reynolds: We have always historically been the first into a slow down and the first out.
She and other realtors credit December's unusually warm weather for bringing out buyers, and good deals and low interest rates for keeping them coming. At Progressive Urban Real Estate, Vice President Dave Sharkey says his office is already moving faster than 2006.
Dave Sharkey: All year you'd go through these phases of the phone'll ring for a day or two and then you'd get optimistic and then that third day it's like, oh, it stopped. (laughs). That's not happening. We're consistently busy now.
And those calls are generating sales. The Northern Ohio Regional Multiple listing service's CEO Carl DeMusz points to a bright spot in recent data: a big jump in the number of homes now under contract, or in other words, on their way to being sold.
Carl DeMusz: So yes, we had a lot more listings, but I think what we're seeing is that that inventory is starting to be utilized which is good news going forward.
And Nate Coffman of the Home Builders Association of Cleveland says local builders are even seeing good signs.
Nate Coffman: Now in the dead of winter they are reporting an increased amount of traffic and an increased amount of sales.
But realtors warn that sellers need to be realistic. With all the for sale signs out there, prices aren't going to be climbing anytime soon. I'm Mhari Saito, 90.3.