July 08–The first wave of modern high-end homes is about to hit Akron.
Private developers are busily buying up 35 acres of city-owned land to build 349 homes in four developments, some so dense that 15 houses will fit on an acre. The first of the homes will be on the market later this year or early next, carrying price tags of up to $280,000.
It’s all single-family housing.
A mix of 156 homes and townhouses are planned for Guinther Park, a turtle’s crawl from Lake Nesmith in Kenmore. Priced between $175,000 and $200,000, 90 homes with golf course views will replace old Perkins Middle School at Mull and Hawkins avenues. Along Hickory Street near the Towpath Trail, once-weary developers are looking at 42 ready-to-build lots. And on a hill above the Akron Zoo, not far from the John Brown House, 51 upscale units are planned on tree-lined fields where mansions and carriage houses once stood in the heyday of Akron’s industrial past.
The jolt of homes is a direct response to Akron Mayor Dan Horrigan’s residential tax abatement program. Launched last spring, the tax incentive for builders and homebuyers locks in the value of property before it’s developed. Even if a developer plops down a $300,000 house, the property value — and property taxes — stay flat for 15 years.
Homeowners stand to save $7,000 or more a year in property taxes on these 350 new homes.
The tax breaks are an economic development tool that diverts funding away from schools, parks, libraries, the zoo, police, fire and other municipal services to make building viable in Akron. For more than a decade, the city has counted on one hand the number of new homes each year. Now, it’ll count by the dozens.
The homes will compete with at least 312 new downtown apartment units for young professionals looking to start a family or empty nesters who prefer low-maintenance living in the city near arts, sports, music and entertainment.
The apartments will come 100 at a time as building renovations are completed; the homes will trickle online.
“Usually we build a model or two per community, which also acts as the sale center for that community. As we wait for interest, we do build a number of ‘quick move-in’ homes,” said Greg Nowak, regional marketing manager for K. Hovnanian Homes, the builder for the 51 homes at the Crossings at Auld Farms off Diagonal Road, near the Akron Zoo.
Auld Farms is the furthest along of the four projects.
Demand will dictate the pace of building. “It all depends on what we feel the market is in the mood for. If demand is high, they’ll put up the quick move-ins,” said Nowak, whose company is building 13 communities across Northeast Ohio.
“I feel that’s a good sign,” he said. “For us, we’re in a growth period.”
Homeowners and city leaders who share Nowak’s optimism expect this wave of upscale homes to buoy falling property values, if not push them up. “Existing home prices will stabilize,” said Bill Sanderson, vice president of land acquisition and development for Knez Homes Inc., the developer on the Crossings at Auld Farms and the Lake Nesmith project. “And there will still be plenty of affordable houses in Akron. Most of the places we’re building are on vacant lots. We’re not tearing down any good housing.”
More cautious residents, however, worry that developers are overestimating the market. That’s what happened on Hickory Street when two homes went up, the bottom fell out on the housing market and no more units have been built since.
“That’s my biggest concern is that you’ll have 51 homes at $200,000 and nobody to buy them,” said Jamie Brown, who lives beside the future site of the Crossing at Auld Farms. “I love my home, but that’s our biggest concern is that they’re going to sit there vacant.”
“Fifty-one houses on that property is going to be interesting. But someone has obviously done their market research and that’s what the city wants,” said another neighbor, Stephen Brown, who couldn’t convince the city years earlier to let him use the lots to employ dozens of people to sell produce grown in hydroponic greenhouses, like the one in his backyard.
“[Neighbors] are looking for their property values to go up, because they haven’t recovered from 2008,” said the Rev. Gus Brown, searching for something positive.
The pastor, whose church abuts the development site, has concerns about privacy, building homes within 300 feet of his two gas wells, adding traffic to an already busy Diagonal Road and creating drainage issues when rain hits 51 hard roofs and tiny lawns, and a network of new sidewalks and streets.
Some neighbors also question the prices. How, in a city with a median household income of $35,240, can anyone afford a $200,000 home?
“There are a lot of [used] homes here that are selling for half that. So why would someone spend that much?” asked the Rev. Scott Campbell, whose Shoreline Church sits across the street from the barren Guinther Park. “Are they going to sit empty if no one buys them and eventually become Section 8?
“Oftentimes, there’s skepticism,” Sanderson said. “And sometimes projects fail — let’s be fair.”
But the simple answer — according to Sanderson and Tom Fuller, executive director of Alpha Phi Alpha Homes Inc., which is developing the Perkins Middle School site — is that the new homes are not for current Akron residents. They’re being marketed to the higher incomes of people who live outside the city.
The sales hook for most will be proximity to downtown and hassle-free living. Packed tight to be profitable, the housing is not for people who enjoy spending hours each weekend cutting the grass or weeding the garden. “Some folks enjoy waking up on a Saturday morning to a list of chores and a trip to the hardware store. Some don’t,” Sanderson said.
Time will tell if Akron’s housing strategy attracts empty nesters and young professionals with in-demand job skills and disposable incomes.
Local businesses, from grocers to gas stations, would welcome their patronage. But on the whole, Northeast Ohio — with the exceptions of Kent, Macedonia, Reminderville and rural Medina County — has shrunk. There are few places to fund new residents, making it tough to grow in the middle of a shrinking corner of a shrinking state.
And cities like Akron and Cleveland have lost the most since 2010.
Early data, however, show the property tax breaks, which apply to most new residential construction of $5,000 or more, have piqued builders’ interest. In all of 2017, Akron had $917,490 in home repairs, additions and a couple of new houses, according to county building permits. Halfway through 2018, job permits in the city already total $952,610.
That positive trend will only increase if the first of 51 homes worth $12 million goes up at the Crossings at Auld Farms.
Abatement in action
The residential abatement program will save thousands of dollars a year for new homeowners, who can use the money to pay down a hefty mortgage. According to a Beacon Journal analysis, the property tax savings for 15 years should equal about 40 percent of the value of each new home.
Take 141 Marvin Ave., for example. Knez Homes built and sold this state-of-the-art, energy-efficient 1,716-square-foot, three-bedroom, two-and-a-half-bath colonial on cheap land previously owned by Summit County Land Bank and vacant for two years following a house fire.
Knez Homes heavily marketed the home’s “extremely walkable” Highland Square neighborhood — “just a few steps to the Mustard Seed, Highland Theatre, the public library, dry cleaning, Square Records, restaurants and bars … Live the good life and see why we always say ‘It’s hip to be square’.”
With the sale too fresh to appear on county records, Sanderson said the buyer paid more than the listed price of $260,000. That’s promising in a neighborhood where century homes twice as big are selling for half as much.
Because of the residential tax abatement program, the property taxes will stay at $581 a year for the next 15 years, saving nearly $7,500 a year, or about $112,000 over the life of the abatement. The seller, who has struggled to build homes at a marketable price, can roll those tax savings into a sweeter deal for the buyer. It’s an indirect public subsidy.
“We are not talking about affordable housing,” said Fuller, with Alpha Homes. “And that’s another issue is the availability of pricing at that range and being able to sell construction costs at that range. We’re aware of the difficulties in pricing some other projects we’re doing. We know the costs are going up and the demand for skilled labor is high right now.”
This article provided by NewsEdge.