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Wannabe homebuyers finding higher costs, tighter market

Covington nonprofit is trying to help
Posted at 9:14 PM, Feb 06, 2020
and last updated 2020-02-07 10:46:48-05

COVINGTON, Ky. — Wannabe homebuyers like Toi Cole are feeling the effects of the housing crunch, but a Covington nonprofit is trying to help.

Stuck with high rent, Cole has been trying to buy for a year and a half. But she found a tight market.

As of Thursday, there were 28 homes for sale in Covington, and usually it's two or three times that, according to the multiple listing service.

And prices are more than she bargained for.

“I felt like everything was overpriced,” Cole said.

As for negotiating a lower price, forget it, she said.

"You're not going to negotiate because, guess what? The next person that wants that house, they're going to get it," said Cole.

Why are housing costs up?

Three reasons, said William Sanderson, president of Urban Community Developers, a nonprofit helping Covington combat the affordable-housing crisis.

1) Cost of materials has gone up 10% to 20%, said Sanderson.

“I can’t think of anything that's gone down in price," he said.

Part of the reason for that is a shortage of materials – particularly lumber. Wildfires are partly to blame.

"When it burns up, it's pretty much gone and it will take 30 years to replace,” Sanderson said.

2) There is a labor shortage.

“A large percentage of our trade base – plumbers, electricians – those people are all in their 50s,” Sanderson said. “They're looking at retirement, and there's not a whole cadre of people behind them.”

3) There aren’t enough homes on the market.

"Part of the reason is because if you sell your house then you have to buy another one, and if the prices have gone up, you can't take that money that you got from the sale and buy another house,” said Sanderson.

What's the solution?

The theory at Urban Community Development is build more – add to the housing supply – and prices will drop.

The nonprofit is starting with two townhomes on Philadelphia Street.

“We can control that part of it by building homes on the vacant lots that will hopefully create some turnover,” Sanderson said.

But that will take time.

Cole’s advice to wannabe buyers:

"Don't rush it. Just take your time."