I recently met my neighbor, whose slate-roofed Italianate Victorian home I had been drooling over since I moved into my own (much humbler) three-story brick Victorian just around the corner. She, her husband, and their daughter saw the place online and bought it - sight unseen - and moved their family from Denver, CO to Williamsport, PA, a city they had no connection to and had never set foot in.
Newly liberated by a switch to remote work, and lured by historic properties with rock-bottom prices, her story and mine are similar. Having switched to a fully remote working arrangement when joining Fourth Economy, my eye also began to wander through Instagram accounts and real-estate listings. I saw my current home online and fell in love with its period details and location in the Historic District just off “Millionaire’s Row” - a street lined with grand old mansions and turn of the century buildings constructed with timber and coal money of yesteryear. The price seemed too good to be true - less than half of what I paid for a much smaller home an hour away in a larger college town. We went to see the house one weekend and made an offer on it that day having spent all of three hours in a place we’d never been before.
What’s Old is New Again
Social media accounts such as Cheap Old Houses and Leave Some Character have recently elevated grand old Victorians and craftsman bungalows in far-flung places and rust belt cities to national attention. Homes on these accounts are typically older than 1960 and less than $200k (often far less). With the national median home price standing above $400k, moving to Dayton, Ohio, or Glasgow, Missouri for a $100k home seems less crazy than it might have in years past.
Built in 1918, this move-in ready 2 bedroom, 1 bath home is listed for $125k in Akron, OH
Older homes, especially those in need of repair, are often an affordable entry point for homeowners looking to get into the housing market. For those with good credit or a creditworthy co-signer, a down payment may be as low as 3% of the sale price. For a $100k home, this means roughly $3,000 down with a monthly mortgage of around $600/month at today’s historically low interest rates (not counting taxes and insurance). For those living in large cities where one months’ rent can be north of $2,000, or for those looking to move out of their parents’ basement, a “cheap old home” could translate into lower housing costs and upward economic mobility as homeowners build equity.
Older homes also offer home buyers the opportunity to make something their own and preserve housing stock that might otherwise fall beyond repair. There are federal tax credits available for purchasing and restoring a historic home, and some states and municipalities offer further financial incentives for buying older homes. Louisiana, for example, offers an 18.5% tax credit to offset the cost of restoring historic homes with many other incentives at the local level.
The downside of old houses, however, can outweigh the financial benefits. When the roof leaks or the toilet backs up you can’t just call the landlord, you ARE the landlord. Outdated HVAC systems, old wiring, old roofs, and structural issues are not uncommon among old houses and can quickly raise the price of your cheap old home and eat into the amount you would otherwise be saving in reduced housing costs. Windows and insulation that aren’t up to modern efficiency standards can make heating and cooling old homes cost-prohibitive. Beyond the stained glass, crown molding, and period details there may be asbestos, dangerously outdated wiring, mold, and almost certainly lead paint. Mitigating these issues can be extremely costly and ignoring them may present health and safety dangers to the homeowner. Also, old houses may not qualify for certain mortgages, like FHA loans, which offer lower interest rates but require more stringent inspections than traditional mortgages.
In Cedar Rapids, IA this well-preserved 3 bedroom, 2 bath 1924 Tudor could be yours for $152,000 - if it weren't already pending
In addition to lowering the barrier to home buying, communities may need to offer resources to support rehabilitation and modernization of housing stock to lower operating costs of older homes and stabilize communities. Programs such as the Urban Resources Development Corporation’s Owner Occupied Repair Program in northwest Philadelphia serve as a model for providing wrap-around services to help low income and elderly homeowners make needed repairs. The URDC program provides assistance with identifying financial resources to make repairs and connects homeowners with pre-approved contractors and volunteers to complete the work.
‘Cheap Old Houses’ Aren’t Cheap for Everyone
Scranton, just an hour northeast of Williamsport has similar demographics, housing characteristics, challenges, and opportunities at a slightly larger scale. In the Strategic Economic Development Plan we recently completed for the City we observed that homes are generally affordable - the median home price in Scranton is $103k - and yet homeownership remains low with less than half of Scranton homes being owner-occupied, indicating that housing access and affordability are an issue. Our analysis finds that the median annual wage in the city of Scranton is $30k, $20k lower than what is considered a living wage for the area.
At $199,900, this 3 bedroom 2 bath house in Scranton, built in 1930, is just a few blocks from Scranton's Nay Aug Park - one of the areas cultural treasures.
In Scranton, efforts to improve housing access and affordability include the Lackawanna County Land Bank which has acquired more than 500 properties since its establishment in 2017 and, in its first two years, sold over 100 properties generating approximately $70,000 in new tax revenue (learn more about Land Banks in our Promising Practices article here).
Other efforts in the city include a first-time homebuyer assistance program administered by NeighborWorks and a public-private housing coalition that combines efforts to mitigate blight and improve affordable housing and new development.
Old housing stock may also serve as a starting point for correcting historic inequities brought about by practices such as redlining. In Baltimore, Black Women Build trains Black women in carpentry, electrical, and plumbing by restoring vacant and deteriorated houses in West Baltimore while assisting them to become homeowners. In addition to increasing home ownership, participants learn valuable technical skills that may lead to potential job opportunities and will allow them to maintain their homes, blighted properties are restored and saved from demolition, and communities are preserved and strengthened.
Yeah, But You Wouldn’t Want to Live There
A common sentiment among those who comment on the accounts mentioned earlier boils down to - “yeah, the house is cheap because no one would want to live there” or “great, but it’s in the middle of nowhere”. Cheap homes aren’t an economic development strategy in and of themselves but could be leveraged into a larger strategy to attract talent and growth. Beyond the affordability of our home, what sold us on Williamsport, a small post-industrial city in north-central Pennsylvania, was the walkability of its neighborhoods, the quality, and vibrancy of its well-maintained downtown, its infrastructure (high-speed internet access was obviously a must), and the fact that it has an arts scene and cultural amenities. These are all the result of years of economic development efforts, an infusion of energy from a young mayor committed to economic development planning, public-private partnerships that have revitalized large parts of the downtown area, and a stable base of employment in the city’s medical, educational, and manufacturing sectors.
Downtown nightlife in Williamsport, PA. Photo: Lycoming County Visitor's Bureau
Cheap homes aren’t an economic development strategy in and of themselves but could be leveraged into a larger strategy to attract talent and growth.
Critical assets for economic development include housing stock that is diverse and affordable, mobility options that get people to where they need to be, wages that support homeownership, and a robust array of cultural and recreational opportunities.
In addition to large-scale economic development planning, we can help with housing stock analysis, neighborhood development plans, equitable development planning, and other services to assess housing affordability and accessibility. Our Equitable Development Toolkit also offers additional thoughts on expanding housing access and affordability. Contact us to learn more about how we can assist with developing implementable plans that help communities employ a portfolio of strategies designed for impact.