Scranton boasts most first-time home buyers applying for mortgages

May 14—Even as inventory levels remain low and interest rates rise, Scranton persists as a popular destination for people looking to purchase their first home.

The metropolitan area had the highest percentage of first-time home buyers applying for a mortgage at 54%, outpacing New Haven, Connecticut, at 52%, from January 2019 to December 2022, according to research from CoreLogic, a real estate data analytics firm.

After the national share of mortgage applications from first-time home buyers dropped to a three-year low of 34% in the third quarter of 2022, the number rebounded to 39% in February, according to CoreLogic.

Locally, the average interest rate for a mortgage settled around 6.5% during May, said Tim Holmes, mortgage originator for Dunmore-based My City Mortgage. Rates hovered around 3% last year before steadily increasing throughout the spring, summer and fall to above 7%, he said.

While the current rate sits lower than the average rate of roughly 7.7% throughout the last 50 years, Holmes believes recent increases swayed some prospective buyers away from the market.

"We're actually below average, but because it's been so low for so long, that's really top of mind for buyers," he said.

Holmes noted many recent buyers are purchasing homes while looking to the future.

"The people who are buying now know they can easily refinance a year from now when things come back down," he said. "They can see they're better off owning their own home and having control over their destiny."

Holmes also credits an influx of transplants from outside the area — specifically New York and New Jersey — for driving up the number of mortgage applications.

"They've rented their entire lives and are finally beginning to say I really should own my own property," he said.

Pamela Anslinger, home ownership manager for NeighborWorks Northeastern Pennsylvania, which manages down payment assistance programs with the City of Scranton and Lackawanna County for first-time home buyers, stressed the financial assistance is vital for those trying to land a home.

"A lot of reasons why people sometimes struggle to purchase homes is the initial upfront cost, but also having enough purchasing power," she said. "They don't just give you the funds to be able to get you in the door with some downpayment and closing costs, first-time home buyer programs are also giving enough of an investment to impact the overall cost of the purchase."

The City of Scranton program allows for up to $20,000 per applicant. Anslinger anticipates about 30 people will take advantage of the program this year.

The Lackawanna County program offers a minimum of $7,500 assistance to approved applicants.

"The program is organically bridging the wealth gap and helping underserved and minority populations be able to access homeownership," Anslinger said.

Maite Hernandez, 30, utilized $7,500 through the Lackawanna County program while purchasing a home at 517 Boyle St. in Dunmore this month for $150,000.

Hernandez, who previously lived in New Jersey, sought a secure spot to raise her 5-year-old daughter, Daniela.

"I want to give my daughter a safe place," she said. "We will spend the rest of our lives there."

She credits Kathi Tavera, bilingual housing counselor for NeighborWorks, for helping her obtain the home.

"They supported me through the entire buying process," Hernandez said. "They helped me with the down payment and the closing costs."

While others pointed to the amenities available in Scranton, Anslinger feels the homey feel of the city stands out.

"When you talk with community members, Scranton is just a very welcoming area," she said. "We're very diverse and that pulls in a lot of different types of people that want to live in a place where they feel inclusion."

Pat Rogan, a Realtor with Olyphant-based Hub Real Estate Group, worked with clients throughout the country the last three years, including Boston and San Francisco, looking to buy a home in Scranton.

"Since COVID, many people who are working from home moved to Scranton because of the cost of living," he said.

Holmes added applications from existing homeowners are down because of lack of inventory.

"People are not inclined, if they currently own a home, to make a move right now," he said. "Generally speaking, they probably have a 3% to 4% mortgage rate and to trade that off to get something higher is not something they're interested in. The sheer lack of inventory also makes it very difficult (to relocate). Even if you are able to sell your home and get a great number for it, you really have nowhere to go whether you're upsizing or downsizing."

As of May 9, Scranton had 45 single-family homes for sale, down from about 400 a decade ago and 200 to 300 from five years ago, said Rogan, who noted the number sits around 150 to 200 in a balanced market.

He expects the problem to continue for a couple of reasons.

"There is not a ton of new construction in Lackawanna County and a lot of people either bought or refinanced at interest rates of 3% to 4%," Rogan said. "The tight market is probably going to be the case for the foreseeable future. The interest rates haven't really slowed things down much at all."

Despite the depleted inventory, home costs are still more manageable in Scranton than larger metropolitan hubs, Rogan said.

"Although prices have gone up tremendously in the Scranton metro area, our prices compared to other areas are still very affordable," he said.

Steve Farrell, owner and broker of Classic Properties in Clarks Summit, believes the desire to move back home and be part of a bustling social scene led many young professionals to consider Scranton.

"You probably have a fair amount of people from the area that were considering getting out of cities and relocating closer to family in Northeast Pennsylvania," he said. "They wanted to be near a vibrant downtown area and there are a lot of young people that hang out downtown because of the restaurants and bars. It's a younger city now and first-time home buyers are mostly younger people."

Contact the writer: rtomkavage@timesshamrock.com; 570-348-9131; @rtomkavage on Twitter.