CUMBERLAND, Md. — City officials hope a $20,000 relocation offer will bring new people to the area.
A Choose Cumberland Relocation Package calls for 20 offers of up to $20,000 each for “individuals moving within the Cumberland city limits” who buy a house and spend at least $20,000 to renovate it.
Applicants for the program would have a full-time remote job, or accept work in the area, and make at least $52,000 per year.
Cumberland’s average per-person income was $28,059, and median household income was $43,699, according to the most recent data from the United States Census Bureau roughly two years ago.
In July 2022, the Census estimated Cumberland’s population at 18,769, down from 19,081 in April 2020.
The city’s relocation incentive plan hinges on its fulfilled request to the state for up to $600,000 in 2024 community legacy projects that include artwork for the Baltimore Street Gateway Project, a midtown facade grant and roof replacement program.
If approved, Cumberland’s relocation incentive will follow a growing list of similar attempts from cities including Topeka, Kansas; Newton, Iowa; and Little Rock, Arkansas.
States including Vermont, West Virginia, Alaska and Maine also offer financial incentives for new residents.
Applicants that meet criteria for Cumberland’s relocation proposal would get $10,000 divided over the first year of residency, and another $10,000 after required house renovations are complete.
Ruth Davis-Rogers, the city’s historic planning and preservation specialist, said the relocation package is a pilot program that makes sense for Cumberland.
“We are losing our population,” she said. “Our population is aging.”
Additionally, the proposal would address houses in the city that need to be updated, Davis-Rogers said.
“This will actually help our housing stock,” she said.
Give sellers incentive to sell
Nadia Evangelou is a senior economist and director of real estate research for the National Association of Realtors based in Washington, D.C.
In addition to programs that attract buyers, incentives such as lower capital gains taxes for homeowners to sell their property are needed to address the housing stock shortage, she said.
Typically, NAR wants to see a six-month supply of houses for sale.
But now, most real estate inventory across the country is gone in three months, Evangelou said.
“There’s some progress,” she said of market conditions but added that housing inventory remains limited.
Other factors that stimulate real estate movement include affordability.
“Many buyers are priced out,” Evangelou said and added that less than 30% of gross income should be spent on housing. “We don’t want to see anyone be cost burdened.”
That means a solid job market is also crucial.
“Strong employment growth in (an) area is very important,” she said.
And while Fed Chair Jerome Powell on Wednesday testified before the House Committee on Financial Services that housing inflation will decrease “significantly” through next year, NAR expects housing inventory to remain tight through 2024.
Housing rent prices are expected to continue to increase but at a slower pace than a year ago, she said.
Too few houses for sale
Ally Litten, a real estate broker and owner of Mountainside Home Realty on Washington Street, said the area’s real estate market remains tight with limited inventory.
Most local houses with up to a $100,000 price tag need work, she said Thursday.
Within city limits, 30 houses were listed in that price range and would likely require conventional financing or cash offers, Litten said.
Part of the reason for the local housing price increase in the past couple of years is because not enough new homes were built in the past decade.
Today, unlike other nearby cities where housing developments are being created, Cumberland and surrounding Allegany County have few prospects for new construction.
To complicate matters, some people who want to sell their house are tied to a low mortgage interest rate that was offered a couple of years ago as a way to jump start the economy after COVID-19’s wrath.
The problem with that idea was it apparently didn’t consider future implications, including inflation and higher mortgage interest rates that now prevent gobs of homeowners from buying a new place because they can’t afford it.
A few years ago, the local market included several hundred houses for sale, Litten said.
“Before, (buyers) kind of had their pick,” she said.
Now, multiple offers on a house means a seller can be choosey and reject bids from folks who must sell their own home before they can buy a new one.
And if those want-to-be buyers sell their house first, they risk finding a new one in the current scrawny market.
That can make for tricky timing when it comes to real estate transactions, Litten said.
Also driving demand for local homes is the popularity of remote jobs birthed by COVID, which has made Allegany County attractive for many out-of-area buyers who can afford higher-priced houses with some acreage, she said.
“Those go really quickly,” Litten said of such properties.
She likes the idea of the city’s relocation incentive proposal because it comes with a house improvement requirement, which in theory will help raise property values.
“I see it as a positive,” Litten said.
“One small impact on this community means a lot,” she said. “It sparks a fire.”