Housing Market & Trends

[KJP]

Getting back to housing, my father was a realtor and he always urged his clients to keep some furniture in a for-sale house not because people weren't creative but because they couldn't judge scale without familiar objects of reference. So if you keep an old bed in one room, a sofa in another, and a table with chairs in still another, people can better judge the size of a place. And it will actually look a little bit like a home rather than a cave. Speaking of which, my dad also turned on every light in a home during open houses and showings he did. He said a bright home felt more cheerful and inviting than a dark one.

[Brutus_buckeye]

That is very true. I know when we show apartments, people sometimes question whether they can get their queen bed in the room and we are like, the people before you had a California King in this space.

 

Your dad was ahead of his time. The home staging industry is huge now.

[KJP]

My dad was a million-dollar seller in the 1980s, back when a million dollars a year in sales was an accomplishment. He hated sales but loved houses, architecture, Greater Cleveland, and the power of positive presentation.

[Brutus_buckeye]

WHere was he selling homes? Shaker and Cleve Heights areas? Back in the 80s I figured the preservation and older architecture was a much smaller niche that what it is today. Outside of those areas and maybe Bay Village was there a huge market for the preservationist houses?

[Guest jmecklenborg]

The home staging industry is huge now.

 

Home buying is incredibly emotional and minimally rational, despite it being nearly everyone's greatest expense. 

 

 

[KJP]

WHere was he selling homes? Shaker and Cleve Heights areas? Back in the 80s I figured the preservation and older architecture was a much smaller niche that what it is today. Outside of those areas and maybe Bay Village was there a huge market for the preservationist houses?

 

He worked out of the Chagrin Falls office of HGM Hilltop, later Realty One, and finally bought by Howard Hanna. His territory was the entire east side of Cuyahoga County and western Geauga County.

[Brutus_buckeye]

Chagrin and some parts of Geauga county have a lot of historic charm to them too. I can see why he was successful.

[KJP]

I always see a lot of young adults on the 55, long before it was called the Cleveland State Line, since it runs from Lakewood to CSU. And I see quite a few young adults with moving vans every late-August/Labor Day moving into the neighborhood. This year it seemed like less, however.

 

Are you seeing less people moving into the lakewood neighborhood area or the cleveland state neighborhood area?

 

Lakewood. I'm seeing lots of moving vans and out-of-state cars consistently throughout the year, but not the sudden surge at the end of August like I've seen in year's past.

[327]

Interesting.  I doubt students are getting priced out of Lakewood rentals, which are still a lot cheaper than downtown.  Although that gap may be closing.

 

Was talking with a colleague today about house shopping and she said "Are you dead set on Lakewood?  Try Parma.  My mortgage there is $400."  Last week another friend theorized that a lot of these newcomers to Lakewood might move further west when their kids are nearing high-school age.  We shall see.

[surfohio]

Interesting.  I doubt students are getting priced out of Lakewood rentals, which are still a lot cheaper than downtown.  Although that gap may be closing.

 

Was talking with a colleague today about house shopping and she said "Are you dead set on Lakewood?  Try Parma.  My mortgage there is $400."  Last week another friend theorized that a lot of these newcomers to Lakewood might move further west when their kids are nearing high-school age.  We shall see.

 

If I was priced out of buying in Lakewood I'm honestly not even sure where I'd move my family.

[KJP]

Data guy @RichExner uses Tremont duplex to explain how county real estate appraisals, taxes rise in hot #CLE neighborhoods - and why homeowners elsewhere might see tax bills drop even amid modest value gains. https://t.co/1s84gejfSy

[Brutus_buckeye]

^ It is a shame that the county goes through this with a hatchet and raises prices like this. Fortunately, at least in most counties, the appeal process is pretty reasonable and when confronted with reasonable evidence, the county quickly backs off their values. I had a couple properties in Montgomery County double a couple years ago but we got them knocked down to their original price upon appeal which is not too hard.

 

I know Jonathan Dever at the statehouse is working or has been working on a bill to prevent the county from assessing tax rates on an existing property more than 9% more than it was for the previous year.  This would provide relief to homeowners from the tax shock in such circumstances

[BigDipper 80]

Yeah I own a house in Dayton and the appeal process was painless. Granted, my property value wasn't raised all that much during the reappraisal, but all I did was submit the appeal online and they left my home value alone.

[Brutus_buckeye]

^ Karl Keith has come out at one time in the past and said that he views his goal to maximize revenues for the county through getting property values as high as possible. What he counts on is that there are many people who do not understand the appeal process and will not do anything and pay it. He is preying on the ignorance of his constituency.

[StapHanger]

Data guy @RichExner uses Tremont duplex to explain how county real estate appraisals, taxes rise in hot #CLE neighborhoods - and why homeowners elsewhere might see tax bills drop even amid modest value gains. https://t.co/1s84gejfSy

 

What gets a little lost in all this, is that most of the increase in tax burden on that Tremont duplex isn't due to its increase in value per se, but its increase relative to other city properties.  Or, put differently, a big part of what's spiking the tax bills in Ohio City and Tremont is the decimation of house values on the East Side.

[KJP]

 

What gets a little lost in all this, is that most of the increase in tax burden on that Tremont duplex isn't due to its increase in value per se, but its increase relative to other city properties.  Or, put differently, a big part of what's spiking the tax bills in Ohio City and Tremont is the decimation of house values on the East Side.

 

How does that work?

[Brutus_buckeye]

^ the county is trying to balance the budget on say $10 million in taxes. As the property values on the East side erode, they need to raise the West Side higher to make up for this erosion to get to the number to balance the budget.

 

The problem is it overvalues the West Side property and the risk is that the County loses if the owner appeals and then they miss their revenue projections that they had already accounted for in spending.

[GCrites]

^ It is a shame that the county goes through this with a hatchet and raises prices like this. Fortunately, at least in most counties, the appeal process is pretty reasonable and when confronted with reasonable evidence, the county quickly backs off their values. I had a couple properties in Montgomery County double a couple years ago but we got them knocked down to their original price upon appeal which is not too hard.

 

I know Jonathan Dever at the statehouse is working or has been working on a bill to prevent the county from assessing tax rates on an existing property more than 9% more than it was for the previous year.  This would provide relief to homeowners from the tax shock in such circumstances

 

Wouldn't that motivate the counties to perform reassesments more often? If they happen only on a 5-8 year basis as they do now that might not allow for enough appreciation in certain areas.

[Brutus_buckeye]

Its statutory that they do a 6 year re-appraisal and then 3 year adjustment. It is up to the legislature to change that.

[KJP]

^ the county is trying to balance the budget on say $10 million in taxes. As the property values on the East side erode, they need to raise the West Side higher to make up for this erosion to get to the number to balance the budget.

 

The problem is it overvalues the West Side property and the risk is that the County loses if the owner appeals and then they miss their revenue projections that they had already accounted for in spending.

 

The West Side is rising because it's a seller's paradise. Doesn't matter if it's in Cleveland, Lakewood, Rocky River or Bay. And not everything on the west side is skyrocketing. Look at areas away from the lake. Anyone who lives over on the West Side of the county near the lake and has been doing any house shopping knows how crazy this market is, with housing sales happening within days or hours of a listing and prices getting bid upwards, some by people offering all cash. We're competing with people not only moving in from other states but also from people relocating from the East Side, which is a mess. Real estate values are going up because prices are going up due to demand, not some arbitrary governmental initiative.

[StapHanger]

^ the county is trying to balance the budget on say $10 million in taxes. As the property values on the East side erode, they need to raise the West Side higher to make up for this erosion to get to the number to balance the budget.

 

The problem is it overvalues the West Side property and the risk is that the County loses if the owner appeals and then they miss their revenue projections that they had already accounted for in spending.

 

I wouldn't put it that way, exactly. Aside from the inside millage*, the taxing jurisdictions are going to collect the absolute dollars of tax collections that have been duly approved by ordinance or voters. The valuations are just the method for allocating that burden across all the taxed properties.  The county doesn't need to increase valuations anywhere to make that happen- the effective tax rates just go up to make up the difference.  But in Cleveland's case, there really has been very healthy property value appreciation on the near west side- that's not some bogus county estimation game.

 

*The inside millage (10 mils) is a literal percentage of valuation (1%), so collections there do change in lockstep with valuations. But everything else is reallocated across all the properties on the tax rolls in a given tax jurisdiction every time valuations change.

 

One other piece affecting property taxes in the past few years is that the state has stopped doing its "rollbacks" on new levies. The state used to force taxing jurisdictions to reduce their tax rates, but then make the jurisdiction whole from state funds.

[Brutus_buckeye]

When I lived in Cleveland years ago, it seemed as if the East side and west side were pretty balanced as to where the concentration of affluent people lived. Is that still the case or has it dramatically shifted to the WEst Side (and by East side, I include some of the western parts of Geauga County)

[freefourur]

When I lived in Cleveland years ago, it seemed as if the East side and west side were pretty balanced as to where the concentration of affluent people lived. Is that still the case or has it dramatically shifted to the WEst Side (and by East side, I include some of the western parts of Geauga County)

 

I think the East Side, from the Heights to the Chagrin Valley, is generally old money while the West Side, along the West Shore, is new money.

[StapHanger]

^^It probably wasn't as balanced back then as you thought, and even now, the big money is still disproportionately located in the eastern suburbs.

[Brutus_buckeye]

StapHanger[/member]  That is what I figured. Old money Shaker, Chagrin, Orange, Beachwood, etc. New Money in Westlake, Avon, Avon Lake, etc. Some old money in Bay Village too though.

[Mendo]

What gets a little lost in all this, is that most of the increase in tax burden on that Tremont duplex isn't due to its increase in value per se, but its increase relative to other city properties.  Or, put differently, a big part of what's spiking the tax bills in Ohio City and Tremont is the decimation of house values on the East Side.

 

Many of the houses that saw large appraisal increases were seriously undervalued in the first place.

 

The example in the article was odd. They picked an income producing double in Tremont to show that their property appraisal is too high? Perhaps the rate of increase was excessive, but the newly appraised value isn't crazy.

[Brutus_buckeye]

The appeal process is pretty easy and many will get it lowered by the appeal process. Get an appraisal for $400 and you will more than make that money back in the appeal.

[Guest jmecklenborg]

I visited Nashville this past weekend and during a brief pause in the rain took photos of about 100 new infill houses in just one little 4x4 block area.  Just way off the scale compared to anything going on in any Ohio city, and likely all tear-down/infill activity in the entire state.  I'll be posting this week. 

[KJP]

House-price gains are picking up in #CLE even as growth slows nationally. And according to Case-Shiller, at least, Cleveland-Elyria-Mentor-area house prices finally have returned to their pre-recession peak - 12 years after they started to slump.

http://realestate.cleveland.com/realestate-news/2018/09/house-price_gains_slow_nationa.html

[Gramarye]

Careful with that.  Not long ago, we'd have used the term "bubble peak" instead of "pre-recession peak."

[tklg]

From what I understand, the pre-recession levels were all time highs.  Markets tend to deflate all time high prices, so keep an eye out for another retrace.

 

If retrace does happen, and we get classic cup and handle, CLE market could go through the roof.

[StapHanger]

Careful with that.  Not long ago, we'd have used the term "bubble peak" instead of "pre-recession peak."

 

The difference is, we've had a long stretch of fairly pathetic for-sale housing construction, so it's not exactly like 2008 Las Vegas in most markets.

 

Michele is good about flagging this in her articles, but the interesting stuff is hidden by the metro-level price indices. It's true that metro-wide, price appreciation has brought prices back on average, but the price growth has been very uneven within a lot of these areas (see posts in this thread about Cleveland area).

[GCrites]

Enough suburban tract housing got built in the early to mid-2000s that no more was needed for 10 years in many markets... even Columbus.

[KJP]

Thankfully the fastest growing employment district in Ohio, University Circle, is in the midst of one of the most impoverished areas of Ohio -- and even more so, that there is a concerted effort now underway to leverage that growth for the benefit of those surrounding areas.

 

See my blog:

http://neo-trans.blogspot.com/2018/08/leveraging-boomtown.html

[simplythis]

More Housing? https://realestate.cleveland.com/realestate-news/2018/09/report_shows_demand_for_6800_m.html

[KJP]

Why we need more housing inventory in Cleveland....

https://twitter.com/mjarboe/status/1052564558076932101

[Cleburger]

We have plenty of houses.  Just many of them need rehabbed.  The city and county should step up code enforcement and force absentee landlords to sell to someone willing to put the effort into the homes. 

[KJP]

Nah, they'd rather demolish them.

[KJP]

Hmm....

 

 

[Mendo]

Yikes, the second lowest income increase and lowest housing price increase over the last 20 years.

[surfohio]

Cleveland, Indy and Detroit stand apart in the miserable category.

 

For what it's worth my house in Lakewood just appraised at 3X the dumb zillow estimate.  

[Guest jmecklenborg]

Free of physical constraints (an island, mountain range, etc.) or an unusual zoning issue, every area's housing prices will even out over time.  An area that grows steadily and has no physical constraints will maintain civilized housing prices.  Even areas that have grown pretty quickly like Houston, Dallas, and Atlanta have pretty affordable housing. 

 

All of the west coast cities have unusual physical and zoning restraints.  For whatever reason all of the people who have moved to the west coast don't really understand this. 

[Robuu]

11 hours ago, surfohio said:

Cleveland, Indy and Detroit stand apart in the miserable category.

 

For what it's worth my house in Lakewood just appraised at 3X the dumb zillow estimate.  

Dude, it's called a Zestimate.

[surfohio]

Just now, Robuu said:

Dude, it's called a Zestimate.

Ha! Trying to work a good Trulia pun here but it's still too early for me.....

[KJP]

 A sad statement...

 

[tklg]

Why is government support required for middle market housing?

[Mov2Ohio]

^The rents or sales prices don't justify the cost to build. So they want a government subsidy to bridge the gap.

[Gramarye]

Government support for affordable housing is premised in part on the greater collective-level benefit of having a higher homeownership rate.  Of course, there are dissenters who perceive no such net collective benefit, but in general, even in the subsidy-hostile Republican Party, most people still accept that broad access to homeownership is a net positive for the country.  That's not to say you should have a government-guaranteed right to live in a tony neighborhood in San Francisco, of course.

 

When it comes to middle-market housing, there's less perception of a net benefit because, for example, a young professional couple looking for a starter home still has respectable options in almost all Ohio markets (and again, it's not like people should be looking to the government to support a desire for a trendy condo in the heart of downtown Cleveland or Columbus or their most desirable close-in neighborhoods).  There may be government-supported options such as 203(k) loans for rehab of older properties, because we've recognized a specific interest in restoring salvageable older properties rather than a general interest in new middle-market housing.

 

Things can always change, of course, but this isn't a political or market reality I see changing anytime soon.  We may have some minor market imbalances in the availability of serviceable middle-market housing in particular pockets of the country, but we have nothing really approaching a general middle-market housing shortage that would warrant a major commitment of tax dollars to remedy.  Available dollars are still likely to be channeled primarily into affordable housing for the foreseeable future.

[KJP]

Actually, @mjarboe's tweet was part of a larger stream, based on what's being said at a panel discussion she's attending. Here's more.....

 

 

Which brings us to the tweet I shared above....

 

 

[GCrites]

Housing affordability isn't really a problem in a lot of Republican controlled House districts. They don't bother with the issue since houses in many of their jobless Appalachian, Deep South and small-town Midwest districts are only worth $30-50K.