11 minutes ago, Brutus_buckeye said:

Most of the Cleveland doubles I have seen have been top bottom,  where have they had the side by side doubles?

 

Neighborhoods built in 1900-1920 there are many.  

A typically solid piece from Robert Shiller:

https://www.nytimes.com/2020/07/31/business/housing-market-prices-risk.html?action=click&module=Editors Picks&pgtype=Homepage

 

Quote

Ultimately, it came down to unwarranted optimism and excitement about home prices. There were, during the 1997-2005 boom, constellations of narratives about housing that grew contagious over time, even transcending national borders. Intense “real estate voyeurism” — envious online snooping of other peoples’ home values — became common. The exuberant mind-set displaced thoughts of price declines.

 

I have no doubt that the Zestimate alone has motivated a ton of activity over the past ten years.  Realtors don't make money unless you move.  That's why you always hear them say "it's a seller's market" or it's "a buyer's market".  Who are you?  You're one or the other. 

 

I just looked up my childhood next-door neighbor on the county auditor.   Yep, they're still there.  The house was built in 1968 and they bought it in January of 1970.  They've now been there for 50.5 years.  Realtors hate that.  HGTV hates that. 

 

Rents in Ohio outpacing the rest of the nation YoY for July: https://www.crainscleveland.com/scott-suttell-blog/apartment-rental-rates-keep-pushing-higher-cleveland

Quote

Topping the list of gainers: Cleveland, with a median one-bedroom apartment rent of $940 in July, up 16% from a year ago. (Cleveland's two-bedroom median rent was $1,000, up 14.9% from a year ago.)

 

Ohio is holding up well, as Columbus was No. 3 on the list of gainers ($810, up 15.7%) and Cincinnati was No. 7 ($900, up 15.4%). Akron was No. 21, with a median rent of $610, up 10.9% from July 2019.

 

40 minutes ago, PoshSteve said:

Rents in Ohio outpacing the rest of the nation YoY for July: https://www.crainscleveland.com/scott-suttell-blog/apartment-rental-rates-keep-pushing-higher-cleveland

 

But the thing to keep in mind is that even with those large jumps in average rents, Ohio still ranks near the top of the list in the country for housing affordability.

On 8/2/2020 at 9:15 AM, jmecklenborg said:

A typically solid piece from Robert Shiller:

https://www.nytimes.com/2020/07/31/business/housing-market-prices-risk.html?action=click&module=Editors Picks&pgtype=Homepage

 

 

I have no doubt that the Zestimate alone has motivated a ton of activity over the past ten years.  Realtors don't make money unless you move.  That's why you always hear them say "it's a seller's market" or it's "a buyer's market".  Who are you?  You're one or the other. 

 

I just looked up my childhood next-door neighbor on the county auditor.   Yep, they're still there.  The house was built in 1968 and they bought it in January of 1970.  They've now been there for 50.5 years.  Realtors hate that.  HGTV hates that. 

 

My father has been at his home since 1959. They hate that even more I guess.  It has been paid off for over 30 years.

1 hour ago, PoshSteve said:

Rents in Ohio outpacing the rest of the nation YoY for July: https://www.crainscleveland.com/scott-suttell-blog/apartment-rental-rates-keep-pushing-higher-cleveland

 

 

1 hour ago, Brutus_buckeye said:

But the thing to keep in mind is that even with those large jumps in average rents, Ohio still ranks near the top of the list in the country for housing affordability.

 

When these studies are done, are they at all controlled for the change in the mix of housing stock, or is part of the whole point to capture the effect of the change in the mix of housing stock?  I ask because at least in Cleveland (and even to a lesser extent in Akron), I could see a solid portion of this increase being ascribed not to landlords jacking up rents on existing properties, but the entry into the market of many large, new-build, luxury rental properties.

53 minutes ago, Toddguy said:

My father has been at his home since 1959. They hate that even more I guess.  It has been paid off for over 30 years.

 

I'd like to shake his hand.  

 

I just refinanced my house at 3.25% which discourages paying the thing off quickly but if I came into money I'd do it.   

26 minutes ago, Gramarye said:

 

 

When these studies are done, are they at all controlled for the change in the mix of housing stock, or is part of the whole point to capture the effect of the change in the mix of housing stock?  I ask because at least in Cleveland (and even to a lesser extent in Akron), I could see a solid portion of this increase being ascribed not to landlords jacking up rents on existing properties, but the entry into the market of many large, new-build, luxury rental properties.

So the article is unclear. Given that it is from Crains and not an apartment industry specific magazine, it is looking at the market in aggregate and data based on rent analytics provided form Yardi or other large property management software systems. This is going to be skewed a bit more heavily toward the class A product. The higher end product is also easier to measure since you have more larger corporate ownership in that product whereas the vast majority of Class B/C (workforce Housing) is going to be held by more of a mom and pop or small ownership group. The data is not as easy to measure for that level product.  

 

Many specific industry magazines will break out the rent raises by product. Class A, B, C etc. and you can then break it down in an apples to apples comparison much better.  Nothing against Crain's but it is just focusing on more of a top line aggregate number. 

 

That being said, rents are going up across the spectrum in all classes. Supply and Demand have a lot to do with it and new ownership groups reinvesting in older properties and fixing them up are leading to a lot of these increases in the markets. What I have been seeing in the workforce product is that street rents are going up fairly aggressively for newer tenants who rent an updated unit while the existing tenant base in the building are typically seeing 2-5% adjustments annually.  The main reason for this is that there is purely supply and demand. There are just no units being built in the mid market class setting to increase the supply. You either have class A or you have a HUD contract affordable housing built. The area where there is the greatest demand can't really get the new product, which is partially why there are the  higher street rents that we are seeing.  

 

The thing to really look at is the housing affordability index, which Ohio cities usually rank very well. it is important to keep in mind that a 10-15% gain in Ohio when avg rents are now say 940 is $94-142 per month (which is a lot) whereas in the expensive markets where they are paying $2000+ per month for the same space, a 5%-7% raise is the same if not more on a dollar for dollar basis. 

Edited August 3, 20204 yr by Brutus_buckeye

Here in Columbus, especially in the Uncool Crescent, residential can go from A to B only a few years after being built. 

15 hours ago, jmecklenborg said:

 

I'd like to shake his hand.  

 

I just refinanced my house at 3.25% which discourages paying the thing off quickly but if I came into money I'd do it.   

Elbow bump only with corona! ?

14 hours ago, GCrites80s said:

Here in Columbus, especially in the Uncool Crescent, residential can go from A to B only a few years after being built. 

Well at least a working class family can actually afford to buy a house there.  

16 hours ago, jmecklenborg said:

 

I'd like to shake his hand.  

 

I just refinanced my house at 3.25% which discourages paying the thing off quickly but if I came into money I'd do it.   

 

We're on a 10-year 3% mortgage, and we could actually refinance to get it even lower (I thought interest rates were crazy low in 2017 when we refinanced to this, but thing are even crazier now), but we'd end up with a different lender and it's not worth it just to drop to 2.6% because I'm currently with a credit union I really like.  We have about 6.5 years left.  I wouldn't even pay it off if I came into money.  I could write a check and pay the house off tomorrow, but why bury $100k+ in an illiquid asset retiring a 3% obligation when the market is returning 10%+ and keeps your assets mobile?  Unless something big like retirement is coming up in that span, anyway.

 

 

16 hours ago, Brutus_buckeye said:

So the article is unclear. Given that it is from Crains and not an apartment industry specific magazine, it is looking at the market in aggregate and data based on rent analytics provided form Yardi or other large property management software systems. This is going to be skewed a bit more heavily toward the class A product. The higher end product is also easier to measure since you have more larger corporate ownership in that product whereas the vast majority of Class B/C (workforce Housing) is going to be held by more of a mom and pop or small ownership group. The data is not as easy to measure for that level product.  

 

Many specific industry magazines will break out the rent raises by product. Class A, B, C etc. and you can then break it down in an apples to apples comparison much better.  Nothing against Crain's but it is just focusing on more of a top line aggregate number. 

 

Is "Class A" an actual, formal term of art or just a marketing term?  As in, could you be hit for false advertising if you advertised "Class A" space and it wasn't, because there are certain characteristics that Class A space must have in order to be called that?  Or is it more impressionistic than that?

Class is is a formal term of art, but there are some nuances so it is not an exact line. Pretty much class A is an apartment built in the last 10-15 years with multiple amenities in the unit as well as the community. A class A in downtown is going to look a bit different than a Class A in the burbs

I refinanced to a 30 year fixed 2.925%.The funny thing is, the way they explained it to me, it's the same rate for a 20 or 25 year, and a 15 year was only 2.5%. not a huge reduction, so I took the 30 year. Basically knocked $200 off my monthly payment and I barely had to put in anything out of pocket.

20 hours ago, jmecklenborg said:

 

I'd like to shake his hand.  

 

I just refinanced my house at 3.25% which discourages paying the thing off quickly but if I came into money I'd do it.   

Unless I’m retiring I would never want to have my house paid off. Honestly I’d even take out a second mortgage. A mortgage is at worst like 4%. Overtime the market does much better than a 4% return. 

9 minutes ago, Cavalier Attitude said:

I refinanced to a 30 year fixed 2.925%.The funny thing is, the way they explained it to me, it's the same rate for a 20 or 25 year, and a 15 year was only 2.5%. not a huge reduction, so I took the 30 year. Basically knocked $200 off my monthly payment and I barely had to put in anything out of pocket.

I always think the 30 year is the best option. There is no penalty if you want to pay it down early on a 15, 20, of 25 year schedule, so if you prefer to do a 20 or 25 year, just pay that way on your own. In my opinion, why lock yourself into the higher payment and shorter term when you can give yourself flexibility of having 30 years to repay. 

1 hour ago, Brutus_buckeye said:

I always think the 30 year is the best option. There is no penalty if you want to pay it down early on a 15, 20, of 25 year schedule, so if you prefer to do a 20 or 25 year, just pay that way on your own. In my opinion, why lock yourself into the higher payment and shorter term when you can give yourself flexibility of having 30 years to repay. 

One other little trick if you can do it. Take 20-25% of your mortgage and put it on a home equity line. Rates are low (even though they float right now).

As you pay down the principal, your monthly obligation becomes less and less. If you can take advantage of locking in the low rates of 2.75-3% split the payments between the equity line and 1st mortgage and then you can pay down a chunk of principal early while being able to lower your monthly payment obligation without having to go through a refinance, simply by paying off the equity line. 

I'm wondering if it would be worth trying to refinance while rates are still low.  Bought the house a year and a half ago 15 year at 3.8%.  Bought points which would require me to own the house for 5 years to recoup what I spent.  Every month I pay almost $300 extra in principal and will have the hosue paid off in 9 years if I keep doing the same until its paid off.  

 

Any advice for pros or cons in trying to refi?

10 minutes ago, richNcincy said:

I'm wondering if it would be worth trying to refinance while rates are still low.  Bought the house a year and a half ago 15 year at 3.8%.  Bought points which would require me to own the house for 5 years to recoup what I spent.  Every month I pay almost $300 extra in principle and will have the hosue paid off in 9 years if I keep doing the same until its paid off.  

 

Any advice for pros or cons in trying to refi?

So much has to do with how long you are trying to stay in the house and what your financial goals are (I’m married to a financial advisor). 
 

Refinancing while lowers your payment still costs money. It costs 3-4k usually so you need to make sure that you stay long enough that you recoup that in interest saved. 
 

Another thing is are you trying to free up equity at all to invest in the market or real estate. My brother does real estate and one of the big benefits of refinancing is it frees up equity that you can invest in places that yield a much higher rate of return than what you would be saving in interest rates. For instance, free up 20k that you will have to pay 3% or even 4 or 5% mortgage interest on is totally worth it if you can invest that 20k in a new rental property that yields a 15-20% rate of return. 

Edited August 4, 20204 yr by cle_guy90

I just refinanced from 4 to 2.875. Saving almost $200/month. I say go ahead.

2 hours ago, Brutus_buckeye said:

I always think the 30 year is the best option. There is no penalty if you want to pay it down early on a 15, 20, of 25 year schedule, so if you prefer to do a 20 or 25 year, just pay that way on your own. In my opinion, why lock yourself into the higher payment and shorter term when you can give yourself flexibility of having 30 years to repay. 

 

If you actually intend to stay in a house for the long term, the way amortization works is that you actually spend a lot more in interest over 30 years than you do if you pay the mortgage off in 15, even if the difference in interest rates is only 0.5 percentage points.  However, that's somewhat less of concern when we're talking about the difference between 3.0% and 2.5%.  Even less of a concern if you're serious about investing in the market, but even if you're just spending the savings, we'll probably never see 3.0% 30-year fixed rate credit again in our lives.  So I certainly don't think the old advice of "always go with the 15 if possible" is as relevant today as it was back when 30-year rates were 7%+ and were often 1.5 or 2 percentage points above the 15-year rates.

 

We don't actually need to be on a 10-year mortgage.  I'm just a little happier thinking about being mortgage-free at age 45 instead of 65.

  

1 hour ago, richNcincy said:

I'm wondering if it would be worth trying to refinance while rates are still low.  Bought the house a year and a half ago 15 year at 3.8%.  Bought points which would require me to own the house for 5 years to recoup what I spent.  Every month I pay almost $300 extra in principle and will have the hosue paid off in 9 years if I keep doing the same until its paid off.  

 

Any advice for pros or cons in trying to refi?

 

You can definitely do better than that today if your credit is good.  I agree with @TBideon, go for it.  The only other thing I'd recommend is make sure to look at the fee disclosures and divide the monthly savings into the total fees to see how many more months (years) you need to stay in the house to break even on the fees.

32 minutes ago, Gramarye said:

 

If you actually intend to stay in a house for the long term, the way amortization works is that you actually spend a lot more in interest over 30 years than you do if you pay the mortgage off in 15, even if the difference in interest rates is only 0.5 percentage points.  However, that's somewhat less of concern when we're talking about the difference between 3.0% and 2.5%.  Even less of a concern if you're serious about investing in the market, but even if you're just spending the savings, we'll probably never see 3.0% 30-year fixed rate credit again in our lives.  So I certainly don't think the old advice of "always go with the 15 if possible" is as relevant today as it was back when 30-year rates were 7%+ and were often 1.5 or 2 percentage points above the 15-year rates.

 

We don't actually need to be on a 10-year mortgage.  I'm just a little happier thinking about being mortgage-free at age 45 instead of 65.

  

 

You can definitely do better than that today if your credit is good.  I agree with @TBideon, go for it.  The only other thing I'd recommend is make sure to look at the fee disclosures and divide the monthly savings into the total fees to see how many more months (years) you need to stay in the house to break even on the fees.

Also, a lot of times people look at break even as only the cash payment savings, I.e. your mortgage payment is $200 less a month. Truly from an accounting perspective, to calculate break even you have to also take in account that you pay potentially more principal a month as well.

 

Edit: The change in principal  amount for each payment is also a factor in calculating break even when deciding on buying points or not (most if not all “financial wellness” websites don’t consider it)

Edited August 4, 20204 yr by RDB

12 minutes ago, cle_guy90 said:

will

 

22 minutes ago, richNcincy said:

I'm wondering if it would be worth trying to refinance while rates are still low.  Bought the house a year and a half ago 15 year at 3.8%.  Bought points which would require me to own the house for 5 years to recoup what I spent.  Every month I pay almost $300 extra in principle and will have the hosue paid off in 9 years if I keep doing the same until its paid off.  

 

Any advice for pros or cons in trying to refi?

What is your ultimate goal with the re-fi? 

Do you plan on holding the mortgage for 30+ years? A lot of people will re-finance, move, etc for numerous reasons every 3-5 years so the thing to always consider is how many months it will take to realize any savings from the refinance. 

for example - If it costs $3000 to re-fi and it will cut your monthly payment by $300. it will take 10 months to start realizing any direct benefit from the re-fi. If you only save $50 per month it will take 60 months. For me, it would not be worth the cost to re-finance to not realize any savings for 5 years because chances are, we would probably re-finance again during that period. For a 10 month recovery period, I would likely re-fi. Just my 2 cents though. 

41 minutes ago, Gramarye said:

 

If you actually intend to stay in a house for the long term, the way amortization works is that you actually spend a lot more in interest over 30 years than you do if you pay the mortgage off in 15, even if the difference in interest rates is only 0.5 percentage points.  However, that's somewhat less of concern when we're talking about the difference between 3.0% and 2.5%.  Even less of a concern if you're serious about investing in the market, but even if you're just spending the savings, we'll probably never see 3.0% 30-year fixed rate credit again in our lives.  So I certainly don't think the old advice of "always go with the 15 if possible" is as relevant today as it was back when 30-year rates were 7%+ and were often 1.5 or 2 percentage points above the 15-year rates.

 

We don't actually need to be on a 10-year mortgage.  I'm just a little happier thinking about being mortgage-free at age 45 instead of 65.

  

 

 

You can still do that with a 30 year mortgage and just pay it off on a 15 year schedule. My preference for the 30 year is that it can give some flexibility in that if something happens and I cant pay on a 15 year schedule for a number of months, I can "slow down" and pay on the 30 year schedule without incurring any additional penalty. 

 

To your point though, the rate difference is important. When you are talking 25-50 basis points, that is not a ton of interest. When you are talking 100-200 basis points, I would certainly consider that option. 

2 minutes ago, Brutus_buckeye said:

 

What is your ultimate goal with the re-fi? 

Do you plan on holding the mortgage for 30+ years? A lot of people will re-finance, move, etc for numerous reasons every 3-5 years so the thing to always consider is how many months it will take to realize any savings from the refinance. 

for example - If it costs $3000 to re-fi and it will cut your monthly payment by $300. it will take 10 months to start realizing any direct benefit from the re-fi. If you only save $50 per month it will take 60 months. For me, it would not be worth the cost to re-finance to not realize any savings for 5 years because chances are, we would probably re-finance again during that period. For a 10 month recovery period, I would likely re-fi. Just my 2 cents though. 

Also don't look at it as cutting monthly payment.  Look at it as interested saved.  As others have pointed out often you pay less principal when you refinance.  So given the $3000 example if you cut your monthly payment by $300 and you pay $100 less in principle per month then the true savings is $200 per month (the interest portion) and will take 15 months to break even.  

Maybe this needs to go into a different thread but can people who aren't close to retirement and have paid off their mortgage explain why they did so?  To me having at least 100k tied up earning you nothing when you could be paying maybe 4% interest on it and making well more than that in the market (8-10%) doesn't jive with me.  I get near retirement because you want to increase stability and minimize risk but when you are 15-20 years away from retiring?  I guess I just don't get it.

Some perks are deflation protection, intangibles like ownership pride/peace of mind, protection against market fluctuations, and increased monthly cash flow.

24 minutes ago, cle_guy90 said:

Also don't look at it as cutting monthly payment.  Look at it as interested saved.  As others have pointed out often you pay less principal when you refinance.  So given the $3000 example if you cut your monthly payment by $300 and you pay $100 less in principle per month then the true savings is $200 per month (the interest portion) and will take 15 months to break even.  

You are right in that respect, and I would definitely factor that in as a rental, however, even though it is essentially a "savings account" as you are paying yourself that principal, you still are on the hook to pay it every month, and from a cash outlay perspective, you still need to consider that fact

2 hours ago, cle_guy90 said:

Maybe this needs to go into a different thread but can people who aren't close to retirement and have paid off their mortgage explain why they did so?  To me having at least 100k tied up earning you nothing when you could be paying maybe 4% interest on it and making well more than that in the market (8-10%) doesn't jive with me.  I get near retirement because you want to increase stability and minimize risk but when you are 15-20 years away from retiring?  I guess I just don't get it.

 

I haven't yet but I'm on track to do so about 15 years short of retirement.

 

This could bleed a little into the personal finance thread but we don't have to go far down this tangent, or away from housing economics generally.

 

When I'm giving financial advice, I always tell people they shouldn't rely on their house as their primary store of wealth.  If refinancing to a low-interest 30-year loan frees up the cash flow necessary to max out your 401(k) contributions to employer match maximum + Roth IRA to annual maximum, it is clearly the right move as opposed to paying off your home earlier.  Even after that, contributing more to your 401(k), unmatched but within the IRS exclusion limit, is going to be better.

 

Beyond that, though, I agree with @TBideon.  This is particularly true in my case, because I don't have much in the way of other stability-focused assets.  I have precisely zero fixed income in my portfolio.  (The S&P 500 Bond Index has returned about 5.6% annualized for the past 10 years.  Better than the analogous "fixed income investment" of retiring a 3% note on which you're the obligor, but not exactly awe-inspiring.)  I have next to nothing in cash or money markets, other than in the core accounts in my brokerage.  My house serves that function in my overall asset mix, letting me invest the rest of my assets in riskier classes.  And my house, unlike a tranche of bonds in a taxable brokerage account, is exempt from collection (save for consensual liens, i.e., the mortgage itself) up to $145,425, effectively doubled because I'm married and my wife and I are both on the deed, so we get to stack our exemptions.  Our home is worth less than $290,850.  In other words, even if I did something absolutely monumentally stupid in the market with margin, or got hit with some other massive uninsured loss, creditors can't touch the house they way they could some other stable assets.  (They also can't touch the retirement accounts, which is another reason to concentrate on those first, per above, in addition to the tax benefits.)  That protection from downside risk plus the peace of mind, pride of ownership, and monthly cash flow once this thing is paid off is worth more to me than the modest amount more I could have made in fixed income.  You could say that I could just ignore fixed income and concentrate even more in equities, but I'm already 75-80% in equities, with another 6-8% in cash waiting to get into equities if we have another dip like we had in March.

6 hours ago, cle_guy90 said:

Maybe this needs to go into a different thread but can people who aren't close to retirement and have paid off their mortgage explain why they did so?  To me having at least 100k tied up earning you nothing when you could be paying maybe 4% interest on it and making well more than that in the market (8-10%) doesn't jive with me.  I get near retirement because you want to increase stability and minimize risk but when you are 15-20 years away from retiring?  I guess I just don't get it.

In the mid-90s I had a bunch of stock market profits and decided they are here-today-gone-tomorrow but mortgages are forever. So I paid off the mortgage and then regularly invested the equivalent of the mortgage payment in other things.  Meanwhile, the value of the mortgage-free house has appreciated about 600%. I was lucky, though, in buying the house in 1984 when mortgage interest rates were in the mid-teens; so property values were depressed. It worked out well for me.

I listed my house recently and can attest to this. Anything under $300k in Cincinnati seems to be sold before the day is over:

 

Houses selling 'in hours, not days' as local real estate market shrugs off pandemic-related slowdown

https://www.usatoday.com/story/news/2020/08/09/housing-market-rebounds-covid-pandemic-shutdown/5576752002/

 

If you're looking for a house in Cincinnati or Northern Kentucky, you better act quick.

 

Houses are selling fast, propelled by a combination of strong demand, low supply and low interest rates drawing buyers into the market despite the relentless surge in new COVID-19 infections.

 

^I didn't do the math but last Friday I noticed that a huge number of homes hit MLS in the Cincinnati area.  Like back to normal.  There was a brief but significant constriction of supply that outstripped reduced demand.  

 

It's a bad combination when people come to know that their current house has appreciated in value, because NOBODY seems to ever move to a cheaper house, especially people who claim to be "downsizing" . 

 

 

 

 

 

Cross-posted in the Cleveland random developments thread...

 

 

FRIDAY, AUGUST 14, 2020

A new housing crisis is hitting Cleveland, anonymously

 

At first blush, it sounded like such a rosy story.

 

The headline in the June 8 Wall Street Journal read "Cleveland Is a House-Flipping Hot Spot, and Covid Adds Fuel." Its central theme was that Greater Cleveland has become one of the most profitable places in the country to flip houses and own rentals. Investors have been redirecting their dollars from pricey coastal real estate markets and investing them in Cleveland. A happy story, right?

 

Not at all, say city officials and those at Community Development Corporations (CDCs -- which serve as neighborhood-level city halls).

 

Many CDC officials are worried about a potential repeat of the housing crisis that preceded the Great Recession of 2008-10. While the concern isn't so much about subprime lending, collateralized debt obligations and a collapse of international credit markets, there is a concern about a return of absentee landlords milking properties for rent income and leaving hundreds of houses rotting in city neighborhoods that just emerged from the worst of the last housing crisis.

 

That concern is the result of research by Cleveland Neighborhood Progress Inc. which compiled data on real estate transfers from May 1 to July 15 in the City of Cleveland. Of 451 arms-length residential sales/transfers at $50,000 or less during that period, 60.5 percent were to Limited Liability Corporations (LLC’s) many of which were out-of-state buyers.

 

MORE:

http://neo-trans.blogspot.com/2020/08/a-new-housing-crisis-is-hitting.html

Edited August 14, 20204 yr by KJP

8 hours ago, KJP said:

Cross-posted in the Cleveland random developments thread...

 

 

FRIDAY, AUGUST 14, 2020

A new housing crisis is hitting Cleveland, anonymously

 

At first blush, it sounded like such a rosy story.

 

The headline in the June 8 Wall Street Journal read "Cleveland Is a House-Flipping Hot Spot, and Covid Adds Fuel." Its central theme was that Greater Cleveland has become one of the most profitable places in the country to flip houses and own rentals. Investors have been redirecting their dollars from pricey coastal real estate markets and investing them in Cleveland. A happy story, right?

 

Not at all, say city officials and those at Community Development Corporations (CDCs -- which serve as neighborhood-level city halls).

 

Many CDC officials are worried about a potential repeat of the housing crisis that preceded the Great Recession of 2008-10. While the concern isn't so much about subprime lending, collateralized debt obligations and a collapse of international credit markets, there is a concern about a return of absentee landlords milking properties for rent income and leaving hundreds of houses rotting in city neighborhoods that just emerged from the worst of the last housing crisis.

 

That concern is the result of research by Cleveland Neighborhood Progress Inc. which compiled data on real estate transfers from May 1 to July 15 in the City of Cleveland. Of 451 arms-length residential sales/transfers during that period, 60.5 percent were to Limited Liability Corporations (LLC’s) many of which were out-of-state buyers.

 

MORE:

http://neo-trans.blogspot.com/2020/08/a-new-housing-crisis-is-hitting.html

Really good stuff man! This is such a bummer! I like the philosophically loaded captions under the pictures too.

My friend runs land bank stuff in Trumbull county and they’ve been seeing these postcards. True scumbags

Edited August 14, 20204 yr by bumsquare

2 hours ago, bumsquare said:

My friend runs land bank stuff in Trumbull county and they’ve been seeing these postcards. True scumbags

 

 

I do land bank work mainly in the 3-county region of Youngstown (Columbiana, Mahoning and Trumbull).  We get calls from housing and planning departments asking if the land banks can take these things from problem out of state buyers after multiple code violations.  I spoke with a guy from Colorado a few weeks ago who picked up a property in a nice neighborhood in East Liverpool overlooking the river.  It was the only house in the neighborhood that was overgrown and in bad shape.  After years of residents' complaints, the city reached out to the land bank to see what they could do.  A land bank can't take a property without a clean title, and this was mentioned to the buyer in Aurora.  Essentially he looked at street view images from 2013, bought the property, and just let it sit.  Back taxes are owed, and he doesn't want to pay them off for a clean transfer.  So we just work with the assistant prosecutor to start a tax foreclosure - and the property continues to sit there while a guy 1,500 miles away has nothing to worry about (or so he thinks).  Scumbags they are.

We get the postcards all the time for our landbank houses too, or from residents who ask if its a scam or not (yes, yes it almost always is). Anytime I get a public records request for some kind of address list, I always include the city hall address so we get a copy of whatever kind of nonsense they're trying to send out. Anytime we see their signs up around town on the street posts, they are immediately torn down. Most of these buyers operating this way will just throw a coat of paint on and rent the house out, doing bare minimal maintenance, after ripping off the (often elderly) homeowner in purchasing the property. I won't say they are all terrible though. There have been a few that I've seen where they are legitimate flippers who will do a very nice job on the rehab, and follow all city requirements. Those kinds of few and far between, and still rip the sellers off in the purchase by telling them the house is worthless. Add the words "Bottom feeding" before "scumbag" and you have a much more accurate description. 

 

 

Here are the Redfin vs. Zillow estimates for my brother's house:

 

 

...so a $58,000 spread.  The thing is now on the market for $255k.  No house of its size has sold recently in their area above $210k and that one had a garage.  So I don't know what the hell their realtor is thinking. 

 

 

 

 

 

2 hours ago, jmecklenborg said:

Here are the Redfin vs. Zillow estimates for my brother's house:

 

 

...so a $58,000 spread.  The thing is now on the market for $255k.  No house of its size has sold recently in their area above $210k and that one had a garage.  So I don't know what the hell their realtor is thinking. 

 

 

 

 

 

 

Yea, I saw a study awhile back that said basically Redfin estimates are trash. The Zestimates are much more reliable.

That's not saying much, unless the Zestimate algo has gotten a lot better recently.

Edited August 22, 20204 yr by GCrites80s

38 minutes ago, GCrites80s said:

That's not saying much, unless the Zestimate algo has gotten a lot better recently.

They are never going to be that great because they have no idea what the inside of the house is like.  Like I just did a 5k decent remodel of my walk out basement. Since I did like all the work myself I’m pretty confident I may double what I put in. My zestimate will remain unchanged because they have no idea. 

True, if the smell of wet dog permeates in a 20 foot radius outside the house no algo is going to recognize that ever.

Here is the listing for the house.  The realtor's write-up is an extravagant piece of resume padding.  The kitchen does NOT have high-quality finishes. 

https://www.redfin.com/TN/Knoxville/1115-Raleigh-Ave-37917/home/86044059

 

It's also funny seeing how they tried to re-arrange the mishmash of hand-me-down furniture into an Instagram wonderland.  Notice that we don't get to see a close-up of the kitchen since they are de-emphasizing the kitchen table my parents bought in 1993.  The super-uncool antique sewing machine my mom got at a garage sale in 1985 is hidden behind the Swallen's special recliner. 

 

Roughly 150 properties were posted to MLS today in Hamilton County.  That's as many as we were seeing last summer.  Barring anything crazy, the supply shortage will be over in a few months.  

 

Also, there are still a lot of mediocre properties sitting on the market for months, even after price reductions.  

I wonder if people are going to start doing in-town moves just because they are bored and bored with their dwelling.

24 minutes ago, GCrites80s said:

I wonder if people are going to start doing in-town moves just because they are bored and bored with their dwelling.

 

Aside from having a baby, nothing gets attention like moving.  You get to get the old house ready and post the listing on facebook.  Everyone sez oh wow what a beautiful home.  Then you get to post the new home.  Everyone sez oh wow what a beautiful home.  Then you get to have a housewarming party to show off said home.  Everyone sez oh wow what a beautiful home.  

 

A couple, especially, gets to proclaim the rock solidity of their relationship and careers to all and sundry.  A single get to insinuate their wealth and explicitly announce their tastes.  

On 8/26/2020 at 8:30 PM, GCrites80s said:

I wonder if people are going to start doing in-town moves just because they are bored and bored with their dwelling.

 

Someone would actually do that? I've been living in the same condo for 24 years. And I've been alive for 53 years and lived in only five homes (one of them was a college apartment).

13 minutes ago, KJP said:

 

Someone would actually do that? I've been living in the same condo for 24 years. And I've been alive for 53 years and lived in only five homes (one of them was a college apartment).

 

It happens all the time in the suburbs.   Right before a couple gets divorced....

19 minutes ago, KJP said:

 

Someone would actually do that? I've been living in the same condo for 24 years. And I've been alive for 53 years and lived in only five homes (one of them was a college apartment).

In my 31 years of life I've lived in 11 places (2 homes growing up, 9 from college onward), not counting temporary accommodations while on co-op in college. I've been out of Grad school for 6 years now and have lived in 4 places, 3 of which I've owned.

 

I do get "bored" (not the right word, but connecting to this context) as I'm an architect and want the opportunity to design new spaces for myself, but also, all 3 places I've owned made more financial sense to sell and move on to reinvest the equity in other investments and to take advantage of the consistent lowering of interest rates and a 260% increase in income over the last 6 years to move up the housing market while reducing my debt:income ratio.

 

Moving is exhausting, but selling and buying is directly responsible for around half of the current value of all my assets, so it has been worth my time. I think a lot of people have had similar mobility in recent years as the housing market has increased in value and interest rates have fallen.

Edited September 8, 20204 yr by jmicha