While the market grows fat with for-sale signs, and listings in some Northeast Ohio communities become stagnant, buyers can find deals in cities that boast more than their share of unsold homes.
“When there is a market glut of reasonably priced homes, as there is in Cleveland right now, there are opportunities for buyers,” says Carl DeMusz, president and CEO of the Northern Ohio Regional Multiple Listing Service (NORMLS). “A market glut usually occurs in areas with much higher price ranges and is generally not experienced when mortgage interest rates are so low.”
With a crop of homes for sale in suburbs such as Parma, Lakewood, Euclid, Shaker Heights and Broadview Heights, buyers have more negotiation power and should get more house for the money — up to 5 percent more, according to market statistics, DeMusz says.
We looked at areas with an excess of unsold homes and asked, “Why here?” Following is a wrap-up of the trends and a review of which Northeast Ohio communities are littered with for-sale signs on the East, West and South sides.
More For Sale, More Sold
Top three cities with sales of single-family homes and condos from January to November 2006 (NORMLS statistics):
1. Parma 904 homes sold
2. Euclid 613 homes sold
3. Cleveland Heights 559 homes sold
Proximity to downtown, the transient nature of residents, job losses and home size are all factors in why these cities have the highest volume of homes for sale. The same suburbs with the most listings also posted the most home sales from January to November 2006, according to NORMLS.
An array of affordable housing stock is one reason. “These communities are traditionally stepping stones for bigger, better homes,” says David Reddy, an agent with Keller Williams Greater Cleveland West in Westlake. “People can spend $100,000 to $150,000 on a home and move up to the next price range when they outgrow those homes.”
Moving In, Moving Out
In November 2006, there were a total 2,379 single-family homes and condos for sale in Greater Cleveland. The cities with the most homes for sale are disproportionately located in inner-ring suburbs.
Proximity to Cleveland proper could be one reason why these inner-ring cities list more homes, suggests Pam Wetula, a lender with Real Estate Mortgage Corp. in Rocky River. “These cities are well positioned, but because the inner city is having difficulties, the inner-ring suburbs will share some of those difficulties,” she says. “These communities are working hard to strengthen schools and city amenities.” Lakewood’s library and YMCA projects are examples.
Cecilia Sherrard, an agent with Realty One Real Living, is frustrated when clients who don’t need to consider schools discount Cleveland neighborhoods. “There are areas of Cleveland that are just as desirable and nice with less taxes, such as West Park,” she says. “I’ve converted many of my clients back to Cleveland.”
Investing in Tomorrow
Certainly, there are opportunities for pioneer homebuyers to invest in blighted urban properties in promising neighborhoods, such as Tremont. DeMusz draws on Philadelphia’s urban development as an example. “There are many examples where neighborhoods change,” he says.
“But it wasn’t first-time homebuyers who did that, it was people looking for a bargain who had inside information and common sense,” he adds, noting that everyone wants to “buy a home for nothing and sell it for a fortune.” Today, areas such as Tremont are on the upswing, and home prices there are more expensive, he adds.
Sherrard says this is due in part to homebuyers who help drive change in such urban neighborhoods. “People need to move back and demand [quality living] of these neighborhoods,” she says.
New development could eventually turn around the Cleveland market. Consider neighborhoods near the Cleveland Clinic main campus, where attractive, new homes replace once-dilapidated property, Wetula points out. “[The city] has worked hard to build up those areas,” she says. “There have been tax abatement offers for borrowers not only in Cleveland, but in Lorain.”
For Sale: East
Euclid 593 homes
Shaker Heights 387 homes
Garfield Heights 385 homes
Leading the East Side suburbs in unsold homes as of November 2006, Euclid’s bungalow-lined streets provide plenty of options for buyers on a budget, which is also the case for other inner-ring suburbs with lots of listings on the market. But Euclid was also second, following Parma, in the number of homes sold.
There may be a large number of homes on the market in Euclid, but according to statistics, those listings seem to sell.
Euclid is attractive because of its access to public transportation and reasonable prices, DeMusz says. “If you work downtown, public transportation is a big consideration,” he says. “When appraisers appraise a property, that is one of their priorities. ‘What is the public transportation like?’ They grade it and lenders also look at that.”
On the other hand, Shaker Heights and Garfield Heights each had almost 400 unsold homes without also making an appearance on the Top Sold list. Inner-ring suburbs don’t appeal to all homebuyers, Wetula reasons. “When you border the inner city, you compete for buyers that are fleeing to outer cities and counties,” she says. “Instead of moving into the inner ring, which may be more
convenient, they want to go way out.”
Robert Simons, professor of urban planning and real estate at Cleveland State University’s Levin College of Urban Affairs, points to struggling school systems in each of these cities.
But sales are slow everywhere, he adds. Even in Beachwood, where Simons lives, for-sale signs are cropping up and appreciation is flat. “A couple of years ago, there was nothing for sale [in Beachwood] with Realtors; it was all word of mouth,” he notes. “Now there are signs all over the place.”
For Sale: West
Parma 487 homes
Lakewood 388 homes
Strongsville 300 homes
Parma and Lakewood offer a wide selection of affordable homes that appeal to buyers just starting out as well as seasoned homeowners who appreciate these communities’ location close to downtown. So why the slow sales? “Factory closings affect people and cause some relocation problems because people must sell their homes so they can move and secure new jobs,” Reddy suggests.
Of course, these communities are not the only ones affected by factory closings and job losses, but nonetheless, they tend to take more of a hit when the economic chips are down, Reddy says.
Another factor in for-sale signs in Parma and Lakewood is their viability as a starting point for buyers who plan to eventually move into larger homes, Reddy says. This can also help home sales, Wetula points out. A transient population in Parma and Lakewood explains why those communities tend to be real-estate turnstiles for some who move in for a few years, then off to something larger or just different.
But Parma boasts strong sales that help even out its excessive listings.
As for Strongsville, new construction competes with existing housing stock. “If you can build a home you like for $250,000 vs. buying one built in 1980 for $225,000, what will you choose?” asks Reddy.
For Sale: South
North Royalton 200 homes
Broadview Heights 176 homes
Brecksville 128 homes
When prices creep over the $200,000 mark, homes attract a limited buyer population, Reddy says. This explains the higher listing rates in places such as North Royalton, Broadview Heights and Brecksville compared to their neighboring cities.
“Brecksville is a great area — all of those communities are valuable,” Reddy says. “But you have to be willing to spend more to get into homes there. People are buying in areas like Euclid and Parma for their first homes and moving into North Royalton and Brecksville as their income increases.”
Brecksville has always been a strong market, but growth is top-end, Reddy adds. “And because there was such a vast amount of growth between 1970 and 1990, home values dramatically increased,” he notes. This means homes are untouchable for many buyers. So they sit unsold.
Meanwhile, new construction also presents competition in these three markets. For higher-end buyers already investing well more than $200,000 in a home, building to suit is an appealing alternative to buying a fixer-upper. “In that price range, you do compete with new construction,” Reddy says.