Northeast Ohio's Housing Sector Finally Seeing Bright Spots
A brisk, sunny afternoon finds Andrew Eggeman and his crew in a North Royalton culdesac, building a house.
“This is in the `Country French’ style," says Eggeman, navigating past a crane and several stacks of lumber. "It has a lot of old world touches with barn beams and rustic exterior stone, and stucco on the completed house.”
Eggeman is co-owner of Old World Classics, a custom home construction firm based in Canton. He says 2012 has been good to his company.
“We normally do about 10 to 12 houses a year, and this year we’ll probably do closer to 20 to 25 houses.”
Compare that to 2009, when Eggeman built only one house. But with the recession’s effects easing up, he says there’s a resurgence in custom home building that he’s not seen for some time.
“It all comes down to home buyers being able to sell their homes," says Eggeman. "That really just stopped the market the last 3 to 4 years prior to this year. They weren’t able to sell their homes, there was just no market for them. Now we’re seeing homes, I’ve several buyers, who were able to sell their homes in a couple days, a couple weeks. So it’s been dramatically different.”
Other builders in northeast Ohio have reported improved business over 2011. And real estate agencies are also pleased.
Hoby Hanna, President of Howard Hanna Real Estate, says business lately has been “fantastic”.
“We’ve seen sixteen consecutive months of continual month-over-month growth, both in average sales prices, and units," explains Hanna. "August...which was amazing...we were up 23 percent over last August, in terms of homes sold. And about 19 percent over August of 2011 in new written sales.”
Hanna also expects fourth quarter sales to be up nearly 20 percent over last year. It’s a long-welcome boom for realtors, after housing bottomed out in 2008. Rates are currently at 3.72 percent or less for 30 year loans, and first time home owners are making a comeback.
The news isn’t quite so rosy for the city of Cleveland and its inner ring suburbs. For them, real recovery is still at least a couple of years off, says Robert Simons. He's a professor of urban planning and real estate development with Cleveland State. But Simons says there is at least one positive indicator: the percentage of people “upside down” on their mortgage has fallen since last year.
“Last year, I was quoting…28 percent of folks with mortgage owed more on that mortgage than their house is worth, and now perhaps that figure is closer to 20 to 25 percent," says Simons. "So it's going in the right direction. People are paying the equity off, home prices are appreciating a little bit. So everything's going in the right direction, it'll be just a couple years before we (Cleveland metro residents) have any real type of recovery.”
Cleveland was also smacked especially hard with the foreclosure crisis. Officials estimate the city has 11,000 properties that need to be demolished, to curb blight and crime. Properties like this one…or what used to be 3127 West 52nd Street. After a couple hours of being crushed by an excavator, the one-and-a-half story home is now a crater.
“I’m guessing business has been pretty good for you?”, I ask Obie Martin, who heads a company helping to demolish abandoned homes.
“Yeah, can’t complain,” he replies.
William Whitney is with the Cuyahoga County Land Bank. He says helping Cleveland’s housing sector will mean destroying – not building – houses.
“In certain blocks, throughout the city, so many demolitions have needed to occur on those streets that the remaining houses, not only has their value fallen to zero but they’re actually a negative asset of about $10,000, because that’s what it’s gonna cost to get rid of the eyesore.”
Whitney says with resources from the Ohio Attorney General’s Office and County Prosecutor’s Office, they’ll demolish 2500 more homes in the next two years. After that, they’ll need to find more money. 13,000 more foreclosures are expected in Cuyahoga County by year’s end.