The Cleveland thread - US Urban decline and revival

[knavel]

it's an incredibly fertile landscape. It's mid-summer, but everything is green. Everything I eat could have been grown here: corn cobbs, beef, salad, fruit of all sorts, bread/soy. IMO, a family could easily make a living off a piece of land the average person here could in fact easily afford. The average distance to a grocery store of some sort is also less than one might think. To sum it up, whatever will happen, people will be able to live here in a not too bad kind of way. In contrast to possibly MANY other places in the world, like the Arab Peninsula or even Australia.

 

I will wait a few more years, and then buy a piece of land with some sort of house on it. I don't think one can go too wrong with it once the bottom has dropped out of this market.

 

It will be interesting in the midwest to see just "how low can you go".

 

I was in Detroit recently and a friend of mine bought a house in the nice part of Bloomfield Hills (arguably Detroit's nicest northern suburb) at auction (she tells me) for under $300K USD. I believe (she said) it had sold near a million at some point.

 

More interestingly, on topic with this Cleveland thread, it coincidently turns out she has been buying houses in Toledo (the closest Ohio town of any size to Michigan) for some sort of local hedge fund/private equity type operation, and getting pretty good annual returns, similar to what we discussed earlier for Cleveland. (Buys houses for like $15K, puts in $5K, gets $500-700/month rent I'm told).

 

It turns out "the fund" prefers Ohio to Michigan as the property taxes are considerably less (she said $1100/year vs what would be $11K year in Michigan) and it's a lot easier to evict tenants under Ohio law.

 

I told her I might be interested and this morning she wrote me to say she'd found a place for me to buy in Toledo but upon inspection it had had all the copper taken, etc so too much $$$ to get it habitable.

 

So I may get into it..but I told her I prefer to own via a company as I am in Italy and so need others owner(s) closer to there who, by virtue of a vested interest, will better ensure it's managed properly.

 

I'll for sure let you all know if I get in and what happens after that if there is interest. It'll be awhile though.

 

[drbubb]

...the bottom is dropping out of it. I see an awful lot of McMansions here that already seem to be in a neglected state. I have relatives who have been trying for months to sell decent houses, to no avail.

 

Dont forget to analyse the transport links.

Those with decent links will bounceback faster than those without

 

...in the nice part of Bloomfield Hills (arguably Detroit's nicest northern suburb) at auction (she tells me) for under $300K USD. I believe (she said) it had sold near a million at some point.

 

I grew up in Birmingham, right "next door"

 

It turns out "the fund" prefers Ohio to Michigan as the property taxes are considerably less (she said $1100/year vs what would be $11K year in Michigan) and it's a lot easier to evict tenants under Ohio law.

 

A very good point.

 

It sounds like we need some good GEI connections in Ohio

[knavel]

Dont forget to analyse the transport links.

Those with decent links will bounceback faster than those without

 

 

 

I grew up in Birmingham, right "next door"

 

 

 

A very good point.

 

It sounds like we need some good GEI connections in Ohio

Dont forget to analyse the transport links.

Those with decent links will bounceback faster than those without

Toledo has a website for a bus service but there is no way I can tell if it's any good without going there.

http://www.tarta.com/toledo.htm

 

One thing it does have of interest is Amtrak National Rail links to Chicago, Cleveland, Boston, DC and NYC; basically via Cleveland. You may have already discussed this in the thread earlier on. Michigan has no such train service.

 

http://www.amtrak.com/servlet/ContentServe...&ssid=10977

 

and

 

http://www.amtrak.com/servlet/ContentServe...&ssid=10977

I grew up in Birmingham, right "next door"

I know; we graduated the same high school (Wylie E.)

 

[Property Taxes] A very good point.

 

I'll post someday on the point of being aware of property taxes on any real estate investment decision in USA as they vary wildly from state to state. Florida is massive for instance at 3%/annum of purchase cost.

[drbubb]

I know; we graduated the same high school (Wylie E.)

 

I'll post someday on the point of being aware of property taxes on any real estate investment decision in USA as they vary wildly from state to state. Florida is massive for instance at 3%/annum of purchase cost.

 

Yes. That's for others.

RE taxes would be very useful

[Pluto]

Anything NEW to report, Pluto?

 

Are you actively seeking to BUY in Cleveland after your visit?

 

I had an offer rejected on a apartment building with 6 X 2Bed2Bath and 1 1 X 1Bed1Bath. The complex was near Cedar road and Coventry. I am working with a Realtor in the area now. Prices have bottomed out from what I can see, and I believe that Cleveland with its Hospitals, natural resources, low tax base, and transport links has the upper hand on other midwest/great lake cities. My son is starting at Kent Uni in the fall so I will be making many trips to the area. At the moment I am in southern Europe and will be here for the next five or six weeks so not much is going on for me stateside while I'm here.

[drbubb]

I had an offer rejected on a apartment building with 6 X 2Bed2Bath and 1 1 X 1Bed1Bath.

 

can you say anything about what percentage of cost etc.,

that you are budgetting for taxes?

 

[drbubb]

(From the chat thread on KunstlerCast):

 

Best places to live

« Reply #5 on: July 16, 2008, 04:05:53 PM »

 

--------------------------------------------------------------------------------

Hey Oswegatchie - they WILL hop the train and come north (or take their fucking SUVs). When the water is gone and it's just a matter of time until it is, count on millions of air conditioned, over-weight red necks heading back north to the Great Lakes. Thank God I'm north of the border.

 

I feel sorry for Buffalo, Cleveland, Toledo, Detroit, Chicago, etc.....These cities will be repopulated by the same ignorant assholes who turned their back on them in the first place. I guess the Cheez Doodle factory will have to move from Bentonville, Arkansas to Monroe, Michigan.

 

/see: http://kunstlercast.com/forum/index.php?topic=163.0

[knavel]

http://www.forbes.com/2008/07/14/housing-b...714bestbuy.html

 

n Cleveland the average rent is $702, and the average mortgage is $565.78. With a lower monthly payment, tax incentives and the opportunity to build equity, it makes sense to buy here.

 

edit: proper link

[drbubb]

"I]n Cleveland the average rent is $702, and the average mortgage is $565.78. With a lower monthly payment, tax incentives and the opportunity to build equity, it makes sense to buy here"

 

You need to pick somewhere that rents will rise.

Focus on nice walkable neighborhoods with good mass transit links

[drbubb]

Foreclosure Epicenter: Maple Heights, Ohio

By: Diane Tuman Content Manager | September 4, 2007

 

 

It looks like Maple Heights, Ohio is the epicenter of the sub-prime mortgage meltdown. This is according to a depressingly grim feature article in Sunday’s New York Times Business section, “Can the Mortgage Crisis Swallow a Town?“ For homeowners, this scenario is like “Night of the Living Dead,” in which the bloodthirsty zombies are the equivalent of property foreclosures and the last, surviving healthy folks are running for their lives before they get swallowed up, too.

 

Maple Heights is in the top one-half of 1 percent nationally in foreclosures, according to RealtyTrac, a company that tracks foreclosure data. To add insult to injury, Maple Heights is located in Cuyahoga County (which includes Cleveland) and 30 percent of sub-prime mortgages are late or in foreclosure.

. . .

The domino effect of foreclosures should be a 101 class in economics as this new school year starts. Here’s how one town of 27,000 people is being affected:

 

The town’s two swimming pools were closed

Police and firefighter jobs have been eliminated

Free snowplowing for seniors has been cancelled

Tax rolls are 15 percent below projections, forcing a 50 percent increase in garbage collection costs

This list might not sound like much now, but with a dwindling tax base, county-wide economic problems, an overabundance of homes for sale and dwindling home values, this is not a pretty picture. Want to avoid a similar situation? Check out a recent Wiki Wednesday post on avoiding foreclosures.

 

 

/see: http://www.zillowblog.com/foreclosure-epic...s-ohio/2007/09/

[G0ldfinger]

Detroit bottoming out:

 

http://www.detnews.com/apps/pbcs.dll/artic...METRO/808130360

Foreclosure fallout: Houses go for a $1

Ron French / The Detroit News

[drbubb]

Wow! Cleveland won't want to beat that:

 

Foreclosure fallout: Houses go for a $1.

...And it still took 19 days to find a buyer.

 

The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby.

 

LOL

[drbubb]

Housing Series: Cleveland

Regional News Stories: Monday, May 19, 2008

This week WCPN is examining the fall out from the foreclosure crisis: neighborhoods populated by thousands of bank-owned and vacant buildings houses. Case Western Reserve University's NEOCANDO project estimates that financial institutions now own over 11 thousand properties in Cuyahoga County. More than half are in Cleveland. But banks are dumping many city properties and investors are picking them up for as little as a few hundred dollars. In the first installment of our series, ideastream's Mhari Saito explains how the transactions work, who's profiting and who's not.

 

http://www.wcpn.org/index.php/WCPN/highlight/12379/

[Pluto]

I am going to view another duplex (2B/2B/ up/down) near uni-circle this weekend. Will post my results. Cleveland area was one of a few that posted House Price Gains last month.

[drbubb]

I am going to view another duplex (2B/2B/ up/down) near uni-circle this weekend. Will post my results. Cleveland area was one of a few that posted House Price Gains last month.

 

I heard there was a threat to the Medical "industry" in Cleveland from the proposed new health care system in the US.

Care to comment on that, P.?

 

[Pluto]

I heard there was a threat to the Medical "industry" in Cleveland from the proposed new health care system in the US.

Care to comment on that, P.?

 

I haven't heard anything about that or how it would effect uni-circle. The area I looking at is walking distance to Case Western, Severence Hall, Botanical Gardens, History and Art complexes, Uni Hospitals, litttle italy. Right smack bang in the middle of everything. Owner wants the buyer to work with the bank on a short sale as he is in deep crap as he still owes real estate taxes. I've done the math and if I can get it for the price I want it will pay itself off complete in 10 years.

[drbubb]

Sounds right. Exactly the sort of location I would be looking at.

Keep us posted.

My only fear is that interest rates might show a big pop in 12-18 months.

But if you are not taking on massive debt, it should be okay

[Pluto]

Sounds right. Exactly the sort of location I would be looking at.

Keep us posted.

My only fear is that interest rates might show a big pop in 12-18 months.

But if you are not taking on massive debt, it should be okay

 

Nope cash buyer. Normally when you negotiate a short sale you need funds right there and then. However, having said that, mortgages in the US are the lowest they have ever been. I can get a fixed 30Y at 5% right now - how crazy is that?

 

It's a great location. If you want to venture further you can walk to the Euclid corridor in five mins and get a new air conditioned bus downtown. Travel time 15 mins - from there it is a 30 min rapid train ride to the airport etc.

 

Right now everyone thinks I'm crazy for getting into property - everyone else is getting out - hence the deals to be had.

 

My only problem is the tarp. I have to negiotiate with the bank and they may not let me have it a steal because they could get their full "paper" price from the US gov. We'll have to see how that works out. I'll keep you posted.

[wren]

I couldn't find a Detroit thread so I'll put this here.

Average home price $18,513 - Unemployment rate 21%

December 21, 2008

 

The Great Depression has reached Detroit. The average price of a home is now $18,513 and unemployment has reached 21%, and it’s expected to get worse. Detroit is facing a crisis of epic proportions that officially puts Detroit statistically (and real term) on par with the great depression. Many readers of Tribble Ad Agency are advertising centric.. and due to the rash of layoffs within all Detroit Advertising firms has put the city on the map for the wrong reasons.

 

It has become the center of all that is wrong with America… and nothing of what is right.

 

For example, the crime rate has fallen…. because of lack of targets within the city. Meaning there is nothing left to steal. In fact, even the criminals don’t want to leave jail.

http://www.tribbleagency.com/?p=3598

 

[drbubb]

I couldn't find a Detroit thread so I'll put this here.

Actually, there is a Detroit & Michigan thread

Link:

 

The plan to build a light rail along Woodward Avenue may be signalling a bottom

for the "Motor City". This development will free the city from the tyranny of the auto companies

 

[drbubb]

What's the latest with the US house builders share prices?

 

Basically, they are still below the (falling) 12mos/252d.MA's

 

Have a look:

 

CTX : HOV : PHM : TOL

 

There's a reasonable chance they have touched bottom, but I would wait for the breakout above the 252d.MA's

 

Pulte Homes (PHM) ... update vs. CTX, HOV, and TOL

 

PHM is "in the middle" (black line above) and may be the best bellwether. It tried to break out above the 252d.MA in the summer, but could not hold its gains. It now looks like it may have to retest its lows (in 2009 with another selloff in stocks perhaps). If that happens then the trendlines and 252d.MA will work its way lower, and provide the scenario for a nice upwards break by late 2009/ early 2010. That would be a early signal that the physical market may make a bottom. How much of a rally would come after that is a good question.

 

OR: I may be completely wrong about the retest, and it will rally from here. But I would wait for the signal: a convincing break of the 252d.MA by at least three of these stocks.

[G0ldfinger]

DOUBLE POST from the California thread in the main forum:

 

In the 'real economy', the bounce has apparently never arrived.

From what I can see in Indiana at the moment: many, many houses for sale, prices even for prime property at least 30% off the peak. Quite a few recently closed businesses, some that are still running are for sale (business and building often). The unemployment rate went from 9.9% in April to 10.6% in May as far as I know. The rate of homeless families has gone up 79% since last year alone.

 

There are some nicer condos in downtown Indy ...

A good place to retire (or invest at some stage) could be Madison, Indiana, on the Ohio river. It is a very nice little town directly on the river. With an old town center that is walkable. Once can easily afford to live in walking distance of (i.e. in) the town center. It is a more touristic place, but there is also proper grocery shopping in the town center. Southern Indiana has a nice climate and a lot of farming. A coal plant is nearby (plenty of coal gets shipped on the river), and there is a very nice state park (Clifty Falls).

 

http://en.wikipedia.org/wiki/Madison,_Indiana

 

PROPERTY:

 

Here is what you get for less than $150,000:

 

http://www.realtor.com/realestateandhomes-...7250_1102536868

 

http://www.realtor.com/realestateandhomes-...7250_1098795461

 

http://www.realtor.com/realestateandhomes-...7250_1105068075

 

Here is what you get for less than $60,000:

 

http://www.realtor.com/realestateandhomes-...7250_1105430097

 

Here is what you get for less than $40,000:

 

http://www.realtor.com/realestateandhomes-...7250_1107137493

[drbubb]

(1)

The S&P/Case-Shiller Home Price Index ... fell 17.1 per cent in May compared to the same month last year.

The index follows property prices in 20 cities across the US.

 

Although house prices were still significantly lower than in 2008, the year-on-year fall was not as bad as that of April, when prices were down 18.1 per cent on the previous year.

 

After 16 months of consecutive worsening monthly declines, starting in October 2007, there have now been four months in which prices declines have improved month-on-month.

 

David Blitzer, chairman of the index committee, said: "This could be an indication that home price declines are finally stabilising".

 

Meanwhile, the Conference Board, a private research group, said that its Consumer Confidence Index fell in July to 46.6 points, down from 49.3 points in June.

 

A Reuters poll showed that economists expected a reading of 49. A reading of 90 or above means that the economy is expanding.

 

It was the second consecutive monthly decline in the index, which is based on a survey of 5,000 households.

/see: http://business.timesonline.co.uk/tol/busi...icle6730668.ece

 

(2)

“The pace of descent in home price values appears to be slowing” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. In addition to the 10-City and 20-City Composites, 17 of the 20 metro areas also saw improvement in their annual returns compared to those of April. Looking at the monthly data, 13 of the 20 metro areas reported positive returns; and the 10-City and 20-City Composites reported positive returns for the first time since the summer of 2006. To put it in perspective, these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing”.

 

“While many indicators are showing signs of life in the U.S. housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across all metro areas, so we likely do have a way to go before we see sustained home price appreciation.” Mr. Blitzer added.”

 

/see: http://www2.standardandpoors.com/spf/pdf/i...ease_072820.pdf

 

City of Index. : Index. : MoM. : Prev.M : Yr.onYr

=======

Chicago........ : 123.68 : 1.1% : +0.0% : -17.5%

Cleveland..... : 102.11 : 4.1% : +1.2% : - 6.2%

Las Vegas..... : 109.49 :-2.6% : -3.5% : -32.0%

San Francisco : 120.16 : 1.4% : +0.6%: -26.1%

Tampa.......... : 140.35 : 0.0% : -0.7% : -20.8%

Composite-10 : 151.00 : 0.4% : -0.7% : -16.8%

Composite-20 : 139.84 : 0.5% : -0.6% : -17.1%

 

Looks like our old favorite, Cleveland, may be the first to go positive, year-on-year.

That one month gain of 4.1% was impressive.