With its lively neighborhoods, family parks, delicious cuisine, and more, Cleveland is a great place to live. If you are one of the many people hoping to buy or sell a property in Cleveland, it's important to understand the housing market to ensure that you are making the right choice.
This article is designed to arm you with all the information you need. Here, you'll learn about the Cleveland housing market, important trends, factors that affect the buying and selling of houses in the city, and more.
Understanding the Real Estate or Housing Market
Suppose you're new to real estate investments. In that case, it's essential to understand precisely what a real estate or housing market is.
To put it simply, a real estate market is the term given to buyers and sellers of properties in a particular area. It is influenced by a number of factors, which we will discuss later in this article, and can help buyers and sellers identify opportunities for investments or sales.
Why Cleveland, OH?
Cleveland is a city located in Cuyahoga County, Ohio. Home to various attractions, such as Lake Erie, the Rock & Roll Hall of Fame, and the Cleveland Museum of Art, and a rich cultural heritage, it's no wonder real estate investors purchase homes in this city.
It's important to have a good understanding of any city before determining whether to invest in real estate there. As one of the country's most popular cities, it comes as no surprise that homes in Cleveland sell, with some being taken off the market the day they are listed!
What's more, Cleveland's rental market is thriving, with roughly 50 percent of all homes being occupied by tenants. Another great reason to invest in a property in Cleveland is its healthy real estate market, which experts predict will only continue to grow.
Properties also sell for approximately the asking price, indicating a seller’s market, but buyers can count on Cleveland properties to provide a good long-term investment.
Let's look at a few trends to help you understand the city's real estate market a little better.
Cleveland Housing Market Trends
Cleveland's housing market is competitive. Below are some of the most important trends that you should see before buying or selling a home in Cleveland. We've taken our statistics from Redfin.
- Days on the market. Cleveland homes typically receive two offers and are sold on average in 26 days.
- Cleveland home prices. In Cleveland, the median home sold price last month was $127,750, an increase of 11.1 percent from the previous year.
- Sale price. The average sale price per square foot is $87, which is a 1.1 percent decrease from the previous year. This is 69 percent lower than the national average.
- The number of homes sold. There were 342 houses sold in Cleveland, down 19.7 percent from the previous year.
- Sale to list price. On average, homes in the city sell for about 4 percent below the list price and will go pending in an average of 32 days.
- Hot homes. The most competitive homes in Cleveland typically sell for 3 percent above the median listing price and go pending in 7 days, on average.
- Areas preferred. 78 percent of homebuyers searched for properties in the Cleveland metropolitan area, while 22 percent looked to buy outside the city from February to April 2023.
8 Factors That Drive the Cleveland Market
Now that we understand the trends, it's time to talk about the factors that affect the real estate market in Cleveland.
1. Quality of Life
Homebuyers look at the quality of life they can expect when choosing a city in which to purchase homes. Factors such as the cost of living, education, and more place an essential role in attracting buyers.
People may be drawn to the area since Cleveland's general cost of living is six percent lower than the national average.
Redfin advises searching for properties with a backyard, a newly refurbished kitchen, or a completed basement if you're interested in home characteristics that increase home values in Cleveland.
Moreover, before buying a house, it is crucial to look at the Cleveland area's schools because they can also have a significant impact on the value of the property.
2. The Rental Housing Market
The rental market plays a vital role in the real estate market. This is an important consideration for those looking for Cleveland investment properties rather than homes to live in.
There are both owner-occupied homes and tenant-occupied homes in Cleveland. According to Zumper, the average rental price in Cleveland is $1,150 per month. Comparing this to the prior year, there has been no change. Currently, 58 percent of properties in the city are occupied by renters, while 42 percent are owner-occupied.
3. The City's Economy
The health of the economy is another factor to consider since it has a significant impact on the real estate market. A weak economy will result in fewer buyers or a decrease in the median sale price of homes and vice versa.
Despite the effects of the COVID-19 pandemic, Cleveland's economy is doing well. The economy is diverse, depending on a number of sectors, such as healthcare, manufacturing, sports, education, finance, and more.
However, it's important to note that the unemployment rate in Cleveland is higher than the national average, and the average amount earned annually is lower than the median salary earned nationwide. Nevertheless, the low cost of living makes up for the lower income, and job opportunities are on the rise.
4. Mortgage Interest Rates
Because most people use mortgages to purchase real estate, the interest rate impacts the housing market, as higher rates deter buyers from making a purchase. High mortgage rates often increase the median listing home price, which lowers the demand for properties. Unfortunately, the housing market in Cleveland has slowed due to rising mortgage rates.
Demographics also play an important role in determining the health of a city's real estate market. Fortunately, this factor has contributed positively to the Cleveland market.
Cleveland has a steady population of about 400,000 people. It is doing a respectable job of maintaining a good population of young people. Why should that be brought up while talking about the housing market in Cleveland? That's because Detroit, an area that has been losing residents for decades, is nearby.
The Cleveland housing market is supported by gradual to steady growth. However, certain neighborhoods are experiencing price increases as new businesses and attractions open their doors.
Homes in areas where there is a risk of flooding and other climatic issues could make the city less desirable to potential buyers. In Cleveland, summers are warm, while winters can be cold. Let's look at the city's risk factors for unfavorable climatic conditions.
- Storm Risk - Very high
- Heat Risk - High
- Drought Risk - Low
- Fire Risk - Very low
Currently, roughly seven percent of homes in Cleveland are at risk of flooding, and this figure is expected to increase to eight percent in 30 years.
7. The Job Market
Cleveland has made investments in business startups for the bioscience and healthcare industries. In the hope that newly discovered medications and technological breakthroughs will be produced in Cleveland, experts expect institutions like the Global Center for Health Innovation and Bio-Enterprise to contribute to new healthcare advancements being given first in Cleveland.
Investors may find inexpensive real estate to develop, sell, or rent to those who labor at these businesses. High-tech enterprises can be found in abundance along Cleveland's Health-Tech Corridor, and the area's property market is thriving.
The number of properties on sale (referred to as inventory) will also impact the market. A low supply and high demand often push home prices up, while an increased supply and low demand will result in lower home values.
Currently, there is a low supply of houses in Cleveland, which means that sellers can benefit from the competition between buyers.
Cleveland Real Estate Market Predictions
Although the Cleveland housing market is stable right now, it's important to consider how it will perform over the coming months and years. We can never truly predict what's going to happen with complete accuracy, but we can offer some insight from experts that have studied the city's trends to understand how the market will likely perform.
Cleveland has undoubtedly been among the strongest markets with regard to long-term investment opportunities for real estate in the United States.
With a steady increase in job opportunities in the city and a good overall quality of life, there is no reason to believe that this stable market will change any time soon. In fact, it may just improve, making Cleveland a great place to invest in real estate.
The 10-year average appreciation rate was 75.58 percent, which is among the highest 50 percent in the country. This translates to a median annual appreciation rate of 5.79 percent for homes in Cleveland. Due to the continuous supply and demand imbalance, the city's housing market is strong and still favors sellers.
According to Zillow, the real estate forecast for the Cleveland–Elyria Metropolitan Statistical Area (MSA) is favorable. Home values in the Cleveland-Elyria Metro are anticipated to either stay the same or increase by 0.6 percent from March 2023 to March 2024.
It should be mentioned that the demand for buying homes has reduced due to increased mortgage interest rates, which can also cause a decline in home values.
However, Cleveland is a seller's market since there is a shortage of available houses, which forces homebuyers to compete for homes, frequently leading to higher prices and/or faster sales that typically benefit sellers.
If you are interested in investing in real estate in Ohio, Cleveland is a great place to do this. Thanks to a low supply that has increased the prices of homes, you can expect a good price for your property.
Suppose you are hoping to buy a property in Cleveland, OH. In that case, we would still recommend doing so, as these investments have proved excellent long-term. The rental market is also thriving in the city, so you can expect a good source of income.
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Frequently Asked Questions
1. What are some of the best neighborhoods in Cleveland?
Here are some of the most popular neighborhoods in the city:
- Downtown Cleveland
- Ohio City
- Edge Water
- Kamm's Corner
- University Circle
2. Are home prices in Cleveland above or below the national average?
Houses in the city sell for approximately 67 percent below the national average, which means that Cleveland is an affordable place to buy a home.
3. Is Cleveland a buyer's or seller's market?
Currently, Cleveland is a seller's market, as there is a shortage of available homes, which often results in sellers receiving offers close to, or above, the listing price.