patrick.net

Living in bigger coastal cities makes your brain out of whack when it comes to housing prices.

Median annual family incomes are on the order of $40k in most states. $40k x 3 = $120k. Therefore, the median house prices should be around $100k. That's called affordability. $50k is low but not inconceivable.

Cleveland is not doing well but your west coast mentality exaggerates things.

Uh.... I just got back from visiting my folks in NC. You'd think half the damned state of Ohio has moved down there. Ohio's economy has been in the shitter for decades. Its also not exactly a place people are just thrilled about moving to.

Crappy weather? Check.
Crappy economy? Ditto.
Sorta' boring? Yep.

Just because a house is cheap doesn't mean its a deal. For example, you can seriously buy houses in Detroit for under $200. Does that mean they're steals? Not really. Detroit has about 50% more housing than for the population that lives there.

I think investing in housing is sort of dumb anyway. But if I were to do so, I'd buy in areas that are places people are actually moving TO and not AWAY from. You know- places like Austin? Raleigh? Houston? Atlanta? Rust belt states probably don't exactly come to mind.

Then again if this is simply a house you want to live in yourself and you're ok with Ohio and whatever... then why not?

edvard2 says

I think investing in housing is sort of dumb anyway. But if I were to do so,
I'd buy in areas that are places people are actually moving TO and not AWAY
from. You know- places like Austin? Raleigh? Houston? Atlanta? Rust belt states
probably don't exactly come to mind.

If you want appreciation, most places in midwest are not for house investment. If you only want rental income, a $50k house giving you $600 monthly rent isn't too bad.

This might help explain the mystery:

http://business.time.com/2011/08/01/bulldoze-the-new-way-to-foreclose/

New Renter says

This might help explain the mystery:

http://business.time.com/2011/08/01/bulldoze-the-new-way-to-foreclose/

Makes sense for houses in the least desirable areas in cities such as Detroit and Cleveland. House values in those areas are negative, which means nobody wants them even you give them for free. Banks are giving cities a favor to bulldoze them down b/c drug bugs use them for the wrong purposes.

However, if a house is listed for sale at $50k, the chance is it is NOT one of those negative value houses and somebody will buy it (at a lower price.)

You know it might be interesting to study up on the economic history of Cleveland and see what the trends are. Cities are typically quite stable I would want to find out what happened and if that cause is temporary.

Mobi says

New Renter says

This might help explain the mystery:

http://business.time.com/2011/08/01/bulldoze-the-new-way-to-foreclose/

Makes sense for houses in the least desirable areas in cities such as Detroit and Cleveland. House values in those areas are negative, which means nobody wants them even you give them for free. Banks are giving cities a favor to bulldoze them down b/c drug bugs use them for the wrong purposes.

However, if a house is listed for sale at $50k, the chance is it is NOT one of those negative value houses and somebody will buy it (at a lower price.)

The crack houses down the block will keep prices on the nicer properties low.

APOCALYPSEFUCK is Shostakovich says

Cleveland

It's the new Detroit

That's not wrong actually. Like Michigan they were tied to a single industry, most of which went to China. They are on a very steep slope declining... like off the cliff.

It's the new America, where American jobs are outsourced by some government connected thug. Free market for the poor, government for those in the club.

FortWayne says

That's not wrong actually. Like Michigan they were tied to a single industry, most of which went to China. They are on a very steep slope declining... like off the cliff.

I don't know but I have heard government corruption has a lot to do with Detroit.

Certainly the auto unions

Is this the case with Cleveland also?

I recommend this article about the 5 principles of Urban Economics, it is a good read that might help you weighing a city for investment purposes:

www.city-journal.org/2013/23_1_urban-economics.html

APOCALYPSEFUCK is Shostakovich says

Cleveland's Fucked!

Thanks so much

APOCALYPSEFUCK is Shostakovich says

You are most welcome.

My pleasure.

You are a gentleman and a scholar, who happens to have strange appetites.

You might say a Hannibal Lecter of the RE world

Cleveland was Detroit before Detroit became Detroit.

Ceffer says

Cleveland was Detroit before Detroit became Detroit.

Why?

John Bailo says

New Renter says

The crack houses down the block will keep prices on the nicer properties low.

Sure, okay, that's what I thought.

But then I went walking around using Google Street View and didn't see any of those.

In fact these homes seem to be located near the University District close to many of the city's cultural amenities.

Has more to do with the school district. Universities have nothing to do with the public school districts and often times they are in bad neighborhoods. Check out the scores of the public schools.

I wonder what your annual property taxes bill looks like for one of those 50k places,

I live in lancaster PA, and you can buy a row home for 49k, rent ready @ 750. But almost 300 per month gets shipped off to the tax man so that all but 40% of the citys RE can enjoy their privileged tax exempt status, and the firemen and police can get fat at the trough.

150k can buy you a nice 3/2 with an acre just outside the city in any of the more desirable districts, and the annual tax bill is about the same

errc says

I wonder what your annual property taxes bill looks like for one of those 50k
places,

I live in lancaster PA, and you can buy a row home for 49k, rent ready @ 750.
But almost 300 per month gets shipped off to the tax man so that all but 40% of
the citys RE can enjoy their privileged tax exempt status, and the firemen and
police can get fat at the trough.

150k can buy you a nice 3/2 with an acre just outside the city in any of the
more desirable districts, and the annual tax bill is about the same

OH is bad in terms of property tax but PA is ridiculous. I do not know about Cleveland but my guess is like 3% and ~ $200 per month. Counting in maintenance and insurance you are probably getting half of the rent as your income for the $50k house. Not a horrible deal even when there is not much price appreciation.

Cleveland has long been tied to the steel industry. Other industries, manufacturing, etc sprung up around that since the steel was right there. When china decided to underprice steel to ridiculous degrees, our politicians did nothing to protect the steel industry. As a result,any steel companies went out of business and industry as a whole suffered. Since steel making is such a core industry, the lack of local supply means higher prices and tough source lines for the raw material to make widgets. Which just encourages other industry to move to china. It starts with steel and ends up with vacuum cleaners. And then people move away from the welfare state and RE crashes.
Cleveland is the next Detroit. And it's the fault of our federal government for refusing to protect a vital industry from hostile foreign business practices. a nice hefty tariff on Chinese steel would have been all it would have taken to keep millions of Americans employed.

Quigley says

Cleveland is the next Detroit. And it's the fault of our federal government for
refusing to protect a vital industry from hostile foreign business practices. a
nice hefty tariff on Chinese steel would have been all it would have taken to
keep millions of Americans employed.

Ding Ding Ding. We have a winner here.

Our current outsourcing model is to optimize the profit for the big thug companies until the economy completely crashes.

P.S. I used to work for a big company which actually builded numerial models to optimize this outsourcing process.

Ceffer says

Cleveland was Detroit before Detroit became Detroit.

The day Rockefeller got pissed at Cleveland and permanently moved to New York destined the city for demise. Moral of the story? Don't piss off your most wealthy with taxes.

I see houses listed for sale, exactly like mine, and in my neighborhood for 35K now. And it's the second whitest district in Baltimore City.

indigenous says

I don't know but I have heard government corruption has a lot to do with Detroit.

Certainly the auto unions

Is this the case with Cleveland also?

I don't know about unions or corruption, corruption is everywhere though. Steel industry is what kept Cleveland going, it's gone to China now. It's turning into Detroit rapidly... no jobs, a lot of crime... hungry people have to eat.

The story of Cleveland ( and the rust belt for that matter) isn't exactly rocket science. Its basically all about foreign competition. You can't realistically expect any company to willingly pay 10 times more to produce something in the US when they can do it for 10 times less in another country.

Of course automation has narrowed that gap considerably and with rising wages in Asia that gap has nearly closed. But from the late 60's-2000's the damage was already done.

Another thing to consider is that unlike many other countries in the US there are vast choices as far as where to live. In a place like Germany, well the whole country gets freezing winters. In the US? You could choose to live in Florida, AZ, SC, AL, TX, or elsewhere where its warm year-round. About the biggest reason people moved to the Midwest and Northeast were the jobs in manufacturing. Without the jobs there's less incentive for people to stay somewhere that A: Has a poor job situation and B: Has crappy weather for half of the year. So people move.

edvard2 says

About the biggest reason people moved to the Midwest and Northeast were the jobs in manufacturing. Without the jobs there's less incentive for people to stay somewhere that A: Has a poor job situation and B: Has crappy weather for half of the year. So people move.

It's not that simple! Cost of living has a huge impact on if people stay someplace once people lose their job. Expensive places like San Francisco tend to have low unemployment because people have to leave immediately once they lose their job. In Detroit, it's relatively inexpensive to live, so people can linger for years without a job. That and it's not particularly inexpensive to live in Florida any more. What I have observed is that in a place where there are no jobs any more, it's the people who just graduated from college who seem to leave the area pretty quickly more than any other age group. I.E. - A place that just lost a bunch of jobs tends to lose the most of it's most mobile people.

I grew up in the Southeast, lived on the east coast for a few years, and now live in Coastal Cali. My observations have been that the mindset in regards to where people want to live have changed. The surge right now seems to be Texas and the Southeast. Its because the perception is that those are cheaper areas to live in and that their economies are doing better than most other parts of the country, which I find only partially true.

Weather shouldn't be underestimated either. Someone would have to pay me an enormous salary for me to even consider moving back to somewhere like the NE and even then I'm not sure I'd take it. 5-6 months of frigid weather isn't my cup of tea and most other people likely feel the same.

zzyzzx says

It's not that simple! Cost of living has a huge impact on if people stay
someplace once people lose their job.

Yup and even if you have a job, cost of living does make a difference. After my tour around the country and abroad for employment, I am back in CA. Now when I was here for a long time, these prices didn't seem that out of place. But now I see the prices and compare with other places -just rent can be half or even less for the same apt . Not to even mention buying a house. Plus when you are commuting an hour or so each day in crazy LA traffic , having the beach close by is the last thing on your mind.

I am pretty much set on moving. I don't want to buy an expensive house and be tethered/trapped to it. If all expenses including mortgages/taxes etc comes under 1300 or 1500 max, I would be comfortable. Plenty of other places offer that and I am past my partying age and just want to settle down and some peace and quite. So much as I enjoyed CA, the prices for what is provided is obscene. Not a fan of the cold-but can tolerate it.

Am looking at other places. WA was something I was closely looking at, but not sure if I can take the 9 months with not much sun. Phoenix and TX seem to have quite a few openings , so looking at that too. Lets see. But weather does play a part in the cold areas-