Desperately Seeking Stability in Cleveland's Fragile Housing Market
While most of the rest of the country was watching housing values inflate in 2003 and 2004, Cleveland was standing outside the bubble: its home values changed very little during the peak of the housing boom. But Cleveland didn’t miss the part where the bubble burst. Home sales had actually been declining since 2004, and by the time the national mortgage meltdown hit, Cleveland had spent almost two years watching its rate of distressed mortgages rise steadily. The share of distressed mortgages in Cleveland has been consistently higher than the national average every year since 2000. A recent spotlight report [PDF] from the Department of Housing and Urban Development brings the city's plight into sharp focus.
“The housing market in Cleveland remains fragile – with low property values, deeply discounted properties affecting neighborhood values, and many severely underwater mortgages,” the report notes.
HUD is looking for some happy news to tell about Cleveland, but it’s difficult to find. Unemployment is at about 8 percent, 1 point lower than the national average, so that could be worse. But as of July, the metro area had almost 19,000 mortgages at risk of foreclosure. And, citing CoreLogic data, HUD’s report notes that 27 percent of mortgages in the area have negative equity.
Since 2009, the federal Neighborhood Stabilization Program has awarded $92.7 million over three grant periods to communities within the metro area. Much of this funding is aimed at tearing down abandoned properties and supporting the rehabilitation or reconstruction of housing. The state is also fighting the decline, investing $570 million in Ohio Housing Finance Agency money to try to stabilize rocky mortgages throughout the state. So far, though, the effect has been minor, with any small improvements mirrored by national trends.