Norada Real Estate Investments

Archives for December 2022

Montgomery Housing Market: Prices, Trends, Forecast 2022-2023

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How is The Housing Market in Montgomery, Alabama?

Montgomery Alabama Real Estate Market is hot in 2022. It is a good cash-flow market due to the strong demand for rental housing. And this is not entirely due to the 8 or more colleges and universities in the city. The cost of living in Montgomery is lower than the U.S. average while there are a number of good-paying jobs in the area.

Montgomery has seen the job market increase by 1.1% over the last year. Future job growth over the next ten years is predicted to be 30.3%. With affordable home prices, lower taxes, and a low cost of living, Montgomery is a great city to live in and invest in real estate. The median sales price in the Montgomery area was $196,00 in November 2022, an increase of 1.1% from one year ago and a decrease of -12.9% from October, according to the Montgomery Area Association of REALTORS.

The median home sale price — is the midway point of all the houses or units sold over a period of time. It offers a more accurate view of what's happening in a market. There is an acute shortage of inventory in the Montgomery area housing market. At the current sales pace, all the active inventory on the market would sell in 2.7 months (the # of months of supply).

According to the quarterly report published by Alabama Center for Real Estate (ACRE), Montgomery residential sales in the third quarter of 2022 totaled 1,518 units, representing a decrease of 16.8% when compared to 1,825 units that were sold in the third quarter of 2021. Compared to historical data, third-quarter sales are 7.0% below the 3-year quarterly average and 4.0% above the 5-year quarterly
average.

The median sales price in Montgomery for the third quarter of 2022 was $223,000, a 5.9% increase from the third quarter of 2021's median sales price of $210,500. Compared to historical data, the third-quarter median sales price is 18.5% above the 3-year quarterly average and 27.8% above the 5-year quarterly average.

The average sales price in Montgomery for the third quarter of 2022 was $248,837, a 6.8% increase from the third quarter of 2021’s average sales price of $233,015. The average number of days on the market in the third quarter of 2022 was 47, representing a decrease of 16.0% from 56 days on market in the third quarter of 2021.

The average number of days on the market in the first quarter of 2022 was 54, representing a decrease of 34.8% from 83 days on market in the first quarter of 2021. The residential units available for sale in the first quarter of 2022 decreased by 29.2% when compared to the same period last year. The quarterly average of inventory for sale divided by the current quarterly sales average equals the # of months of supply, which was 1.7 months, up 36.8% as compared to the third quarter of 2021. The market is considered to be in balance at approximately 6 months of housing supply.

Montgomery Alabama Housing Market Trends – November

Home Sales: According to the Montgomery Area Association of REALTORS, in November, home sales in the area decreased 25.2% year-over-year (Y/Y) from 488 to 365 closed transactions. Following seasonal trends, sales also decreased 25.% from October. Sales are now down -13.1% year-to-date. These residential sales include existing single-family, condos, & new homes.

Home Prices: Montgomery Alabama real estate market trends show a 1.1% year-over-year rise in median sales price based on 365 home sales registered last month. The median sales price in November was $196,000. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.

Housing Inventory: Homes listed for sale increased 37.8% year-over-year from 670 to 923 listings. Months of supply increased from 1.3 in October 2021 to 2.3 in October 2022, reflecting a market where sellers generally have elevated bargaining power. Homes sold in October averaged 56 days on the market (DOM), 2 days slower than October 2021.

Housing Forecast:  October sales were 135 units, or 25.1%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 538 sales for the month, while actual sales were 403 units. ACRE forecast a total of 5,501 residential sales year-to-date, while there were 4,932 actual sales through October, a difference of 10.4%.

New Construction: The 73 new homes sold represent 18.1% of all residential sales in the area in October. Total sales increased 9.0% year-over-year. The median sales price in October was $352,325, an increase of 7.2% from one year ago and an increase of 1.5% from September. New homes sold in an average of 73 days, 22 days slower than in October 2021.

For all Montgomery-area housing data, click here.

Montgomery Alabama Housing Market Forecast

The current housing demand: According to Realtor.com, Montgomery County was a buyer's market in November 2022, which means that the supply of homes is greater than the demand for homes. The median listing home price in Montgomery County, AL was $179.9K, trending up 6.5% year-over-year. The median home sold price was $120K. Montgomery County has affordable townhomes and affordable condos. There are 18 cities in Montgomery County where Realtor.com has active listings. Grady has a median listing home price of $1.3M, making it the most expensive city. Ramer is the most affordable city, with a median listing home price of $165K.

Some of the lowest real estate appreciation rates in the country over the last ten years have been in Montgomery, where house values have increased by just 29.38%, which is an annualized rate of 2.61%. This rate is lower than the appreciation rate found in 90% of the cities and towns in America. Over the last year, Montgomery's appreciation rates have trailed the rest of the nation.

In the last twelve months (2021 Q2 – 2022 Q2), Montgomery's appreciation rate has been 14.33%, which is slightly above the national average. In the latest quarter tracked by NeighborhoodScout (2022 Q1 – 2022 Q2), the house appreciation rates in Montgomery were at 5.40%, which equates to an annual appreciation rate of 23.42%. However, the rising mortgage rates that have squashed demand and caused sales to plummet and home price appreciation to slow down.

According to Zillow.com, the typical home value in Montgomery County is $147,446. Montgomery County home values have gone up 15.4% over the past year. The Montgomery, Alabama Metropolitan Statistical Area (commonly known as the Tri-Counties or the River Region) is a metropolitan area in central Alabama. According to Zillow's latest forecast, home values in the Montgomery Metro Area are projected to decline by 1.4% from November 2022 to November 2023.

Montgomery Alabama Housing Market Forecast
Source: Zillow

Montgomery Real Estate Investment Overview

The Montgomery Alabama real estate stands out for its affordable properties, relatively high rents, and numerous opportunities for deals. The relative breadth of its student housing market is remarkable given its small size. Here are some of the reasons to consider investing in Montgomery real estate.

A Big Student Market

Student housing offers stable income and better-than-average returns. Students care as much or more about safety, walking distance to school, and amenities than they do price. This is why cap rates for properties within half a mile of campus are so low; they rarely come on the market, and when they do, there is a bidding war. Investment opportunities do exist in older student housing that can be renovated and now rented out at a premium.

You’ll see steady turnover as people graduate, replaced by incoming freshmen. These tenants will never buy a home until after graduation, and if they have trouble paying the rent, getting a roommate is an acceptable solution. This makes the Montgomery Alabama real estate market perfect for those who want to invest in student housing since there are simply more universities in the area.

Montgomery Real Estate is Affordable

Montgomery real estate is cheap. The median home value in Montgomery is $143,142 as of Q2 2022. NeighborhoodScout’s Median Home Values combine data from the United States Bureau of the Census with quarterly house resale data provided to the FHFA by Fannie Mae and Freddie Mac. Around 33% of homes fall in the price segment of $128,001 – $255,000. Another 33% fall in the price segment of $64,001 – $128,000. Single-Family homes account for 68.7% of the housing units and around 47.7% are renters, which is quite a sizable population for rental property owners.

As of November 2022, the typical home value in the Montgomery MSA is $188335 whereas, in the city, it is $137,960 (Zillow Home Value Index). ZHVI is a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type. It reflects the typical value for homes in the 35th to 65th percentile range.

While that is far lower than the national average, it is considerably cheaper. That said, affordability should continue to be the driving force of both supply and demand in the area. First-time buyers and Millennials should find the Montgomery home market more enticing than most others. Hence, Montgomery real estate investing should experience a boost in activity as well.

A Large Rental Market for Multi-Family Housing

While the cost of living and housing are both relatively low in Montgomery, many residents can’t earn enough to afford to buy a home. This created a relatively strong market for multi-family housing. As of December 25, 2022, the average rent for a 1-bedroom apartment in Montgomery, AL is currently $750. This is a 3% increase compared to the previous year.

  • The average rent for a 2-bedroom apartment in Montgomery, AL is currently $850, a 0% increase compared to the previous year.
  • The average rent for a 3-bedroom apartment in Montgomery, AL is currently $1,050, a 6% increase compared to the previous year.
  • The average rent for a 4-bedroom apartment in Montgomery, AL is currently $1,298, a 3% decrease compared to the previous year.

Montgomery Alabama real estate is more than apartments for locals and students. The 2017 Realtors Confidence Index Report described the outlook for single-family homes in Alabama as “very strong”. Buyer traffic for Alabama was seen as strong. For seller traffic, Alabama was rated in that report as having moderate seller conditions, but all of the surrounding states were projected to be “weak” in that category.

Suburbs with Potential

Prattville is located near Montgomery, Alabama. Capitol Hill Golf Course is located here; that’s the site of the Nationwide Tour. The town’s population has grown by half in the past ten years. This is an excellent place to consider buying a rental home whether you’re catering to snowbirds or people relocating to the area before finding a permanent residence. The typical home here is worth around $245,990, a deal compared to other up-and-coming golf communities. Suburbs around Montgomery offer safety, space, and more modern amenities. Small towns around the city provide wide open spaces and privacy. Homes in Wetumpka have a typical price of around $241,435 (Nov 2022).

Highest Appreciating Montgomery Neighborhoods Since 2000

  1. Gunter Annex
  2. Cottage Hill
  3. Centennial Hill
  4. South Hull
  5. Maxwell Boulevard North / Maxwell Boulevard South
  6. Hayneville Rd Park
  7. Chisholm / Kilby
  8. Mount Meigs / Brassell
  9. Washington Park
  10. Deer Creek Blvd / Marston Way
  11. Tax-Friendly State

Alabama has incredibly low taxes. The state and local tax burden typically rank among the top ten (best) in the U.S. State and local taxes are one of the biggest deciding factors real estate investors need to consider. Alabama has some of the lowest property tax rates in the nation. The median property tax in Montgomery County, Alabama is $435 per year for a home worth the median value of $121,000. Montgomery County collects, on average, 0.36% of a property's assessed fair market value as property tax.

Montgomery County has one of the lowest median property tax rates in the country, with only two thousand five hundred thirty-eight of the 3143 counties collecting a lower property tax than Montgomery County. The average yearly property tax paid by Montgomery County residents amounts to about 0.74% of their yearly income. Montgomery County is ranked 2719th of the 3143 counties for property taxes as a percentage of median income.

The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.

References

Market data and trends
https://www.zillow.com/montgomery-al/home-values/
https://acre.culverhouse.ua.edu/category/statewide/montgomery-area/
https://acre.culverhouse.ua.edu/research/residential-research/montgomery/
https://www.neighborhoodscout.com/al/montgomery/real-estate
https://www.realtor.com/realestateandhomes-search/Montgomery-County_AL/overview

Job Growth
https://www.bestplaces.net/economy/city/alabama/montgomery

Alabama taxes
https://taxfoundation.org/state/alabama/
http://www.tax-rates.org/alabama/montgomery_county_property_tax

Prattville data
https://www.nerdwallet.com/blog/mortgages/home-search/best-towns-alabama-young-families/

Montgomery growth
https://www.bestplaces.net/city/alabama/montgomery

Student housing market
http://www.nreionline.com/student-housing/buyers-return-student-housing-sector

Cleveland Housing Market: Prices, Trends, Forecast 2022-2023

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If you are looking at buying a house in Cleveland you must read till the end. Cleveland is often looked at as a has-been market. However, its turnaround has created several opportunities for investors and residents alike. The Cleveland housing market has slowed down to rising mortgage rates. In November, both sales and new listings were down as compared to last year. Home prices are rising by single digits and the forecast for 2023 is mixed. According to Zillow, home values in the Cleveland MSA may decline by 0.1% during the next twelve months ending November 2023.

According to Realtor.com, Cleveland-Elyria, Ohio has been ranked 32nd among the 100 largest U.S. metros in their 2023 housing forecast. In 2023, Cleveland home prices are projected to increase by 4.3%, while home sales are projected to increase by 2.7%. The combined sales and price change (% Y/Y) is anticipated to be 7.0%.

The following Cleveland housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com for November 2022. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only. The median listing price of homes for sale in Cleveland, Ohio was $115K, which was flat from the prior year.

The median asking price per square foot for homes was $77. The median sales price was $120,000. In November 2022, homes in Cleveland, OH sold for 2% less than their asking price on average. Homes sold after 48 days on the market on average. The median days on market in Cleveland, OH has decreased from last month, and have decreased significantly since last year.

Cleveland Housing Market Trends

The FHFA provides a measure of typical price inflation for houses within the United States for the state, national, and Metropolitan Statistical Areas. FHFA releases HPI data and reports on a quarterly and monthly basis. Cleveland–Elyria Metropolitan Statistical Area (MSA) is ranked #56 in the FHFA HPI® Top 100 Metro Area Rankings based on house price change in 2022 Q3. In Cleveland–Elyria house prices rose 10.8% over the past year and rose 0.4% over the last quarter. The Cumulative change in the Cleveland house price index since 2007 has been +57.7%.

Cleveland Housing Price Trends
Source: FHFA

How Hot Was the Cleveland Housing Market in November 2022?

Data by Redfin, a real estate company, shows that the Cleveland housing market is somewhat competitive. Homes in Cleveland receive 2 offers on average and sell in around 33 days. The average home in Cleveland sells for about 4% below the list price. A hot listing on Redfin can sell for about 2% above the list price and go pending in around just 9 days.

  • The average sale price of a home in Cleveland was $112K last month, down 6.7% since last year.
  • The average sale price per square foot in Cleveland is $79, down 5.4% since last year.
  • In November 2022, Cleveland home prices were down 6.0% compared to last year, selling for a median price of $113K.
  • On average, homes in Cleveland sell after 27 days on the market compared to 37 days last year.
  • There were 362 homes sold in November this year, down from 448 last year.
  • Sale-to-List Price was 96.0%.
  • 30.4% of Homes Sold Above the List Price.
  • 27.7% of Homes were sold with price drops.

Cuyahoga County Housing Market Report

Cuyahoga County is located in the northeastern part of the U.S. state of Ohio. It is the second-most-populous county in the state. The county seat and largest city is Cleveland. Here's the November 2022 Market Report for Cuyahoga County released by the Akron Cleveland Association of REALTORS®.

Cleveland is a seller's real estate market. Months Supply of Inventory is just 1.6 months as of November 2022. It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Six months of supply has historically been associated with moderate price appreciation, while a lower level of months' supply tends to accelerate price increases.

  • Total homes sold in Cuyahoga County were 1602, down 26.9% year-over-year.
  • In Nov 2022, the median sales price in Cuyahoga County was $190K, up 5.6% year-over-year.
  • The average sales price was $234,500, up 4.1% year-over-year.
  • Homes are typically seeing offers accepted slower than a year ago.
  • The median days on market is 36 days, up 2.9% year-over-year.
  • New listings were down 14.3% compared to 2022.
  • Pending sales were also down 13.4% compared to the same month in 2022.

Cleveland Rental Market Trends

Cleveland has a mixture of owner-occupied and renter-occupied housing. The average rent for a 1-bedroom apartment in Cleveland, OH is currently $1,045. This is a 19% decrease compared to the previous year. Over the past month, the average rent for a studio apartment in Cleveland decreased by -6% to $1,000. The average rent for a 1-bedroom apartment decreased by -16% to $1,045, and the average rent for a 2-bedroom apartment decreased by -25% to $975.

  • The average rent for a 2-bedroom apartment in Cleveland, OH is currently $975, a 22% decrease compared to the previous year.
  • The average rent for a 3-bedroom apartment in Cleveland, OH is currently $1,150, a 10% decrease compared to the previous year.
  • The average rent for a 4-bedroom apartment in Cleveland, OH is currently $1,335, a 12% increase compared to the previous year.
  • Some of the most expensive neighborhoods in Cleveland are Detroit – Shoreway, Downtown Cleveland, and Ohio City.
  • Some of the most affordable neighborhoods in Cleveland are North Collinwood, Edgewater, and Cudell.

Cleveland Housing Market Forecast 2023

What are the Cleveland real estate market predictions for 2023? Cleveland has a record of being one of the best long-term real estate investments in the U.S. The Cleveland metropolitan area, or Greater Cleveland as it is more commonly known, is the metropolitan area surrounding the city of Cleveland in Northeast Ohio, United States.

The cumulative appreciation rate over the ten years has been 67.95%, which ranks in the top 50% nationwide. This equates to an annual average Cleveland house appreciation rate of 5.32%. The Cleveland real estate market remains strong to favor sellers, due to persistent imbalance in supply and demand.

NeighborhoodScout's data show that during the twelve months, from 2021 Q2 – 2022 Q2, Cleveland's appreciation rate, at 13.03%, has been at or slightly above the national average. In the latest quarter tracked by them (2022 Q1 – 2022 Q2), Cleveland's appreciation rate has been 2.31%, which annualizes to a rate of 9.57%.

The five-county Cleveland–Elyria Metropolitan Statistical Area (MSA) consists of Cuyahoga County, Geauga County, Lake County, Lorain County, and Medina County, and has a population of over 2 million. The typical home value of homes in Greater Cleveland or Cleveland–Elyria Metro is currently $219,184. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. It indicates that 50 percent of all housing stock in the area is worth more than $219,184 and 50 percent is worth less (adjusting for seasonal fluctuations).

The housing forecast for the Cleveland MSA is negative according to Zillow. Cleveland–Elyria Metro home values are forecasted to remain flat or may drop by 0.1% between November 2022 to November 2023. That's Zillow's most recent forecast for Cleveland. It is to be noted that rising mortgage rates have decreased home buying demand and it can lead to a fall in home prices. However, Cleveland is a seller’s real estate market as there exists a limited supply of homes, and buyers are forced to compete often resulting in higher prices and/or quicker sales that tend to benefit sellers.

In other words, the demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. Also, in a balanced real estate market, it would take about six months for the supply to dwindle to zero. In terms of housing supply, the Cleveland market can tip to favor buyers if the supply increases to more than six months of inventory. And that's quite unlikely to happen in 2023. According to some experts, after more than doubling this year, mortgage rates are expected to retreat in 2023. So, Cleveland home prices may not decline if the mortgage rates stop rising in 2023.

Cleveland Real Estate Market Forecast
Credits: Zillow

Cleveland Real Estate Investment Overview

Should you buy investment property in Cleveland? Looking for a home in Cleveland? These up-to-date Cleveland real estate statistics and trends will help you make smart investing decisions. You need to drill deeper into local trends if you want to know what the Cleveland market holds for the year ahead. We have already discussed the Cleveland housing market trends & forecasts for answers on why to put resources into this sizzling market. Cleveland is home to just under 400,000 people. The larger metropolitan area is home to roughly two million people.

That makes the Cleveland real estate market the 32nd largest in the country. If you include the Cleveland-Akron-Canton metro area, there are three and a half million people in the “combined statistical area”, making it the 15th largest metropolitan area in the United States. This century-old city was once a major manufacturing center. It is reinventing itself as a medical and BioMed hub. Home prices in Cleveland have been trending up 8.6% year-over-year.

As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Cleveland, accounting for 46.56% of the city's housing units. Other types of housing that are prevalent in Cleveland include duplexes, homes converted to apartments or other small apartment buildings ( 26.01%), large apartment complexes or high-rise apartments ( 20.51%), and a few row houses and other attached homes ( 6.23%).

Just four miles from Downtown Cleveland, the University Circle has long been a diverse and appealing mix of single-family homes and apartments. This area of the city has the flavor of a quaint college campus. Given that area amenities are within walking distance, there is a lot of foot and bike traffic, which lends to its charm. The area is one of the largest employment centers in the entire state. People in Cleveland primarily live in small (one, two, or no-bedroom) single-family detached homes.

Here are the top reasons to invest in Cleveland real estate.

  • Top 10 Job Market for New College Graduates (CNN)
  • Presence by 70% of Fortune 500 comp.
  • More than 400 bioscience companies.
  • Two new Amazon distribution centers.
  • Over 120,000 healthcare professionals.
  • Home to 27 area colleges & universities.
  • Home to four professional sports teams.

Positive Demographic Trends

Cleveland’s population is stable at around 400,000 residents. It is doing a decent job of retaining its young people. Why is that something to bring up when discussing the Cleveland housing market? Because it is right next to Detroit, a city that has been shedding people for decades. The Cleveland real estate market is thus bolstered by steady to slow growth, though specific neighborhoods are seeing spikes in their valuations as new employers and attractions move in.

The Bright Future of Good-Paying Research Jobs

Cleveland has invested in healthcare and bio-science business accelerators like Bio-Enterprise and the Global Center for Health Innovation. They expect institutions like this to lead to new healthcare advancements provided first in Cleveland and in the hope that discovered drugs and technology will be manufactured in Cleveland. Investors can find affordable investment properties for development and either sale or rental to people working at these facilities. Cleveland’s Health-Tech Corridor is a prime place for high-tech companies, while the Cleveland real estate market is booming around these businesses.

Downtown Brownfield Re-Development

Cleveland is intentionally redeveloping several brownfield industrial sites to create multi-use properties. For example, the Terminal Tower is being turned into a combination shopping and entertainment district. The Cleveland Gateway project is going to turn 65 acres into a densely populated urban neighborhood, mixing multi-family housing with trails, a marina, and an urban park. If you can’t invest directly in this redevelopment project, note that single-family and multifamily housing stock around the new units will go up in value as new infrastructure is built.

Significant redevelopment is occurring along the thoroughfare running from East 55th Street to East 105th Street. Given that it is right off Interstate 490 and connects with downtown streets like Quincy and Chester Avenue, this is an excellent place to buy a property that is going to go up in value. When you know that better streets and traffic management along with improved public transit will go into an area, it is a safe bet for investing in the Cleveland real estate market.

The nucleus is another downtown redevelopment project that seeks to bring mixed-use real estate to depressed areas. The nucleus is centered around two million square feet of retail, residential, and office space, though there will be around 500 residential units. If you want to invest in the Cleveland real estate market, consider buying and rehabbing housing for those who will work in NuCleus but couldn’t get one of the apartments or condos.

University Circle & The Western Rim

University Circle is one of the hottest neighborhoods in Cleveland. It is seeing a wave of high-end condos and apartments. If you can find single-family rentals or multi-family housing in the vicinity, snap it up. These are among the most desirable properties in the Cleveland housing market. We know that when they were willing to turn a former Children’s Museum into an apartment building.

The Western Rim of Cleveland hasn’t been overlooked in the rush to redevelop downtown and the Biotech corridor. Projects worth an estimated 350 million dollars have been proposed or are actually under construction between West 25th and West 117th streets. A business incubator has been proposed for the Western Rim. The Cleveland housing market on the west side should see significant growth as new businesses pop up here. The luxury rentals built in the Near West Side are probably only the start of this area’s resurgence.

The Redeveloped Lakeshore

Cleveland sits on the southern shore of Lake Erie. Cleveland is redeveloping its long waterfront district. The fifty-year plan has already resulted in mixed-use development between West 3rd and East 18th streets. Redevelopment includes rehabilitating waterfront infrastructure like bridges, canals, and “made land”. Reinvented lakeside trails create desirable areas that will command a premium on the Cleveland real estate market. Euclid has already demonstrated this with their lakefront project and main waterfront park. Newly opened areas like the one created by the demolition of the FirstEnergy coal fire plant are to be seen as opportunities to reinvent the Cleveland real estate market.

A New Lease on Life for Old Buildings

The Cleveland housing market is so hot that they’re turning old commercial buildings into new residential spaces. A classic example of this is the former Huntington Bank Building; it is currently known as the 925 Building. The commercial building will be transformed into a mixed-use building with office space, retail space, a Hilton hotel, and 600 apartments.

Catering to the New Medical Talent

While there are Americans who worship Canada’s single-payer healthcare system, the reality is that millions of Canadians come to the United States each year. Some were denied care by their government, while many simply don’t want to wait months for a procedure, so they choose to pay cash at U.S. hospitals. Cleveland is building medical facilities to cater to these medical tourists. And these doctors, nurses and medical specialists are buying homes close to work, whether it is at the world-renowned Cleveland Clinic or the hospital down the street.

Another variation of this strategy is buying property in the Cleveland housing market that caters to medical school students. Case Western Reserve University and the Cleveland Clinic Lerner College of Medicine see many students from around the world who come to the area for one to five years to attend before leaving to practice elsewhere. (The Lerner College is a five-year tuition-free medical school).

Summary

If you are a home buyer or real estate investor, Cleveland real estate investment has a track record of generating one of the best long-term returns in the U.S. through the last ten years. Cleveland is a notable exception to the decline of the Rust Belt cities. It has managed to reinvent itself, shifting from classic manufacturing to biotech and medicine. In the process, it has maintained its population and has strong potential for growth both economically and demographically.

There are over 590 schools in Cleveland, OH. There are 238 elementary schools, 154 middle schools, 84 high schools, and 121 private & charter schools. There are over 105 neighborhoods in Cleveland. Some of the best neighborhoods in or around Cleveland, Ohio are Old Brooklyn, Parma, and Euclid. The Bay Village area is a highly desirable suburb of Cleveland, Ohio.

Cleveland Magazine rated it the number one suburb to nest in, citing low crime, increasing home values, and great schools. Bay Village retained these positive elements even during the recession. Tremont has a median listing price of $320K, making it the most expensive neighborhood. Mount Pleasant is the most affordable neighborhood, with a median listing price of $60K.

Here are the 10 highest appreciation neighborhoods in Cleveland since 2000 (List by Neigborhoodscout.com).

  1. Central Southwest
  2. Central East
  3. Central
  4. Downtown South
  5. Ohio City South
  6. Clark Fulton North
  7. Ohio City
  8. Tremont North
  9. Tremont

Buying an investment property is different from buying an owner-occupied home. Our Cleveland investment properties are designed to make money as rentals, which means you must look at it solely as an income-producing entity just like any other business. These are “Turnkey Cash Flow Investment Properties” located in some of the best neighborhoods of Cleveland.

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments. Buying in a market with increasing prices, low interest, and low availability requires a different approach than buying in a cooler market.

We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities. We can help you succeed by minimizing risk and maximizing profitability. We recommend asking for a FREE Strategy Session by clicking here. One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.

The information contained in this article was pulled from third-party sites mentioned under references. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the information is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References

Market Data, Trends & Statistics
https://www.zillow.com/home-values/24115/cleveland-oh/
https://www.redfin.com/city/4145/OH/Cleveland/housing-market
https://www.neighborhoodscout.com/oh/cleveland/real-estate
http://www.freddiemac.com/research/indices/house-price-index.page
https://www.realtor.com/realestateandhomes-search/Cleveland_OH/overview
https://www.movoto.com/guide/cleveland-oh/cleveland-real-estate-market-trends

Lerner College
https://atlantisglobal.org/blog/2017/11/21/get-paid-in-medical-school-my-journey-to-the-cleveland-clinic-lerner-college-of-medicine

Brownfields / urban redevelopment
https://www.calthorpe.com/content/cleveland-gateway-redevelopment-plan

The Opportunity Corridor
http://www.freshwatercleveland.com/features/SevenProjects022317.aspx

University Circle
http://www.freshwatercleveland.com/features/SevenProjects022317.aspx

Waterfront
http://planning.city.cleveland.oh.us/lakefront/cpc.html
https://www.cleveland.com/architecture/index.ssf/2017/11/euclid_close_to_building_lakef.html
http://www.news-herald.com/lifestyle/20170602/clevelands-lakefront-parks-are-stable-flourishing

The Western Rim
http://www.crainscleveland.com/article/20170507/news/170509850/clevelands-western-rim-embarks-development-boom

Biomedical hubs and hospitals
http://www.theglobalcenter.com/about-us
https://newsroom.clevelandclinic.org/2018/07/11/luye-medical-collaborates-with-cleveland-clinic-to-pioneer-value-based-healthcare-in-china

New Home Sales: Report, Charts, Forecast 2022-2023

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New Home Sales Report Today 2022

New Home Sales, commonly referred to as “new residential sales,” is an economic indicator that tracks the sale of newly constructed residences. It is extensively watched by investors since it is seen as a lagging signal of real estate market demand and, thus, a factor influencing mortgage rates. Household income, unemployment, and interest rates are all variables that influence it.

The United States Census Bureau releases two versions of the New Home Sales metric: a seasonally adjusted figure and an unadjusted one. The adjusted value is shown as a yearly total, whereas the unadjusted figure is presented as a monthly total. These numbers are provided for several areas and the entire nation.

New home sales are completed when a sales contract or deposit is signed or accepted. In any stage of construction, the home might be: not yet started, in the process of being built, or fully finished. About 10% of the US housing market is made up of new house sales. Preliminary numbers for new single-family home sales are subject to major changes because they are mostly based on data from construction permits.

New Home Sales Report November 2022

The Census Bureau and the Department of Housing and Urban Development reported new home sales unexpectedly increased in November, despite rising mortgage rates and house prices, which have severely damaged affordability. According to the Commerce Department, sales of new single-family houses in the United States increased for a second consecutive month in November, largely due to Americans taking advantage of a decline in mortgage rates and incentives from frantic builders.

New home sales, which account for a small share of U.S. home sales, jumped 5.8% to a seasonally adjusted annual rate of 640,000 units last month. The revised sales rate for October was 605,000 units, down from the previously stated 632,000. New home sales surged in the Midwest and West but fell in the Northeast and the densely populated South.

According to the National Association of Home Builders, 62% of builders used incentives to entice buyers in December, including providing mortgage rate buy-downs, paying points for buyers, and offering price reductions. Single-family housing starts and building permits fell to a 2-1/2-year low in November, while previously owned home sales fell for the 10th straight month, the longest such streak since 1999.

According to Freddie Mac data, the 30-year fixed mortgage rate surpassed 7% in October for the first time since 2002. The average rate on a 30-year fixed-rate mortgage dropped to 6.27% this week after vaulting above 7% a few months ago, which was the highest since 2002. The rate, however, is more than double what it was this time a year ago, data from mortgage finance agency Freddie Mac showed.

Mortgage rates will fall somewhat in December, and there will be a small burst of activity, but rates are expected to rise again in the new year. And don't expect rates to fall as quickly as they rose this year. The median new home price in November was $471,200, up 9.5% over the previous year. At the end of last month, there were 461,000 new homes on the market, down from 469,000 in October.

Houses under construction made up 62.9% of the inventory, with dwellings still to be built accounting for the remaining 23.2%. Completed houses made up 13.9% of the inventory, far less than the long-term average of 27%. At November's sales pace, it would take 8.6 months to clear the market supply, down from 9.3 months in October.

The months' supply is the ratio of houses for sale to houses sold. This statistic provides an indication of the size of the for-sale inventory in relation to the number of houses currently being sold. The months' supply indicates how long the current for-sale inventory would last given the current sales rate if no additional new houses were built.

The Federal Reserve's vigorous campaign of monetary policy tightening to slow the economy and manage inflation was having some desired effects on the housing market. A total housing market crash is improbable, however, while home values remain elevated and there is a severe dearth of previously owned properties.

new home sales
Source: U.S. Census Bureau

More New Home Sales Data & Forecast 2022 

In 2022, new-home sales are expected to plummet by 16%. Increased mortgage rates have forced many prospective purchasers to cancel contracts or postpone home purchases because they cannot afford the higher monthly payments. The increase in new-home inventories is assisting in slowing the price rise.

Privately owned housing starts in November were at a seasonally adjusted annual rate of 1,427,000, which is 0.5% below the revised October estimate of 1,434,000 and 16.4% below the November 2021 rate of 1,706,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

Single‐family housing starts last month were at a rate of 828,000, or 4.1% below the revised October figure of 863,000. The November rate for units in buildings with five units or more was 584,000. Both single-family starts and permits hit the lowest nonseasonally adjusted level since January 2019. As we head into 2023, the data shows roughly 75% of builders intend to slow starts further unless there is a notable and consistent uptick in demand.

The seasonally adjusted annual rate of housing units permitted by building permits in November was 1,342,000, 11.2% lower than the revised October rate of 1,512,000 and 22.4% lower than the November 2021 estimate of 1,729,000. Last month's single-family authorizations were 781,000, or 7.1% lower than the revised October total of 841,000. Authorizations for units in structures with five or more units occurred at a pace of 509,000.

The seasonally adjusted annual rate of house completions in November was 1,490,000, 10.8% higher than the revised October estimate of 1,345,000 and 6% higher than the November 2021 figure of 1,406,000. Last month, single-family home completions totaled 1,047,000, a 9.5% increase above the revised October rate of 956,000. The November rate for units in buildings of five or more units was 430,000.

New Home Sales Trend in 2022 [Previous Months]

New home sales in the United States rose by 7.5% to a seasonally adjusted annualized rate of 632K in October of 2022, beating market forecasts of 570K sales and defying the recent drawdown in housing demand as the Federal Reserve aggressively tightens monetary policy. Sales rose sharply in the South (16% to 399K) and in the Northeast (+45.7% to 51K), more than offsetting the decline in the Midwest (-34.2% to 50K).

The median price of new houses sold was $493,000, while the average sales price was $544,000. There were 470,000 houses left to sell, up 21.4% from one year ago and corresponding to 8.9 months of supply at the current sales rate. New home sales in the United States fell 10.9% to a seasonally adjusted annualized rate of 603K in September of 2022, after jumping by a downwardly revised 24.7% in August and compared with market forecasts of 585K.

Housing demand in the US has been sharply falling as the Federal Reserve is aggressively raising interest rates to combat the surge in inflation. Sales fell in the South (-20.2% to 356K) and the West (-0.7% to 135K) but rose in the Northeast (56% to 39K) and the Midwest (4.3% to 73K). The median sales price of new houses sold was $470,600, up 13.9% from a year ago and the average sales price was $517,700. There are 462,000 houses to sell, corresponding to 9.2 months of supply in inventory.

New home sales in the United States soared 28.8% from a month earlier to a 5-month high of 685K in August of 2022, and above market expectations of 500K. It was the biggest increase since June 2020 as sales rose in the Northeast (66.7%), the Midwest (16.7%), the South (29.4%), and the West (27.5%). The median sales price of new houses sold was $436,800, up 8% from a year ago, but the smallest increase since November 2020, and the average sales price was $521,800. There are 461,000 houses to sell, corresponding to 8.1 months of supply in inventory.

Sales of new single-family homes in the United States fell 12.6% month over month in July 2022, to a seasonally adjusted annualized rate of 511K, the lowest figure since January 2016 and considerably below the forecast of 575K, due to increased borrowing rates, prices, and a drop in demand. New single-family home sales in the United States reached a 6-and-a-half-year low in July.

New home sales in the United States shrank 8.1% from a month earlier to a seasonally adjusted annual rate of 590,000 in June of 2022, well below market expectations of 660,000. It is the lowest reading since April of 2020, as the housing market is cooling as rising mortgage and material costs hurt affordability. Sales fell in the West (-36.7%), the Northeast (-5.3%), and the South (-2%) but rose in the Midwest (42.3%).

The median sales price of new houses sold declined for a second month running to $402,400 but was still way above $374,700 a year earlier. The median sale price was $402,400, 7.4% higher than in June of 2021. There are 457,000 houses to sell, corresponding to 9.3 months of supply in inventory, compared to 8.4 months in May.

New home sales in the United States rose 10.7% from a month earlier to a seasonally adjusted annual rate of 696,000 in May of 2022, above market expectations of 588,000. Sales rose in the West (39.3%) and in the South (12.8%) but declined in the Northeast (-51.1%) and in the Midwest (-18.3%).

Despite the rebound in May, elevated house prices and mortgage rates of nearly 6% are likely to continue to hit sales in the next months. Meanwhile, the median sales price of new houses sold last month was $449,000, up 15% from the previous year, and the average sales price was $511,400. There are now 7.7 months of supply in inventory, compared to 8.3 months in April.

New home sales data is published monthly by the US Bureau of Census. The units displayed are in thousands and are the seasonally adjusted annual rate. Here is the regional breakdown for new home sales in the United States for the previous months. New Residential Sales data provides statistics on the sales of new privately-owned single-family residential structures in the United States.

Here's the region-wise tabular data for new home sales from October 2021 to 2022. The units displayed are in thousands and are the seasonally adjusted annual rate. The data estimates only include new single-family residential structures. Sales of multi-family units are excluded from these statistics.

NORTHEAST: Connecticut, Maine, Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont

MIDWEST: Illinois, Iowa, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska North Dakota Wisconsin South Dakota Ohio

SOUTH: West Virginia, Virginia, Texas, Tennessee, South Carolina, Oklahoma, North Carolina, Mississippi, Maryland, Louisiana, Kentucky, Georgia, Florida, Alabama, Delaware, District of Columbia, Arkansas

WEST: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

Sources

  • https://www.census.gov/
  • https://www.census.gov/construction/nrs/pdf/newressales.pdf
  • https://www.mortgagenewsdaily.com/data/new-home-sales

Housing Affordability 2022: Homeownership Still Unaffordable

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Over the last twelve months, national home values grew by around 13%, according to Zillow. The market was pushed by record-low borrowing rates in 2020 and 2021, as well as a supply constraint due to underbuilding. The enormous demand from first-time buyers is almost as important as the limited fresh supply. The present housing market is also being driven by extraordinarily favorable age demographic trends. Freddie Mac reports 18% more 25-34-year-olds than in 2006. This is a 6.6 million growth from 2006 to now.

The number of high-income renters who can afford to purchase and are of first-time homebuyer age has also increased. But the housing affordability crisis is worsening with rising prices and mortgage interest rates. According to NAR, the Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data. Housing Affordability Index data are provided by NAR solely for use as a reference.

When assessing affordability, your income, debts, and down payment are the most important variables. The amount of home you can afford also depends on the interest rate you receive, as a lower interest rate can drastically reduce your monthly mortgage payment. While your personal financial goals and spending habits can affect your capacity to finance a home, getting pre-approved for a mortgage can help you establish a reasonable housing budget.

According to Zillow, the housing affordability crisis is mounting, but buyers who can weather the storm have more time and options. If your income is 70,000 dollars, you can afford a house for up to $232,216. With a $20,000 down payment, your maximum monthly payment at a current interest rate (6.945%) would be $1,850. The interest rate is the national average from lenders quoting on Zillow for preliminary research purposes only.

Housing Affordability: Third Quarter of 2022

ATTOM, a leading national aggregator of real estate data for land and property data, has released its third-quarter 2022 U.S. Home Affordability Report, which indicates that median-priced single-family homes and condominiums remain less affordable in the third quarter of 2022 compared to historical averages in 99 percent of counties with sufficient data to analyze.

This is significantly higher than the 69 percent of counties that were historically less affordable in the third quarter of 2021 and is another peak hit during the eleven-year housing market boom in the United States. The third-quarter figure remains over the 28 percent mortgage lender threshold. It exceeds last year's 23.4 percent.

The present reduction in the share of salaries needed to finance the typical home nationwide marks the first quarterly gain in almost two years and comes as the median national single-family home price has taken an unusual third-quarter downturn.  The median value fell 3% from the second quarter of 2022 to $340,000, the first Spring-to-Summer drop since 2008.

In 574 of 581 counties evaluated during the third quarter of 2022, the median home price is less affordable than it was historically. The most recent figure represents an increase from 568 of the same set of counties in the second quarter of 2022, 398 in the third quarter of 2021, and 284, or less than half, two years earlier. The surge has persisted as the median national home price – despite quarterly declines – is now 10 percent higher than a year ago, although average annual wages across the nation have increased by only 6 percent.

Prices are still high, home-seller earnings are above 50%, and homeowner equity is rising nationwide. Homebuyers are pursuing a very restricted supply of houses. Demand has raised the national median home price faster than salary growth over the past year. But house sales are down as mortgage rates have progressively risen this year from just above 3 percent to nearly 6 percent for a 30-year loan, raising buyer costs. Higher loan rates, inflation, gasoline prices, and a falling stock market strain prospective homebuyers' budgets and threaten to derail or reverse an almost unstoppable climb in property values that began in 2012 when the market began recovering from the Great Recession.

Housing Affordability: Second Quarter of 2022

Here is the summary of Zillow's latest findings on the housing market report and affordability in the U.S.

  • Monthly payments on a typical mortgage are more than 75% higher than they were in June 2019.
  • Affordability challenges are tamping down the competition in formerly red-hot markets, causing steep drops in pending sales in places like San Jose, Seattle, and Salt Lake.
  • Typical U.S. rents have surpassed $2,000 a month for the first time, but growth is easing.

Homebuyers are scarcer than during the pandemic. Today's purchasers face substantial affordability barriers, but those that can or must still buy are benefiting from a more balanced market compared to 2021's pandemic-fueled real estate boom. They have more houses to explore and less chance of a bidding battle. Despite this early rebalancing, the market is still less buyer-friendly than pre-pandemic. The average monthly mortgage payment on a U.S. house is currently 62.3 percent higher than a year ago and 75.7 percent higher than in June 2019.

Affordability issues likely slow property value rise. Annual house value appreciation fell for the third consecutive month in June, to 19.8% from a record high of 20.9 in April. It still beats the 4.6% year-over-year rise in June 2019, before the epidemic. According to Zillow, the average U.S. house is worth $354,165. The monthly price rise fell from 1.6% in April to 1.2% in June (smoothed, seasonally adjusted). A raw monthly price rise of 0.8% predicts future decline.

San Jose, Seattle, San Francisco, and San Diego, all among the five most expensive major metro regions, saw house values decrease from May to June, as did Austin, where values have climbed the most during the epidemic. San Francisco's annual appreciation is 15.4% while Austin's is 25.2%. A strong surge in inventory and high listing price decreases lead to a deceleration in these major markets for the next several months.

The year-over-year inventory shortfall fell from 30.4% in January to 9.1% in June. Inventory is still down 46% since June 2019. San Francisco, Austin, Phoenix, and Seattle, the most expensive metros, have inventory levels closest to 2019 levels. This shows that competition is relaxing faster in these places than elsewhere in the U.S.

Unaffordable alternatives also delay sales. 12 of the 15 main metros with the highest month-over-month declines in pending sales are among the 15 most costly. San Jose (-24.3%), Seattle (-23.9%), and Salt Lake City saw the biggest reductions from May to June (-20.8 percent). 10 of the 15 big metros with the lowest monthly sales declines are among the 15 cheapest.

Buyers have somewhat more time to shop, compare, and consider possibilities. Listings go pending after seven days, so competitively priced properties still move quickly. At 14.8%, the percentage of properties with a price decrease is the largest since November 2019. Salt Lake City (24.1%), Sacramento (21.7%), and Phoenix (20.4%) had the most price reduction.

housing market report june 2022
Source: Zillow

 

Sources

  • https://www.zillow.com/research/june-2022-market-report-31239/
  • https://www.zillow.com/mortgage-calculator/house-affordability/
  • https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q3-2022-u-s-home-affordability-report/

Will the Phoenix Housing Market Crash in 2022?

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The Phoenix housing market has been on fire, driven by strong economic growth, pandemic-fueled demand, and a surge in investment activity that far surpasses the levels during the last housing boom. Once considered to be ground zero of the housing market collapse, Phoenix has orchestrated a dramatic turnaround in recent years and has considerably outpaced other markets such as Las Vegas, and Miami.

According to CoreLogic HPI, the large cities continued to experience price increases in June, with Phoenix leading the way at 26.1% year over year. Among large metro areas, three recorded monthly price gains of 20% or higher in June: Phoenix (26.1%), Las Vegas (24.3%), Miami (25.3%), and San Diego (20.9%).

Phoenix was one of the hardest hit housing markets during the bust, with home values declining 57% from 2006 through mid-2011. But since the middle of 2011, the housing conditions in Phoenix have markedly improved and prices have risen continuously. The Phoenix real estate market is the top-performing, not only in the Arizona real estate market but nationwide as well.

According to NeighborhoodScout.com as their data also shows that in the past ten years, Phoenix real estate appreciated by 265.52%. This amounts to an annual real estate appreciation of nearly 13.84%, which puts Phoenix in the top 10% nationally for real estate appreciation. During the latest twelve months, Phoenix's appreciation rate has been 26.59%, which is higher than appreciation rates in 96.53% of the cities and towns in the nation. In the latest quarter, the appreciation rate has been 3.48%, which annualizes to a rate of 14.68%.

According to recent Realtor.com research, the Phoenix housing market may soon shift to one that rewards buyers. According to the report, Arizona's capital city ranks third among metro regions with the highest rates of home price decline. In the Valley, 29.5% of listings have had their prices reduced. The current median list price for a property is $548,500. Previously, Phoenix was listed as the metro area selling the most homes in the country.

Reno, Nevada ranks #1 on the list, with a slightly greater percentage of 32.6% of listings receiving price reductions. Austin came in second with 32.4% of listings experiencing price reductions, while Anchorage, Alaska followed in fourth with 28.5%. Following Anchorage are Boise, Idaho, Ogden, Utah, Sacramento, California, Colorado Springs, Colorado, Evansville, Indiana, and Medford, Oregon, rounding out the top ten.

According to another report by Zillow, the average home value in metro Phoenix fell 2.8% from June to July, to $470,800. Despite the July drop, Phoenix-area homes are still valued about 70% more than they were in July 2019. And, as a result of rising prices and interest rates, the average mortgage payment has more than doubled in that time.

In Phoenix, property values are up 8% just this year. The Phoenix real estate market is cooling off. The change should make it easier for prospective homebuyers who can afford to enter the market. According to Zillow, Valley inventory climbed by 11.3% from June to July, while prices decreased on 28.8% of houses listed. There are more available homes, and buyers can negotiate lower costs.

Inventory is still quite low overall. Low inventory tends to create more competition among buyers, which has helped to increase prices. The reason we’re seeing inventory increase right now is that people aren’t buying homes, so homes are not selling and they’re staying on the market longer. However, fresh inventory is not entering the market in general, and we have all of these folks who want to buy. So, if those prices fall to a level that consumers can afford, you'll see people buying, and the prices will begin to rise again, putting pressure on the market.

After losing approximately 230,000 jobs from 2008 to late 2010 (approximately 12% of its workforce), the Phoenix metro has experienced 17 consecutive months of positive year-over-year job growth, with February's growth climbing to a 2.1% annual growth rate. The unemployment rate has also fallen sharply over the last year, dropping to a 3-year low of 7.8% from 8.8% in February of 2011. The local economy has had a boost from several big employers like Amazon.com and Intel who have begun hiring again. Other metros with large amounts of housing distress like Las Vegas and Riverside-San Bernardino lack the economic diversity that Phoenix has, resulting in a far more restrained economic recovery.

Phoenix is a seasonal market for “snowbirds” who flock to the Valley during the mild winter months and then return to their primary residence during the harsh summer season. This past winter has been the “perfect storm” for home sales in Phoenix with historically low-interest rates. The true test of Phoenix's housing market strength will be in the second half of 2022 amidst rising inflation and high borrowing costs. Will the Phoenix housing prices decline or not?

The above housing and economic considerations have made Phoenix one of the hottest housing markets in the country and have gone a long way in boosting demand for new homes in the area. However, we can't help but wonder what investors will do with their properties when they sense the next downturn has arrived. Stay tuned!

[Click here to see our current list of Phoenix investment property.]

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