Stable Economy & Market Growth
Home to eight Fortune 500 companies, Cleveland is a major hub for biomedical, healthcare and technology companies offering growing employment opportunities for residents at all educational and skill levels. In particular, the healthcare sector is a strong market driver, including a $1B expansion of MetroHealth Hospital on Cleveland’s West Side and recent #1 ranking of Cleveland Clinic by U.S. News and World Report for cardiology and heart surgery hospitals. Area startups are luring talent from Boston, Austin, and the Silicon Valley, centered around major redevelopment and reinvestment in the urban core. Recognizing the increasing success of this underdog city, Forbes ranked Cleveland as “America’s Hottest City” in 2016. Whereas across the country in high cost cities average rents are falling, Cleveland shot to #1 in the country for rent growth. Cleveland follows only Phoenix, Seattle and Minneapolis for highest growth rate in home prices, coming in #4 in the country in home price appreciation, according to the 20-city S&P CoreLogic Case-Shiller Index.
Low Barrier to Entry
Despite increasing strength of local real estate market conditions, Cleveland remains a relatively inexpensive housing market. The median home value in the Cleveland Metro area is $142,282, well below the national median price of $248,857 and California median of $578,267. GoodRents acquires and stabilizes single family and duplex properties on Cleveland’s West Side for approximately $50,000-$75,000. Lower price points mean lower risk and greater ability to meet debt obligations through other sources in the unlikely event of a nationwide mortgage or rental crisis. Average monthly rents are higher than other markets with similarly priced homes, making Cleveland’s price-to-rent ratio attractive for buy-and-hold investments, and Forbes named Cleveland one of the “Top Ten Cities For Investing Considering Risk Versus Reward” based on low-volatility in housing prices compared to returns.
Legacy of Racism & Exclusion
Like all American cities, Black residents have been systematically excluded from homeownership and housing opportunities due to racist lending, zoning, and housing policies which persist to this day. Cleveland had the third-highest rate of home foreclosures for Black homeowners between 2007 and 2015 – homes in a Black community were 3.4 times more likely have been foreclosed than homes in a White community. And the problem is getting worse, not better: Black homeownership rate in Cleveland has dropped 1.2% between 2015 and 2018, with a homeownership rate at 34.3% – half the rate of homeownership among White Clevelanders and the 4th largest gap between Black and non-Black homeownership rates after Minneapolis, Pittsburgh and Milwaukee. Barriers to capital access are preventing qualified Black residents from becoming homeowners – according to Zillow, 20.9% of Black borrowers were turned down for a conventional loan, compared to just 8.1% of White borrowers nationally in 2016 — a gap that has increased 25% since the mid 1990s. GoodRents aims to intentionally address this legacy of racism & exclusion.