Located on the shores of Lake Erie, Cleveland boasts a population of 383,331 and is the second largest city in Ohio. Trailing in size to only Ohio’s capital, Columbus, “The Forest City” has long been known for being one of the most affordable metro areas in the United States, making it an attractive place for both individuals and families to settle.
The largest employers in the Cleveland metro area reside within the healthcare, retail, and manufacturing industries. Most notably, Cleveland Clinic- a world renowned hospital and healthcare facility is the largest employer in the entire state, with nearly 75,000 employees in the area.
Investors have been looking to cash in on Cleveland
Cleveland boasts a median home sale price of $113,750 and has been a haven of affordability in the midwest. However, that affordability that made the city one of the most desirable places to live in the region has also attracted real estate investors from across the country looking to capitalize on Cleveland’s affordability and appeal. Currently, 38.6% of homes are selling above their listed prices.
In 2021, 25% of homes sold were bought by investors – buyers that have purchased a home but do not list it as their primary residence. This percentage has more than doubled from 12% in 2015, displaying a drastic shift in investor sentiment regarding Cleveland. With low price points, returns on investment are some of the highest in the country, making it a very attractive market for speculators interested in the single family home space and more difficult for families looking for a place to call home.
Historic lows in inventory have driven prices up
Perhaps the most logical cause for this home price appreciation is the lack of inventory. Single family housing inventory within Cleveland have hit historic lows as the market remains extremely competitive and new construction has not kept pace with demand. As of March 2022, the Federal Reserve Economic Data center reports there were currently only 1,789 homes available for sale in the Cleveland MSA. This is the lowest inventory level reported by the Federal Reserve so far in the 21st century.
Another reason for the appreciation is the amount of investors putting money into the Cleveland market. With investor activity picking up over the past few years, competition for homes at the lower price points has increased significantly. As investors look to enjoy high rates of return, they are buying a significant number of affordable homes at price points individuals and families are searching for.
Affordable neighborhoods such as Garfield Heights, East Cleveland, and South Euclid received the most attention from investors, with median home prices under $100,000. However, prices are beginning to rise considerably in those areas – burdening working and middle class families even further.
Over the last several years, traditional buyers and investors both took advantage of the friendly interest rates and low costs of capital. Throughout 2021, interest rates on a 30 year mortgage remained well below 3.5%, encouraging home buying activity. Now, with rates rising above 5% for a standard 30 year mortgage, the cost of capital to purchase a home is soaring, making it even more difficult for traditional, first-time home buyers to find the home of their dreams.
With Divvy, all-cash offers give families the opportunity to compete in a competitive market
In a hyper-competitive housing market, presenting an offer with the strongest terms is more important than ever before. Cash offers, unaccompanied by appraisal contingencies, are 4x more likely to be accepted by sellers than the traditional finance offer.
At Divvy, our offers are designed to help us stand out from the rest of the competition.
Every offer has the following terms:
- 100% Cash
- No Appraisal Contingency
- Closing as quickly as 2 weeks
- Waived Option Period on eligible homes
Since the beginning of 2022, Divvy customers have won over 60% of offers that have been extended. This means that 6 out of 10 customers are winning their first offer, which is well above the market average in this competitive environment.
Want to learn more about how Divvy can help you secure your next home? Apply here and get your journey to homeownership started with Divvy.