CLEVELAND – The housing market in Ohio is on the rebound after a steep drop in prices during the recession that took hold in 2008. That economic decline was the result of Wall Street's bad bets on risky subprime mortgages. The burst of the housing bubble both here and abroad triggered the deepest economic downturn since the Great Depression.
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In Ohio, housing prices tumbled starting around 2007 and had not improved by the time Gov. John Kasich took office in 2011. In 2014, prices are climbing back to levels seen before the recession in much of the state as the overall economy has improved.
Here is a quick look at housing issues over the past four years as Kasich seeks re-election Nov. 4 in a campaign against Democrat Ed FitzGerald.
The Ohio Housing Finance Agency keeps close tabs on aspects of the state's housing market to include sales and rentals. Agency officials have gathered numbers that show the median price for homes over a 12-month period ending July 2014 was $103,000, compared with $84,000 over a 12-month period ending in July 2011.
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The state's urban counties experienced more modest increases. Prices in Franklin County (Columbus) increased 6.4 percent, while Hamilton County (Cincinnati) and Cuyahoga County (Cleveland) prices were up about 4 percent. That's the good news. The bad news is that sales volume is down appreciably from the market's peak in 2006 as credit and lending standards have tightened.
While demand for houses remains tepid compared with the boom years of 2005 and 2006, the rental market appears strong, especially in places like Columbus, which is enjoying robust growth, and in Appalachian counties experiencing a boom in oil and gas drilling. State officials say some people are having difficulty finding affordable rental housing as landlords raise prices that gas and oil workers can easily afford but that others cannot.
Housing affordability remains a problem for the working poor, however. The latest figures from the housing finance agency show that nearly half of renters in Ohio pay more than 30 percent of their income on housing costs and that a quarter pay more than 50 percent. Thirty percent is generally considered the standard for how much of someone's income should go toward housing.
Ohio was one of the Midwestern states hardest hit by the foreclosure crisis that began several years before the housing bubble fully burst in late 2007. Thanks to the large number of subprime loans and an epidemic of mortgage fraud, that crisis hit Cleveland and its inner-ring suburbs early and made it the poster child for vacancy and abandonment. Rural communities in Ohio also saw high rates of subprime lending and foreclosure.
Where the housing boom really skyrocketed was in states like Florida, California, Arizona and Nevada, where prices skyrocketed and housing became a commodity of sorts. It's also where prices fell the most.
While new construction has returned to healthy levels in those states, it has remained stagnant in Ohio, although areas in and around Columbus have seen a boost in construction of multi-family apartment units, which are much in demand there.
Housing has not been much of an issue on the campaign trail for Kasich or FitzGerald. A Kasich spokesman pointed out that five of the most affordable cities in the U.S. are in Ohio. (According to Forbes magazine, they are Cincinnati, Dayton, Akron, Toledo and Columbus.) The spokesman also said the state's real estate industry is optimistic about Ohio's housing future.
FitzGerald is the executive of Cuyahoga County, one of the hardest-hit places by the foreclosure crisis in the country. He counters that the state and Kasich's administration has not been tough enough on predatory lenders. He also criticized Kasich's tax policies, which have cut income and other type of taxes and made communities more reliant on property taxes, which he said makes homes less affordable in the long run.
Helen Hertz, of Cleveland Heights, has been a real estate agent for more than three decades. She has seen firsthand what has happened to the market in the wake of the recession and foreclosure crisis. Her core customer base — young doctors who come to Cleveland for their residencies — found themselves in tough spots when they went to sell their homes after the collapse of the market. Many had to bring money to the table at closing because they were underwater, meaning they owed more on their mortgages than the property was worth.
"They were borrowing money from family or scraping their savings to come up with the cash," Hertz said.
She had her own problems several years ago when she tried to refinance her house and received appraisals that were nearly half the value she believed her house was worth. Houses are selling, but it takes more work on the part of real estate agents along with buyers and sellers to get deals done, she said.
Jeff Joseph, of Russell Township, a suburb just outside of Cuyahoga County, said he didn't know what to expect when he put his elderly father's house on the market this fall. He said that he knew of other houses in the area that had taken a long time to sell, but that his father's house sold in a month at an acceptable price.
"We're quite pleased with the way it went," Joseph said.