Cleveland Leads the Housing Rebound

By Brian Louis and Kathleen M. Howley

Aug. 14 (Bloomberg) -- The good news in the worst housing slump since the Great Depression is that the market in Cleveland is recovering.

The Cleveland area led the nation for home price gains in April and May with an 18 percent jump in the lowest price tier of the S&P/Case-Shiller home price index after values fell to levels last seen in 2000. The median home price was $117,500 in the second quarter, 15 percent higher than the prior three months, the National Association of Realtors said in a report today.

A housing revival in this city of 438,000 on the shore of Lake Erie may portend deeper drops in U.S. markets. Prices for entry level homes in Cleveland had to tumble 37 percent from a September 2005 peak to an almost 11-year low in March before enticing first- time buyers. That may be a sign that U.S. markets with the biggest price increases during the 2000 to 2005 boom have much further to fall before stabilizing, said David Blitzer, chairman of Standard & Poor's Index Committee.

``The areas of the country that saw prices go through the roof and then fall into the basement won't be the first ones to see an upturn,'' Blitzer said in an interview. ``It's more likely to come in a place like Cleveland or other Midwestern cities that largely missed the boom.''

Cleveland never experienced the big home-price gains of its coastal counterparts such as New York or San Francisco. Gains were more modest as Cleveland, like other cities in the Midwest, saw jobs in steel, automotive and manufacturing shipped overseas.

Foreclosure Crisis

Prices in the Cleveland area rose an average of 3 percent a year from 2000 to 2005, according to S&P/Case-Shiller data. Prices in the metropolitan New York and Los Angeles areas gained 15 percent and 23 percent, respectively, in that period.

Now that Cleveland is starting to recover, it may be leading other areas of the country on their way to finding a housing bottom, said Robin Dubin, an economics professor at the Weatherhead School of Management at Case Western Reserve University in Cleveland.

``Cleveland was hit first with the foreclosure crisis,'' Dubin said. ``Other communities are just behind Cleveland and they will start to come out of it pretty soon.''

The May S&P/Case-Shiller index put Cleveland's highest priced homes, properties that sold for more than $182,000, back to 2003 prices, and the overall market back to 2002 levels.

Presently, there are 1,982 pending real estate sales in Cuyahoga County. The tide has turned, friends! Contact us to start your home search using MyRealLiving 2.0 today!