Is Cleveland dying?
Member since 2023 · 29 posts · 10 votes
Is Cleveland dying?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @James Wise:
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
Exactly all the rust belt cities that were built on steel and auto's have lost populaton over the decades just look at Detroit.. that does not mean the cities are dying.. It just means they are re configuring. And the existing inventory gets repurposed refurbished and put back into play. I have not looked closely but where I would bet there is a downturn and will continue is in new construction since so much of the Cleveland stock can still be bought for less than replacement costs even if the land was free.. this is a given in so much of the mid west deep south and rust belt. Its why investor flock there to buy these assets.. I just sold a nice tri plex there for 170k. No way no how could you replace it for 170k at todays building costs even in those markets were labor is somewhat cheaper.
20 Replies
- 3yJack KrusinskiBusiness MemberRealtor · Cleveland/Akron OH · Member since 2019 · 147 posts · 93 votes
Hi Cole,
Being an investor in Cleveland and having been born and raised in the area for the past several decades, Cleveland has seen growth and reinvention. To be clear, I am biased being an investor in the area and a Realtor. However, Cleveland has had significant economic diversification with development in healthcare, higher education, and technology sectors. Below are some examples. From a numbers perspective, Cleveland has seen over a 15% increase in rents, and the year to date has seen a 1% increase in home prices (the national average is -1%).
- Medical and Educational Growth: Cleveland is home to world-class institutions such as the Cleveland Clinic and Case Western Reserve University. These establishments attract a significant population of students, medical professionals, and researchers, and contribute significantly to the city's economy.
- Downtown Revitalization: Over the last decade, there's been a surge in revitalization efforts in Downtown Cleveland and several neighborhoods, leading to an increase in demand for residential and commercial real estate.
- Emerging Tech Hub: Cleveland is gradually establishing itself as a tech hub, with numerous tech startups and companies setting up their base in the city. This growth in the tech sector could potentially attract a younger, professional population looking for urban living.
- Opportunity Zones: Some parts of Cleveland have been designated as Opportunity Zones, which provide tax incentives for long-term investments. This initiative could spark further economic development and real estate growth in these areas.
- Infrastructure Projects: The city has been investing in infrastructure projects, such as public transit and the revitalization of public spaces, which can increase the attractiveness of the area.
- Overall, I continue to invest in the Cleveland area and have achieved both cash flow and appreciation. But there are pros and cons to every market, and Cleveland is no different.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes3y
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @James Wise:
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
Exactly all the rust belt cities that were built on steel and auto's have lost populaton over the decades just look at Detroit.. that does not mean the cities are dying.. It just means they are re configuring. And the existing inventory gets repurposed refurbished and put back into play. I have not looked closely but where I would bet there is a downturn and will continue is in new construction since so much of the Cleveland stock can still be bought for less than replacement costs even if the land was free.. this is a given in so much of the mid west deep south and rust belt. Its why investor flock there to buy these assets.. I just sold a nice tri plex there for 170k. No way no how could you replace it for 170k at todays building costs even in those markets were labor is somewhat cheaper. - Member since 2023 · 243 posts · 199 votes3y
Well, it is and it isn't.
Summary:
The population overall is decreasing but the city's investment is on a ridiculously sharp incline.
Detail:
From 2000 to 2010, the population had a 17% decline. From 2010 to 2020, the population fell 6% The population has been decreasing since the 1940s. Most of the decline is in the toughest areas like Glenville and Hough.So what is the "isn't" part? Downtown. It's population has increased by 40%. Why?
The last few mayors have been investing heavily into the city and I'm not talking tidbits here/there. In the past 7 years, they've implemented new housing communities by tearing down old areas. Downtown now has a large gathering area with an ice skating rink, a gambling casino, condos galore, shopping plazas and restaurants all around the Rock-n-Roll Hall of Fame, and even the flats now has a new design.
And that was just Downtown 2.0 where they are WIP on Downtown 3.0 now which looks serious.
I haven't even described all the work Cleveland Clinic has done, which is massive. Its ranked #2 in the US.
Forbes recently ranked Cleveland as one of the top 15 emerging downtown cities in the country.
Conclusion:
Is Cleveland dying? As you can tell, its just the opposite. Its not a city where the pop is going down and the city simply doesn't care.
The only thing you should be worried is the missed opportunity if you were just to look at the one statistic w/out diving deeper.
Caveats? (1) Know the area you are investing! Don't look at an internet posting w/ its price and say "ok". Research that specific area. Also, Homes used to appreciate ultra slowly but that has changed. (2) The mayor stated one of the biggest problems is outside investors buying the homes and letting them decline as they don't care (i.e., slumlords). If you buy, ensure things are up to-par, as I don't know what they're going to do to combat this. There are a ton of MFHs there so have at it!!
Sources:
Census data per community: https://planning.clevelandohio...
https://www.clevescene.com/new...
https://www.clevescene.com/new... Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
LOL I have been hearing about this BS population decline for 10 years, I dont buy it. I have seen tremendous growth. MASSIVE infrastructure, massive residential buildings, hotels, restaurants and more. Have you ever been there I assume no. Prices have doubled, tripled quadrupled and more. There is little to no inventory ,investors from around the world have been and are still buying in Cleveland and the burbs. As I posted many times, " sitting on the internet is a waste of time".
What does the internet say about East Cleveland, ? Runaway right. Well that too would be 100% incorrect. Try buying anything from just east of UC to the RTA on or off Euclid Ave, not going to happen, nothing for sale. I can get some you cant :)I have done about 500 deals out there with OOS and county cash buyers so know a thing or two. I just picked up 9 more doors over the last few weeks, A 7 UNIT in EAST Cleveland near the RTA. yep, and will buy as much as I can we know what's coming. Others are aware as well, this is why no inventory.
Is Cleveland dying, too funny, not even remotely. "A fracture of what it once was", HMM you really need to get off the internet and get real facts.
It's all about knowledge and your team.Quote from @Jay Hinrichs:
Quote from @James Wise:
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
Exactly all the rust belt cities that were built on steel and auto's have lost populaton over the decades just look at Detroit.. that does not mean the cities are dying.. It just means they are re configuring. And the existing inventory gets repurposed refurbished and put back into play. I have not looked closely but where I would bet there is a downturn and will continue is in new construction since so much of the Cleveland stock can still be bought for less than replacement costs even if the land was free.. this is a given in so much of the mid west deep south and rust belt. Its why investor flock there to buy these assets.. I just sold a nice tri plex there for 170k. No way no how could you replace it for 170k at todays building costs even in those markets were labor is somewhat cheaper.Great points!
Cleveland is not dying.....what is happening is families are moving to the suburbs for a better school system, since the one in Cleveland proper is not so great. Also, look at the all new construction that is happening in the area. If the city was dying, there wouldn't be any new construction going on.
It’s amazing how many cities had maximum population in the 50’s. I watched a video on it and from memory. Chicago, Detroit, Philadelphia, Baltimore, Minneapolis, and even Cleveland. All had their maximum population in the 1950’s and have been shrinking since then.
You could say that just because they live in the suburbs now and don’t count as the city. But as someone who spent 20 years in the suburbs of Minneapolis, back when it was safer and cleaner. That also means you don’t really go in to the city or spend any money there.
I assume it’s just houses being replaced by businesses? There’s certainly less green space. But I don’t think they’re dying just because they’re becoming smaller than the suburbs. They are the headquarters for more and more rules, regulations, permits, and expenses on anyone with a dollar. While, at the same time. Enforcing laws less and less on others. Once you give out the impression that some laws don’t matter, people start to wonder what other laws don’t matter.
Remember when nobody brought their dog on a plane or in to a restaurant? Then people saw a few other people doing and said, hey I love my dog, I should do that. And so on and so on.
- 3yBasit SiddiqiBusiness MemberAccountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
It doesn't matter what the past population declines have been.
The only thing is the future and whether there will continue to be population declines or a population increase.
Take a trip down to Cleveland and spend a week there and compare it to other cities that you are thinking about investing in.
Best of luck
Basit Siddiqi CPA4.880 Reviews - Member since 2023 · 29 posts · 10 votes3y
Quote from @Jack Krusinski:
Hi Cole,
Being an investor in Cleveland and having been born and raised in the area for the past several decades, Cleveland has seen growth and reinvention. To be clear, I am biased being an investor in the area and a Realtor. However, Cleveland has had significant economic diversification with development in healthcare, higher education, and technology sectors. Below are some examples. From a numbers perspective, Cleveland has seen over a 15% increase in rents, and the year to date has seen a 1% increase in home prices (the national average is -1%).
- Medical and Educational Growth: Cleveland is home to world-class institutions such as the Cleveland Clinic and Case Western Reserve University. These establishments attract a significant population of students, medical professionals, and researchers, and contribute significantly to the city's economy.
- Downtown Revitalization: Over the last decade, there's been a surge in revitalization efforts in Downtown Cleveland and several neighborhoods, leading to an increase in demand for residential and commercial real estate.
- Emerging Tech Hub: Cleveland is gradually establishing itself as a tech hub, with numerous tech startups and companies setting up their base in the city. This growth in the tech sector could potentially attract a younger, professional population looking for urban living.
- Opportunity Zones: Some parts of Cleveland have been designated as Opportunity Zones, which provide tax incentives for long-term investments. This initiative could spark further economic development and real estate growth in these areas.
- Infrastructure Projects: The city has been investing in infrastructure projects, such as public transit and the revitalization of public spaces, which can increase the attractiveness of the area.
- Overall, I continue to invest in the Cleveland area and have achieved both cash flow and appreciation. But there are pros and cons to every market, and Cleveland is no different.
Thanks for the pointers for where to look for specifics in the Cleveland market. Good insights!
- Member since 2023 · 29 posts · 10 votes3y
Quote from @James Wise:
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
But what are the implications of it? You live there, I take it. What is the prospect of its sustainability for investors?
- Member since 2023 · 29 posts · 10 votes3y
Quote from @Todd Jones:
Well, it is and it isn't.
Summary:
The population overall is decreasing but the city's investment is on a ridiculously sharp incline.
Detail:
From 2000 to 2010, the population had a 17% decline. From 2010 to 2020, the population fell 6% The population has been decreasing since the 1940s. Most of the decline is in the toughest areas like Glenville and Hough.So what is the "isn't" part? Downtown. It's population has increased by 40%. Why?
The last few mayors have been investing heavily into the city and I'm not talking tidbits here/there. In the past 7 years, they've implemented new housing communities by tearing down old areas. Downtown now has a large gathering area with an ice skating rink, a gambling casino, condos galore, shopping plazas and restaurants all around the Rock-n-Roll Hall of Fame, and even the flats now has a new design.
And that was just Downtown 2.0 where they are WIP on Downtown 3.0 now which looks serious.
I haven't even described all the work Cleveland Clinic has done, which is massive. Its ranked #2 in the US.
Forbes recently ranked Cleveland as one of the top 15 emerging downtown cities in the country.
Conclusion:
Is Cleveland dying? As you can tell, its just the opposite. Its not a city where the pop is going down and the city simply doesn't care.
The only thing you should be worried is the missed opportunity if you were just to look at the one statistic w/out diving deeper.
Caveats? (1) Know the area you are investing! Don't look at an internet posting w/ its price and say "ok". Research that specific area. Also, Homes used to appreciate ultra slowly but that has changed. (2) The mayor stated one of the biggest problems is outside investors buying the homes and letting them decline as they don't care (i.e., slumlords). If you buy, ensure things are up to-par, as I don't know what they're going to do to combat this. There are a ton of MFHs there so have at it!!
Sources:
Census data per community: https://planning.clevelandohio...
https://www.clevescene.com/new...
https://www.clevescene.com/new...Excellent insight. Thanks for the resources!
It ranked 4th in the country in 2019 by number of people lost, 9Th by percent of people lost. They lost another 1.1% in 2022 alone. So they’re definitely still shrinking. The question is are they going to bulldoze those empty houses or are values going to drop? You can’t have less people and rising prices unless you’re destroying inventory. Especially if anyone is still building new homes.
They’ve gone from over 900k to under 375k, that’s a big drop. They have zero eras of gaining population in 70 years. I’m guessing the draw of small, 70 year old homes with small electrical panels, lead paint, asbestos, maybe a single car garage, and single pane windows in a frigid climate with high taxes is losing some of its appeal.
As long as the city has cut its budget more than 50% then the tax burden per citizen won’t skyrocket. Especially if they get hit by the commercial loan apocalypse.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes3y
Quote from @Cole Puterbaugh:
Quote from @James Wise:
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
More or less, this is every larger city in the Midwest.
But what are the implications of it? You live there, I take it. What is the prospect of its sustainability for investors?
Having sold $200M+ in Ohio rental properties, I can tell you that 99.9% of the BP audience, as well as 99.9% of the out of state investors buying cash flow properties in places like Cleveland, would be so much better served to stop wasting energy thinking about the macro while ignoring the micro.
- Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes3y
People are investing in Cleveland the way I invested in South Bend and Mishawaka Indiana 15 years ago. You do it because you have to. It's the price point where you can enter this business.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Cole Puterbaugh:
Looking at MFRs in Cleveland and suburban areas, but I'm super concerned with population decline. Some suburban communities are pretty stable, but generally, Cleveland is a fraction of what it once was. What are the caveats to investing there, or is it just a no-go altogether?
Population decline is not a huge factor. Better indicator would be job and wage increase. California keeps having population decline while job demand increases, so there's that.
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes3y
Ever since Lebron left the Cavaliers....
Job and wage increase data:
U.S. news:Cleveland's unemployment rate is higher than the national rate. Meanwhile, the average annual salary of a Clevelander is lower than that of people in nearby metro areas like Chicago. Still, the area's low cost of living makes the lower salary manageable.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Bill B.:
It’s amazing how many cities had maximum population in the 50’s. I watched a video on it and from memory. Chicago, Detroit, Philadelphia, Baltimore, Minneapolis, and even Cleveland. All had their maximum population in the 1950’s and have been shrinking since then.
You could say that just because they live in the suburbs now and don’t count as the city. But as someone who spent 20 years in the suburbs of Minneapolis, back when it was safer and cleaner. That also means you don’t really go in to the city or spend any money there.
I assume it’s just houses being replaced by businesses? There’s certainly less green space. But I don’t think they’re dying just because they’re becoming smaller than the suburbs. They are the headquarters for more and more rules, regulations, permits, and expenses on anyone with a dollar. While, at the same time. Enforcing laws less and less on others. Once you give out the impression that some laws don’t matter, people start to wonder what other laws don’t matter.
Remember when nobody brought their dog on a plane or in to a restaurant? Then people saw a few other people doing and said, hey I love my dog, I should do that. And so on and so on.
For Twin Cities / Minneapolis data strongly shows pre-covid there was an era of "Urban Cool" that was short lived, and there is a very strong full fledged "Suburb Rush" back on in full force. Which was the same thing that happened post 40's.
Since the 50's the population of Twin Cities has more than TRIPPLED. Well over 3m now. In same time yeah, Minneapolis population went down.
Nowadays it's hard to know where Minneapolis ends and Saint Paul starts, it's just one giant concrete oval, of near a million DOCUMENTED residents (those who know TC know documented vs not is a BIG difference, probably add at least 10% for undocumented). It's just too dang packed.
- Member since 2023 · 29 posts · 10 votes3y
Quote from @Bill B.:
It ranked 4th in the country in 2019 by number of people lost, 9Th by percent of people lost. They lost another 1.1% in 2022 alone. So they’re definitely still shrinking. The question is are they going to bulldoze those empty houses or are values going to drop? You can’t have less people and rising prices unless you’re destroying inventory. Especially if anyone is still building new homes.
They’ve gone from over 900k to under 375k, that’s a big drop. They have zero eras of gaining population in 70 years. I’m guessing the draw of small, 70 year old homes with small electrical panels, lead paint, asbestos, maybe a single car garage, and single pane windows in a frigid climate with high taxes is losing some of its appeal.
As long as the city has cut its budget more than 50% then the tax burden per citizen won’t skyrocket. Especially if they get hit by the commercial loan apocalypse.
Some RE areas are bearing the burden via high property taxes. Cuyahoga county has some of the most unappealing property taxes in the region.
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