Cleveland Population Decline... Why?

Austin, TX · Member since 2016 · 160 posts · 39 votes

We all know Cleveland Population is Declining every year. I hear a lot of reasons, but other than jobs as being the main reason, I cannot seem to find other reasons that make it reasonable for the declinning population.

There are a lot of metros with high unemployment and yet the properties are appreciating greatly (EX: Fresno, CA, Bakersfield, CA).

With such high unemployment rate in Fresno, you would still be able to see an increase in population. Although I strongly believe in the fact that job will significantly impact the population, but after seeing Fresno as an example, I think jobs are not only source nor the true source of population decline. What do you think the reason that may contribute to the decline population?

Interesting population graph that I see here:

Although this is not a great indicator that "population is moving to Columbus", but those curves really made me wonder what is happening.

To local Clevelanders, tell me what you think of the reason of decline population?

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Ryan Evans

Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes

Gotta love threads like this that scare people away from Cleveland and leave the great deals for the rest of us! Amazon is a lot smarter than I am and they're investing a couple hundred million in the area my properties are so I think I'll stick it out there. If the city dies off in 10 years, at least the properties you buy there will pay for themselves in 5 years haha.

@James Hunt you mean major conferences like the 2016 RNC?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Duriel Taylor I am not in that business I would check with some of the local brokers.. @James Wise owns a large firm there he may be too busy for you himself but can probably send you to one of his agents who can help U
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Duriel Taylor
Realtor · FL · Member since 2013 · 372 posts · 83 votes
8y
Jay Hinrichs Thank you for your prompt feedback. I will reach out to the firm you mentioned. Enjoy your evening. Regards,
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Kyle Schlosser
Specialist · Louisville, KY · Member since 2017 · 166 posts · 154 votes
8y
I'm baffled by the amount of traction this thread got. I grew up in the Cleveland area and my family is still there. It is pocketed...some areas are war zones, some are pretty middle class and some areas (such as some of the western suburbs) are bonkers hot sub markets...multiple offers within days of listing on SFRs. Definitely a city to know the sub markets...and watch the taxes...
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Albert L.
Investor · Temple City, CA · Member since 2016 · 47 posts · 11 votes
8y
Originally posted by @Jay Hinrichs:

Originally posted by @Federico Gutierrez:
So @Helen Zhang you going to invest in Cleveland or keep looking for reasons not to?

Cause I deal with many investors that look at numbers but find every excuse under the sun to not buy and then say "I can't find no deals"
Cleveland is awash in rental deals the whole metro area I was there in June I think to spend 5 hours.. I liked what I saw met with my Vendors realtor and PM.. really liked them.. green lighted it.. and just off MLS etc we are buying at least 5 a month and ratcheting up as labor allows we are not capital restrained in that market.. tax's are high and you have that POS stupidity which may or may not be stupid depending on what side of the fence your on on that one.. .. but for a high volume gig with plenty of renters and plenty of inventory Cleveland metro fits the bill for any size wallet.. you can buy hoodies or you can buy A quality and anything in between.. Next time I come back I will spend more than 5 hours.. I had a meeting with the owners of SMartland they have a nice gig going .. We are not doing anything as I tend to fund more of start up type enterprises than mature companies like them. AS one who works in all the big markets currently that are quote un quote cash flow markets.. Except Memphis and ST Louis these markets are pretty interchangeable.. and all this worry about major financial rehab etc.. does not really filter down to the BP I want to own a few rental house's investor.. they are not developers looking to do massive deals in the inner city areas.. or new construction.. they just want to buy a rental house.. Not that complicated Jim and I often talk about that its just a man or women a house and dog.. well not a dog a tenant.. you know what I mean.. to get in to the macro and micro economics of any of these big cities simply does not filter down to the average tenant who is just living their life out.. they are usually born and raised there and are not going anywhere no matter what business moves in or moves out.. UNLESS its a Detroit situation which is unique in America these days.
Curious what's unique about Memphis and St Louis?
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Rahul Bhatt
Fremont, CA · Member since 2015 · 289 posts · 63 votes
8y
Lot of good point raised I will add my few cents I am doing investment and research in the West Cleveland area. I think in suburbs vacancy rate is decreasing. I know parma and Parma heights for sure.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@James Wise , I appreciate that you have been actively responding to most of my posts, and I am glad that the information that you are providing me matches to the picture that I have painted in my mind about Cleveland. I am not seeking for Cleveland Suburbs, as the rent ratio that I will be receiving from Cleveland Suburbs are really no different to many other suburbs from Texas or California that I already own. I am seeking for exactly the B & C neighborhood in Cleveland, and I care very much about the rental culture. I want to know what kind of tenants I should be targeting, and what behavior that I should expect my tenants to have. And thank you for making contributions on my Cleveland Rental Culture post.
@Jay Hinrichs , While most of the investors here are mom&pop and def not 200mil investment, I still believe that many (or most) of us here are at least 7 figure investments. Due to the fact that I am seeking for B/C neighborhood, there is no way I will just buy one with 1031 exchange. Just like any business owners, when you scale up, you must be sure that you are making the right business decisions. I get what you meant that you don't think macro big data matters, and I would agree with you that big data may only give us the right direction for investment. It is the small data that makes income. You can always make money off real estate even if you choose to go against the big data. But why would we want to take that risk? why not try get both of your big data right, and get the small data to confirm your big data and feel confident on investment?
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Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
8y
Originally posted by @Ryan Arth:

The decline due to the de-industrialization of Cleveland has already been fully realized. The same as the river catching fire, the country at large remembers stereotypes, even if they were twenty years ago.
Half of the city at this point doesn't remember either of these time periods.
The city is evolving and has a more diversified employment base than it once had, but that doesn't make for good soundbytes. We do still have an industrial sector, it is just less than it once was. We now have a much larger medical sector than we once did, but people in Colorado or anywhere else don't think of Cleveland as medical. They think Browns, steel, etc. While this doesn't exactly matter, it may potentially keep young people from moving to the area due to negative stereotypes.
Unfortunately we also have leadership issues here that hold back the potential. A business (and a City) can normally only grow so large from within, at some point it makes sense to bring in people who know how to take things to the next level.
Our mayor was just talking yesterday in a debate about what should be done to combat gentrification...
Combat capital investment by people who are risking their money on a belief in improving areas?
Similar to Pittsburgh in a way. Many still think of steel, industrial but they have diversified their economy and now I don't think there are any steel mills that actually operate within the city.
The Mayor of Cleveland talking about combating gentrification would worry me. 'Fighting gentrification' seems to be a hot button/trendy type issue these days across the country.
Apparently Detroit,MI is fighting gentrification too...I didn't realize gentrification was an 'issue' in Detroit..
https://nextcity.org/daily/entry/detroit-inclusion...
Looking at housing prices in Detroit and Cleveland I really don't think they have an affordable housing 'crisis'.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@Joseph M. totally agrees to the fact that gentrification should "naturally" happens in a desirable location within a short distance from downtown in high-density cities.
Interestingly, there is movement on Cleveland in terms of gentrification as there seems to be a small spike in terms of Cleveland downtown population. Here is Cleveland's gentrification map: http://www.governing.com/gov-data/cleveland-gentri...
I think the gentrification may trigger affordable housing "crisis", not the other way around. The high-density population with millennials who wants to live closer to downtown will trigger gentrification.
P.S. I don't have enough funds to bet on gentrification. This is just for the sake of discussion.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Albert L. the big turn key players have Memphis pretty well covered and I just don't have clients there anymore.. it no other reason than that.. I do think you have to watch for double taxation.
and I have had bad experinces with trashed house's I St. Louis and or values not holding.
@Helen Zhang if your looking for areas of the mid west that have west coast up side look no farther than fountain square in Indy or Bates Hendrix in INdy.. I think If you look at those areas this is what I am thinking your looking for.. I did about 30 projects in those areas last year.. there is no other area of the country I have seen were you can buy a 50k rehab job.. on the same block were you can do a 260k retail exit.. and or build a new home that will sell for 300 to 450k. all on the same block and or a rental at 100 to 120k that hits 1% with INdy's famously low tax rates.. Its not supposition or speculation I have done it all and continue to do it all in that particular market.
Although I entered Cleveland last june and I think we are surpassing deal number 20 there but these are your vanilla buy and holds.. we have had no problem selling them to investors they are sold before they are done.. cash flow numbers work as good if not better there than in say Memphis or St. Louis but neighborhoods seem to be a little less crime affected than both those cities.. at least at the price points we are at.... takes no real skill to buy rentals there just go drive around make a few offers and close on the.. If I can do that in 5 hours.. you all can spend your days researching and do it as well.. no biggee. there is money in each of these markets.. I just would caution on anything inner Detriot. but even outer Detroit well out of the hoodies is a fine place to invest for cash flow as well.
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Ryan Arth
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
8y
@Joseph M. To be clear, the mayor was led into that comment about gentrification during a debate. The interviewer said "what are you going to do to combat gentrification?" The man isn't going to say "nothing". He isn't the best in those settings, but only 10% of voters in the city showed to the primary, so nothing changing there.
I was pointing it out simply as a broad stroke inhibitor to growth due to a scarcity mindset.
On BP, which has a national audience, sometimes the nuance of these discussions paints a poor picture of reality. There are 400K people in the city, but 2M in the area. The area isn't dying, but you aren't getting oil area growth here either.
People on here discussing the particulars of sub 75K neighborhoods make others believe that is the majority of the city, when in reality the fact is simply that those were the neighborhoods that met those out of state investor's budget and required return criteria. And most likely they were buying retail at those price points and trying to eek out a return.
These areas and long term growth beyond the inflation rate would only coincide in a full rising tide scenario. This isn't going to be the case in the near future, but that doesn't mean that there isn't a model that works within the parameters that exist.
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Ryan Evans
Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes
8y
That's super interesting that the city would be opposing gentrification. I mean, over gentrification can cause housing issues like out on the west coast. But I'd think that's the least of concerns in the city. I think some folks are referring to "gentrification" and "stimulate the economy so we don't have to bulldoze blighted houses every day," in the same context. Though, they're obviously very different things.
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Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
8y
@Ryan Arth , Yeah I could see how he could be in a tight spot being asked that question. Of course gentrification pretty much always means rents and housing costs will go higher but it also pretty much always results in lower crime rates especially violent crime. I've seen this in many neighborhoods in Los Angeles..but also heard the same for other cities across the U.S.
L.A has rent control that covers most multi family but now there is talk from the Mayor of wanting to expand it to cover new structures. It's kind of ironic because the cities with the strongest rent control laws ; L.A,SF, NYC are all the most unaffordable cities in America.
Hopefully they don't end up enacting rent control in Cleveland, I think that would be a big mistake.
I hear you about people thinking Cleveland is all sub $75,000 properties. I know that's definitely not the case but of course those neighborhoods are most attractive to out of state investors.
I've seen some of the new developments and they definately aren't cheap at over $500,000 a unit.
https://www.redfin.com/OH/Cleveland/3116-Vine-Ct-4...
What is interesting is that there are actually very low priced properties right around these properties too which is something you don't see in L.A. Here the base at low end is probably going to be $450,000+ that's for a rough house in the hood.
The hood here isn't really a great value because for say $600,000 or so you can get a home in a much nicer and safer area.
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Ryan Arth
Developer · Cleveland / Akron, OH · Member since 2008 · 922 posts · 399 votes
8y
@Ryan Evans The City still has 5,000 homes to be razed. They just appropriated more funds, specifically targeting those within 1,000ft of a school.
We don’t have to worry about gentrification producing an affordable housing crisis, the displaced folks have plenty of options on housing, normally less than ten blocks from wherever they lived.
There is no shortage of available housing within the city limits.
@Joseph M. You don’t see that in those rehabbed areas here because the housing isn’t scarce in general, though improved housing might be.
The places where people have invested in improving the housing stock within the city just gets pushed a house/block at a time into unimproved areas where they can hopefully force some margin into the situation if others follow or they land an exit buyer.
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Account Closed
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
8y
I have a relative that just moved back from Cleveland. He is a MD. He had a contract to work there for two years. While he was there he got a great offer at the Cleveland Clinic which he rejected.
He and his wife said the same things. The weather is "unacceptable" and Cleveland is a city on the decline.
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Jack Martin
Lender · San Clemente, CA · Member since 2017 · 74 posts · 35 votes
8y
Your comments make more sense than any I have read on this thread, Joe, I love the cash flows in CLE, but every area around that area has seen a steady decline; that is the bottom line, unless something drastically changes, like 70 degree temps all year around, and tech campuses abounding, I think we will see a continuous decline in property values for both SFRs and Multi-family. As an out of state investor, I do see better opportunities in the south; I believe I am too late for Austin, but there are plenty of other choices, how about you? Where are you looking?
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Joe Scaparra
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
8y
@Jack Martin Investing in Austin is not the sure thing like it was 3-5 years ago for sure. However, as long as the economy continues on the path it is, Austin remains a viable option. In Texas, we are generally not accustom to RE appreciation like you in CA. For most of us to solely bet on appreciation is mighty risky for us. We like the cash flow as it is good, but man that appreciation is icing on the cake! The problem I'm experiencing now is I can't find the deals I was finding just 2 years ago. Nonetheless, deals still do exist but they are certainly harder to find and when they are found you have absolutely no time to hesitate on it. Along with appreciation the rents have sky rocketed as well. This is causing the lower income to have to migrate out of Austin just to find acceptable rents.
It appears that the appreciation in Austin in certain areas can still go higher, but to find 1% cash flow deals is next to impossible in the city limits. To put it in perspective, my son just closed on a duplex last week in North Austin, 11101 Renel. Bought it for 255k and existing rents were $750 and $800. Rents were out of wack and there is about 7-8k needed to get rents to $1100/unit. That still is not 1%, but my son wanted it as it is close to Amazon and Facebook and he thinks that that area still has a lot of growth in appreciation, not only in price but rents too. At $1100/unit he will still be positive cash flow, so I think he will be fine and his rents will still have room to grow.
I have been buying in Bryan TX, home to Blinn College and Texas A&M. I'm a graduate of A&M so I go to all the home football games. Its about 2 hours from Austin and I am still finding good value there. If you look to the North of Austin, like Georgetown, Jarrell, Belton and Temple you can find good value. If you look North of Dallas towards the Denton area you can find good value. Stay close to HWY 35 and I think you will do fine. I love investing in Texas and duplexes.
Duplex investing in Texas abounds. Most communities have them. When you buy them you get both sides, the entire building. I only make that clarification for my friends from out of state either to the west or north as many still think you only get one side. However, that being said that too is changing. I think people from CA are figuring out that if we condo out the duplexes we can get more money. That seems to be true. The nice thing about duplexes here in Texas, most are individually metered for all utilities including water. I like that a lot. Happy Hunting! Joe
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Hau N.
CA · Member since 2017 · 153 posts · 74 votes
8y
Originally posted by @Helen Zhang:

@Andrea Hauserman , it is great to get a local perspective.
It make total sense that job is the reason, and there should be a strong correlation between jobs and population.
Here is some interesting data:
1. Cleveland unemployment rate: 7.2%, and population decline 2.8%
2. Fresno's unemployment rate: 9.5%, and population increased 5.2%
3. Yuma's unemployment rate: 8.5%, and population increased 3.3%
Even higher unemployment rate cities have population increase, so exactly what is wrong with Cleveland that causes population decline?
I live in Clovis, CA, right next to Fresno, CA. The two cities are basically one. You wouldn't know crossing the border between the two cities if you're not local. Either way, Clovis population growth has increased from low 80K to 106K now in 12 years. Unemployment is about mid 6% in Clovis. I don't know if the statistic above is for Fresno county or city. If it's county, then it breaking the numbers down further will show you a different picture.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@Joe Scaparra I stated on my profile that I live in Alhambra, but I actually live in Austin. So I agree with you are saying about Texas.
The thing is... I can't fully agree to what it is going to be like in Cleveland yet as I have never lived there. Before I invested in Texas (I actually invested in Texas before moving to Austin), I had this ugly imagination of Texas that if I were to invest in rentals, no one would live there. It was absolutely wrong. In fact, discovering Texas to be a great rental place made me felt like Columbus discovering America. Now Cleveland could be a brand new "America" that I haven't got a chance to discover.
I remembered that both you and I had a discussion with someone who is heavily interested in Bay Area (who probably just never take a look at outside world) on a different thread. And I don't want to be that person who never gets to look at the outside world =P
@Hau N. Clovis is considered as a different city. From an outsider's perspective (and I might be wrong of course), Clovis looks like a suburb of Clovis. For July, 2017, Clovis' unemployment rate is 6.9%, and Fresno's unemployment rate is 9.4%. You can google these information via google by type in "fresno, ca unemployment rate".
My point is that I'm not convinced that employment rate is heavily impacting the decline of population. There has to be more than just "no jobs" for Cleveland's population drop.
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Joe Scaparra
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
8y
@Helen Zhang I am not here to say why the population is declining in Cleveland because we can discuss that till the cows come home. For me as an investor I just need to know if the population is declining and is it in a long term trend which I believe it is in Cleveland. So why try to catch a falling knife, until a turnaround happens there are better places to invest, unless you are local and you feel you have some insights to areas that will be profitable long term.
My goal with investment real estate is CASH FLOW to fund my retirement. So that makes me a buy and hold investor and I like that. Real Estate and business in general still follow sound economic principals. One of those in real estate is a steady or growing population.
I always have a wondering eye as to where I should be investing and while there are opportunities outside of Texas, I still see plenty of opportunity in Texas. People are flocking here to invest so, for me, I see no current need to go outside Texas.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@Joe Scaparra do you find this conversation similar to what we had before when we were trying to inform the person who only invest in bay area? He doesnt know what texas is like and the awesome profit margins that we have here, and thats his loss.
Now we are having the exact same conversations as you on texas and I am on Ohio except that neither one of us knows what awesome profit margins in Cleveland.
I disagree that it is not important to know the reason for population decline. What if the reason is because old people are dying fast? Or becauce less suburbs are being claimed as part of Cleveland? Imo, there is no good reason to not know more.
I strongly believe that there are reasons why investors are still investing there. I am glad that I beat most of the californians to invest in texas, and now if Cleveland is a great place for investment, I want to get there before everyone else gets there. I get it that u r use to ur area, and indeed local knowledge is powerful, but I do not really want to be the person that you and I both talked to previously on forum who makes Ok profit and stops there because he doesnt know there are places that are better than what he knows.
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Joe Scaparra
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
8y
Ok Helen but Cleveland is not the next Austin. Yeah you can try and figure it out, I certainly have my reasons that the population is declining, but the fact remains Cleveland has been in a long term population decline/stagnation. Yes the rental market in areas might be good because no one wants to buy. Long term those areas are going to be risky to own, especially if your out of town. This is not rocket science. Cleveland is not any community in Texas. When I run out of GREAT deals in Texas, I will look out of state, but Ohio won't be one of them.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@Joe Scaparra I think the word good is relative. The same way you believe that Cleveland is not going to become the next Austin, I believe Austin is not going to become the next Bay Area. But I chose to invest in Austin because of numbers, it is exactly the same way I am interested in Cleveland. Now numbers are not just rois, it is job unemployment rate, it is rent occupancy rate, it is homeownership percentage, it is untility policies, eviction policies, rental culture, crime rate, and more... including this population decline.
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Joe Scaparra
Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
8y
Absolutely all that goes into consideration when making a decision to invest. Just as important is your Goal or reason for investing as well. I never thought of Austin becoming the next Bay area, in fact I would not have wanted that at the time I began investing.....why? Because I invested for CASH FLOW POSITIVE DAY ONE. That can't be done in the Bay area by putting down 20% unless maybe if your buy large apartment complexes.
However, now that I own my properties here in Austin, if we move towards the Bay area model I'm good with that, only because I already own.
For first time investors of real estate, one of the biggest looming questions for them is "what if I can't rent this out"? I would think in Cleveland that is more of a question mark than here in Austin. The comfort you can get being from Cleveland is the fact that currently your cash flow number should you rent it out will be exceptionally good as compared to Austin. So that might be your hedge to the question can I rent it out. But eventually, if the trend doesn't reverse or stabilize you might have a hard time finding a suitable tenant.
This is why I say for Cleveland you are better off taking advantage of those dynamics if you are living in the area. No doubt if I lived in Cleveland, I too would be looking and trying to cherry pick properties to invest in. Because I would be living there, I could handle a little higher turnover and stress that the environment might produce, and by the way enjoy the outstanding cash flow as long as I could keep it rented.
Investors need to take advantage of the strengths that are uniquely theirs. Currently an investor in Cleveland has a advantage due to knowledge and time to commit to the property management, than someone out of state. That could be said of almost any out of state situation, however it is magnified when dealing with areas that will experience more stress managing the property.......in my opinion, Cleveland would be a higher stress environment than Austin due to market forces.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
I am so glad I've lived in so many different areas of this country and spent considerable time in almost all of it.
If you are interested in investing in a market you need to go to it and spend a bit of time there. You also need to know the demographics of the market, where people are moving and basic history of the market.
There are places that I would never consider investing because I'm just not comfortable owning property in the area and that's all from personal experience with the areas.
Get out of CA and go spend some time in these places! Then decide if you'd be comfortable investing there.
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Helen Zhang
OP
Austin, TX · Member since 2016 · 160 posts · 39 votes
8y
@Joe Scaparra Absolutely agree with you and exact to the point. I would never expect Austin to be the next Bay Area, nor expect Cleveland to be the next Austin. I am interested in Cleveland for "better" cash flow. Btw, cash flow with small units can also be positive in bay area (if you actually paid attention to the person that you can I previously talked to. Bay area just like anywhere else, it has not so great neighborhood where you can great cash flow like the Austin duplex that you just bought).
Let's put it this way (and it might be offensive since you sounds like you are local Austinites), Austin demand is simply not even near Bay Area's demand. So if I am a Californian, I have been wondering about the same thing as you have been wondering about Cleveland: "What if the house that I bought cannot be rented". In a local Californian's eyes, Texas is some wild land that has no demand and value will not increase. I invested in Dallas before I moved to Austin. I would agree with you remote landlord is at disadvantage, and it is a great strength to be local. But I disagree with the point remote landlord give you enough disadvantage that you should never invest.
@Jordan Moorhead Not sure what made you believe that you the rest of us have not lived more than just California, but ok.
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