A Crains Cleveland article piqued my need to talk about the decrease in new construction starts in NE Ohio. The article focuses a bit on a project that was to be built on the former Locust Grove golf course in Mayfield Heights. Now the developer/owner has the parcel up for sale.
I bet a lot of media types would say ‘aha, housing starts are down because of the lending woes and here is an example of that fact.’ But read between the lines. One of the things we talk about a lot in my real estate office is numbers. Our population versus new subdivisions and for that matter, total housing stock in our existing neighborhoods. We don’t have the numbers to support the housing stock we already have. The powers that beknow this, that is why The City of Cleveland Master Plan is now proposing pockets of retail and then mixed use development along Lorain Road, instead of trying to restock all the retail that existed for miles on Lorain in our population’s heyday. This is why I love Crain’s, you get a fuller picture than other sound byte type media. Kingdom Development Corp’s president said this in the article:
“….Mr. Halpern said the larger factor driving the listing is that the site might be worth more as a mixed-use project than as housing.
Maybe housing is not the best use of that land,” Mr. Halpern said of the site that adjoins Landerhaven Corporate Park and is near Landerbrook Corporate Park. Both are huge office parks where thousands work….”
You can also read the numbers and interpretation of the housing starts issue here. Nationally, housing starts fell 10.2% in September. The NAHB’’s article says Nationally, the mortgage woes were an issue. I know for a fact the commercial loan process has gotten tighter. But the article also says most of the downturn across the Country was related to a correction of a spike in multi-family starts the previous month.
We have been hearing there is an 18 month supply of new construction and that is a lot to absorb. Builders are said to be adjusting accordingly. Here in Cleveland we have the issue of how many are moving into our area as opposed to how many are moving out. Back to the job situation as usual. So it makes sense that builders not continue to glut the market.
The Crain’s article also points out that the percentage of town homes and cluster home sales is down 13% from stats for 2006. Very true. Also true that in some areas like Ohio City, town home sales are still outpacing detached, existing single family home sales. Tax abatement may be a factor in the Cleveland market that does not enhance new construction sales in the suburbs…and then again suburban developers are the ones currently offering deep discounts or ‘perks’ to new home buyers. Does it balance out?
The point is, there are as many reasons as I have fingers on my hands (and then some) for fluctuations in the housing market. Explanations that work for San Diego will not work for NE Ohio. That is why that obnoxious phrase ‘real estate is local’ really does apply.
3 responses so far ↓
1 Elaine Reese // Oct 20, 2007 at 10:02 am
Great local information, Carole. I think you’re right on regarding builders glutting the market.
Here they built hundreds of homes on small lots with no privacy, designed for younger families. But the condos and patio homes are still selling as the boomers want that type of convenience. AND many of the younger families want some privacy when sitting on their deck.
So, they can spend $250K to see their neighbors in a cookie-cutter development or $250K to get into an established neighborhood with the landscaping privacy and beauty already established. Those homes are a much better value.
I think the builders were too slow to react to changing demographics. It’s not just a “slow market” issue.
2 Carole Cohen // Oct 20, 2007 at 5:09 pm
Elaine you describe it like the professional and good observer of people that you are. Slow to react…yes, and I think maybe a bit too anxious to keep the development train going when really, checking the pulse every year is really a better idea. Thanks for your words of wisdom.
3 Mortgage Business » Real Estate is Local So Why Are Housing Starts Down in NE Ohio? // Oct 31, 2007 at 2:39 pm
[...] Cleveland Heights and Lakewood Home Sales | Cleveland Real Estate News wrote an interesting post today onHere’s a quick excerpt [ Skyline from Edgewater Park taken by Carole Cohen]A Crains Cleveland article piqued my need to … . One of the things we talk about a lot in my real estate office is numbers. Our population versus new [...]
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