CUYAHOGA COUNTY
HOUSING ISSUES
IN THE SHADOW OF THE FORECLOSURE CRISIS
Prepared for the Fair Lending and Vital
Communities Conference
Frank Ford
Senior Policy Advisor
Thriving Communities Institute
June 27, 2014
Cuyahoga Median Home Prices 2000 – 2013
Residential 1-3 Family properties with no Sheriff Sale in the chain of title since 1995.
Source: NEO CANDO at Case Western Reserve University
Foreclosure: down 47% from 2007
But still double the pre-crisis rate
Foreclosure prevention counseling – if funded – is
more cost effective than removing blight
Good News: Board of Revision Tax
Foreclosure Is Up
Judicial Tax Foreclosures Are Down – Replaced
By Sale of Tax Debt to Private Investors?
1,200 Aeon & Woods Cove Foreclosures in 2013
Tax Delinquency Is An Issue – But How We
Address Delinquent Vacant Property Is A
Concern
Cuyahoga County
• $400Million + Approximate Tax Delinquency
Vacant and Distressed Property
• $70 Million
• Send these to the County Land Bank – or
• Sell to low value investors at Sheriff Sales?
• Sell At Forfeiture Sales?
Emerging Problem:
Condemned Property Being Sold by the
County at State Forfeiture Auctions
Properties currently listed by CWRU NEO CANDO as
being on the State Forfeiture List
• 559 Cuyahoga County
• 364 City of Cleveland (subset)
• 99 Cleveland Condemned Structures
Recent Forfeiture Sales
50+ Properties sold to Parcelnomics and Toledo Investment
Team (related to Lime Deeds.Com)
Apparent Office Location for Lime Deeds
Address In Public Records for Parcelnomics
and Lime Deeds - UPS store in a Strip Mall
in Las Vegas
Harvard REO Investor Study – January 2014
Outcome By Investor Type
The failure rate for properties acquired by
out-of-state investors was double that for
Ohio investors.
Failure defined as:
• Vacant
• Condemned
• Demolished, or
• Tax Delinquent
Harvard REO Study - Outcome By Investor
Type
 Properties acquired by large investors
(100+ properties) were 5 times more likely
to fail than those acquired by small
investors.
 Properties acquired by non-profits, land
banks or government were three times
more likely to succeed than those
acquired by small investors.
The Consequences Of
Housing Market Decline
Shift of Tax Burden to Outer Suburbs
• Blighted property in distressed Cleveland
neighborhoods and inner-ring suburbs has
caused property owners in the rest of the county
to pay a larger share of property tax.
• $45 Million in tax burden has shifted to other
suburbs.
Thomas and Gillespie. “The Cost of Vacancy - Everyone Pays”. Thriving
Communities Institute (March 2014).
14
Foreclosures Are Down
But They’ve Left Us With An Epidemic of
Market-Crippling Blight
Cleveland City Survey
Distressed/Condemnable
Demolition Estimate
October 2012
May
2013
October
2013
6,974
7,761
8,011
$69,740,000 $77,610,000 $80,110,000
City of Cleveland Distressed Property Estimates
Blight and Vacancy Are Predominantly in
Housing Markets With Weaker Sale Prices
Cleveland Distressed Survey (August 2013)
• 6,669 (83%) Cleveland East Side
• 1,326 (17%) Cleveland West Side
US Postal Vacancy (NST as of 6-26-14)
19,616 Cuyahoga
12,480 (64%) Cleve East Side and East Inner Suburbs
7,118 (36%) Cleve West Side, West and Outer Suburbs
Low re-sale prices limit options for renovation.
TALE OF TWO HOUSES
2620 E. 114th – foreclosed
by Wells Fargo then sold
to an investor who did
nothing. Eventually
condemned by the City of
Cleveland.
2616 E. 114th Street - New
home built by Buckeye Area
Development Corporation in
2004. Cost - $141,000.
Appraised value in 2014 is
$71,900.
17
Blight and Low Sale Prices Have
Undermined Market-Based Solutions
Low Sale Prices Have Made Traditional
Renovation Approaches Unsustainable In Many
Cleveland Neighborhoods
 Full “gut rehab” of home in 2006: no subsidy
required.
 The same rehab in 2013: $50-80,000 subsidy
required in distressed neighborhoods.
“We Can’t Demolish Our
Way Out of This”
Rehab Analysis – Harvard Study Test Homes
Subsidy (red) or Surplus (black)
Neighborhood
Address
Old Brooklyn
4107 W. 48
Gut Rehab Code Plus Code Only
(29,296)
9,339
31,006
North Collinwood 15615 Trafalgar
(55,146)
(30,999)
8,875
Slavic Village
3655 E. 54
(70,504)
(28,871)
3,980
South Euclid
3866 Salisbury
(61,274)
(24,440)
6,229
Euclid
19400 Ormiston
(64,909)
(20,177)
(1,464)
Stockyards
5628 Pacific
(73,239)
(40,517)
(16,740)
Code Only = Replace mechanicals and finishes only if code not met. E.g. 20 yr
furnace stays if it works. No sidewall or attic insulation. No Green Standards.
A More Accurate Statement Would be
“We Can’t Rehab Our Way
Out of This”
Solutions Need To Factor In Market Reality
And A Limited Supply of Subsidy
In Depressed Markets, Rehab Requires
More Subsidy Than Demolition.
+
Market Conditions Will Not Improve Until
Blight Is Reduced.
=
Until Market Conditions Improve,
Demolition Will Be A More Cost Effective
Means of Blight Removal In Severely
Distressed Sub-markets.
For further information contact
Frank Ford, Senior Policy Advisor
Thriving Communities Institute
2012 W. 25th Street
Cleveland, Ohio 44113
fford@wrlandconservancy.org