Just as we hear and read about there being two Americas, the haves and the have nots, there are cities across the nation where the so-called housing recovery has and has not happened. Four of the cities where the housing recovery has not yet taken hold are in Ohio. Those cities are Cleveland, Akron, Dayton, and Toledo. Not as bad, but not far behind are Columbus and Cincinnati.
A decade after the housing crisis, Cleveland and Akron are among the worst large cities for homes that are worth less than the mortgages on those properties. Cleveland, according to ATTOM Data Solutions of CA which compiles property databases, has the largest percentage of “seriously underwater” properties among 88 metro areas with populations of +500,000. (ATTOM defines “seriously underwater” as “homes whose owners owe +25% more than the estimated market value of the property.”)
In 2009, one in six homeowners in Ohio were at least one month behind in their mortgage payments and 1 in 20 homeowners with mortgages were in foreclosure. Greater Cleveland was considered to be the epicenter of the predatory/subprime lending disaster that led to homeowners refinancing their homes for much more than the homes were worth, according to Myra White, the Vice President of Howard Hanna Real Estate in Shaker Heights. White goes on to say that exorbitant interest rates and huge balloon payments added to the disaster. “Even for the strongest borrowers who made 20% down payments on their homes in during the worst years lost 30-50% of their home value.”
Ken Mayland, an economist with Clear View Economists, calls the situation in Cleveland the “Cleveland Curse.” People with these seriously underwater properties are “…locked in. They’re prevented from moving to more stable, affordable homes and they’re prevented from moving to a city or state that has better economic prospects…” because they can’t get out from under these homes with little value that cost them so much…” year in and year out.
ATTOM reports that Cleveland’s seriously underwater properties; nationwide represent 20-22% of its housing market; 10% of all properties nationwide are considered to be seriously underwater. Even this last quarter, Cleveland added an additional 7,600 seriously underwater homes. Joining Cleveland, Las Vegas, Akron, Dayton, and Toledo in what can be described as a “very slow recovery” at best are Baltimore, Philadelphia, Central Florida, the Midwest, McAllen, TX and St. Louis. Clearly, it is better to be a “has” city than one that is a “has not.”