The Observation Deck

Newly released housing statistics from the Northern Ohio Multiple Listing Service (NORMLS) show Lakewood's housing market to be stronger than virtually every other city in the northeastern Ohio market.

NORMLS statistics reveal the average sales price of a single family home in Cuyahoga County FELL from $164,700 in the 3rd Quarter of 2006 to $154,100 in the 4th Quarter of 2006.

These figures represent a national and regional slow housing market as well as seasonal adjustments. An upturn in values is expected during the upcoming spring selling season.

Lakewood during this time, going against the trend, measured a GAIN in single family housing price to $148,900. This was an INCREASE of
+4.34% in value.

Other communities of interest-
Rocky River (-19.76 in value with an average sales price of $178,700)
North Olmsted (-8.30% in value with an average sales price of $139,200)
Berea (+.07% increase in value with an average sales price of $138,300)
Cleveland Hts. (-20.69 % in value with an average sales price of $142,600)
Euclid (-23.20% in value with an average sales price of $84,400)
Strongsville (-6.09% in value with an average sales price of $206,800)
Olmsted Falls (-16.30% in value with an average sales price of $151,000)

You sure these weren't statistics from NORML? (national organization for the reform of marijuana laws)

Seriously, it's good to see numbers like that. Though it's also disconcerting to see houses that I viewed back winter 2006 still for sale. And even a few I viewed in summer and fall 2005!

It's good news Jim, thanks for sharing it.

Since we just closed on our house today, it's glad to know we're not in a tumbling market in Lakewood.

Now that we're officially Lakewood homeowners, I'm getting antsy to move in the next few weeks.

Hey Bryan!

Welcome to your new home!

What an exciting day for you!

This community has so many intangible benefits that I could not possibly begin to name them all, so I'll start with just one.

The people.

We have so many folks trying their best to make this little old inner-ring streetcar suburb work.

And does it ever! Oh yeah!

Again, welcome home!

(Be sure to ask Jim about getting a couple of Lakewood stickers for your cars)

Gary

Can't wait to rub this in the face of my Rocky River friends.

Bryan--- I volunteer Gary, Jim, Ivor, and Charyn to help you move your stuff. Brett and I will go get the chicken and beer if you give us the money.
Stan

Gary Rice wrote:Hey Bryan!

Welcome to your new home!

What an exciting day for you!

This community has so many intangible benefits that I could not possibly begin to name them all, so I'll start with just one.

The people.

We have so many folks trying their best to make this little old inner-ring streetcar suburb work.

And does it ever! Oh yeah!

Again, welcome home!

(Be sure to ask Jim about getting a couple of Lakewood stickers for your cars)

Gary

Yep, I love Lakewood. I've lived there all my life with the exception of college in Ann Arbor and this horrible 6 month stint on the east side.

Grew up on Arthur right near the library. Went to Grant, Harding, then LHS.

It will be nice to be back.

Bryan:

I was very pleased to see Lakewood not only hanging tough in a very difficult real estate market but firming up its numbers against the vast majority of places. The full report shows places like Solon and Brecksville doing well, but at price points that seems exclusively and insanely risky.

My question is whether or not the LO could do a little story on your return home and experience away - why Lakewood made sense to you.

From the beginning, we have imagined the LO working hand in hand with the people who believe in the place and have an experience with something to say.

You have always been very articulate with a comparative sense of how Lakewood can better differentiate itself in terms of the market. You are precisely the kind of young person that makes our city great.

I'd be happy to do a little story, maybe have an LO photographer catch you on or around move-in day.

Your journey home is worth documenting in the LO, if you feel comfortable with such an intrusion.

Kenneth Warren

Citing single quarter numbers can be very misleading. First, without other quarters' data it's way out of context. And second, quarterly data varies quite widely. One Clifton Park lakefront home can add fully $10,000 to the average, especially during Q1 or Q4 when less homes are sold.

So here's some additional info. I found the source of this data, gathered over five years worth, and did some math. I like math....

The first dollar column below is the actual average for that quarter. Jim's $148,900 quarter average is at the top. The second column is “smoothedâ€Â￾ by calculating the weighted average sales price for the most recent 15 months ended that quarter. For brevity, I did not show the actual number of homes sold in each quarter, and that data was not available for a couple quarters so I had to estimate it. That will affect the smoothed numbers very little.

Q4 2006 $148,900 $145,480
Q3 2006 $149,400 $149,760
Q2 2006 $156,300 $148,590
Q1 2006 $119,300 $144,861
Q4 2005 $142,700 $149,374
Q3 2005 $161,500 $149,668
Q2 2005 $155,400 $146,203
Q1 2005 $139,900 $142,415
Q4 2004 $135,400 $143,681
Q3 2004 $153,800 $143,365
Q2 2004 $145,000 $139,200
Q1 2004 $138,400 $137,847
Q4 2003 $135,000 $137,711
Q3 2003 $146,800 $137,085
Q2 2003 $136,000 $135,357
Q1 2003 $127,100 $135,453
Q4 2002 $137,600 $135,573
Q3 2002 $137,400
Q2 2002 $132,100
Q1 2002 $139,900
Q4 2001 $136,900

While generally our home prices are holding up, Lakewood homes appreciated by only 7.3% (or so) total in four years.

The Rocky River Q4 2006 number ($178,700) was a HUGE anomaly. You'd see that instantly if you saw all the numbers. Average down almost $90,000 in two quarters, and the first time Rocky River was below $200,000 in any quarter since Q1 2003. In fact, Rocky River's smoothed out price appreciation over the same four years was 13.3%, even with the Q4 2006 anomaly. That's close to double Lakewood's.

I'm not trying to rain on anyone's parade. I've lived in Lakewood for 22 years and I like it here. And like many of you I see great things happening. I just think we should be careful what we brag about, and our home price appreciation is probably not one of them.

Finally, I can find no justification whatsoever in the numbers above for the three-year 13.1% increase that the County asserted in our most recent assessments. I have always wondered where those numbers came from. Thin air I suspect.

Tim Liston wrote:Finally, I can find no justification whatsoever in the numbers above for the three-year 13.1% increase that the County asserted in our most recent assessments. I have always wondered where those numbers came from. Thin air I suspect.

Thanks for a great analysys. Quarter to quarter unadjusted averages can be very misleading.

The County was under pressure from the State to be more "generous" in its appraisals. The 13% number did come out of thin air.

An accurate appraisal in two years will probably show an actual decline in home values countywide. The City has been living on artifically inflated property tax increases for quit some time. When reality finally sets in the City will have to deal with declining income tax revenue AND decling property tax revenue.

The attitude at City Hall? Party on dude!!!

Kenneth Warren wrote:Bryan:

I was very pleased to see Lakewood not only hanging tough in a very difficult real estate market but firming up its numbers against the vast majority of places. The full report shows places like Solon and Brecksville doing well, but at price points that seems exclusively and insanely risky.

My question is whether or not the LO could do a little story on your return home and experience away - why Lakewood made sense to you.

From the beginning, we have imagined the LO working hand in hand with the people who believe in the place and have an experience with something to say.

You have always been very articulate with a comparative sense of how Lakewood can better differentiate itself in terms of the market. You are precisely the kind of young person that makes our city great.

I'd be happy to do a little story, maybe have an LO photographer catch you on or around move-in day.

Your journey home is worth documenting in the LO, if you feel comfortable with such an intrusion.

Kenneth Warren

Thanks Ken,
I think I'd be interested. Anything I can do to help build the brand.

The 1st quarter 2007 Lakewood home sale numbers are in from the MLS. I have updated the adjusted numbers I gave earlier, shown below.

The news is pretty good for Lakewood homeowners. The average sale price for a Lakewood home sold in Q1 2007 was $153,200, up from Q4 2006. On the other hand, the average sale price of homes sold countywide dropped precipitously, from $154,100 in Q4 2006 to $142,900 in Q1 2007. Ouch! Of course one quarter statistics can be very misleading and I have not fully analyzed countywide numbers. But 2,456 homes were sold in Cuyahoga County in Q1 2007 (3,082 in Q4 2006) so the numbers should be at least fairly reliable.

Below are the updated Lakewood numbers. As before, the first dollar column below is the actual average for that quarter. The second column is “smoothedâ€Â￾ by calculating the weighted average sales price for the most recent 15 months ended that quarter. This time I added the actual number of homes sold in each quarter as the final column. Don't forget that the sale of even one $1,000,000 lakefront home adds $10,000 to the average price for a quarter so even the smoothed numbers can bounce around a bit.

Q1 2007 $153,200 $147,370 103
Q4 2006 $148,900 $145,480 120
Q3 2006 $149,400 $149,760 153
Q2 2006 $156,300 $148,590 154
Q1 2006 $119,300 $144,861 88
Q4 2005 $142,700 $149,374 134
Q3 2005 $161,500 $149,668 150
Q2 2005 $155,400 $146,203 162
Q1 2005 $139,900 $142,415 99
Q4 2004 $135,400 $143,681 124
Q3 2004 $153,800 $143,365 174
Q2 2004 $145,000 $139,200 147
Q1 2004 $138,400 $137,847 86
Q4 2003 $135,000 $137,711 121
Q3 2003 $146,800 $137,085 185
Q2 2003 $136,000 $135,357 170
Q1 2003 $127,100 $135,453 94
Q4 2002 $137,600 $136,573 141
Q3 2002 $137,400
Q2 2002 $132,100
Q1 2002 $139,900
Q4 2001 $136,900

Like I said it's pretty good news overall I think.

Here is the url for the current report: https://www2.normls.com:442/market/pdf/ ... LS1Q07.pdf. You can tweak this url by changing the quarter and the year to see earlier reports. I had to print all the reports to gather the data summarized above. I did that last March so I had very little work to do this time to update the numbers.

FWIW....

Thanks for the update, Tim.

Nice to see you're putting that Kellogg education to good use.

Thank you for this info. This also tells us where one of our problems lie.
These numbers include not just single-family homes but also doubles, do they not?
If 5 yr appreciation is less than 10% as it appears to be, buying a double in Lakewood is a horrible horrible investment, barely keeping up with inflation.

No wonder owners want to run them on the cheap.
I don't think this is Lakewood's 'fault'. More 'cirumstances beyond our control'

Dee, I must disagree. The facts presented do not support your opinion that "buying a double in Lakewood is a horrible, horrible investment, barely keeping up with inflation."

First off, the figures presented simply can't be read in the way you suggest. Secondly, please don't confuse measurements and real estate building type. When measuring the "return" on a rental property/double, value appreciation is just icing on the cake wherein this is the primary measurement for single family owner occupied homes.

The fact of the matter is that, in well run rental buildings, the renters are covering the mortgage, taxes and insurance and are thus putting ALL the equity in the property save for the initial down payment. Renters are the ones paying off the note.

For example:
A double in Lakewood at $150,000 would carry a mortgage of about $858/month with a 20% down payment at 20-years. Add $500 a month in taxes and insurance and the house needs to pull in $1,350/month in rent. A landlord would try to get an extra $100 or so to cover expenses. So, with nice doubles renting for $750 per unit, $1,500 is not unexpected.

The bottom line is that $30,000 can turn into $190,000 in 20-years ($150,000 plus appreciation) if the rental unit is run like a business. Tax benefits/umbrella is an extra layer of icing.

The fact that must be remembered by all investors is that there are really only two ways to make a living off rentals: (1) investing heavily to acquire dozens if not hundreds of units each making $50-100 profit per month or (2) having mortgages paid off wherein 60% of the rent received can be used as real monthly income/salary. (This second scenario is where all homeowners wish to be before kids enter college.)