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Cleveland popped up recently as the U.S. city with the largest increase (4.1%) in home sale prices among the twenty big cities followed in the S&P/Case-Shiller Home Price Index. Cleveland? Isn’t that the city where the mayor is suing the nation’s biggest banks for all the havoc they caused with subprime loans and foreclosures?
It seems the best efforts of Washington to stem the slide in home prices does seem to be be having some impact, at least that’s how Dianna Hosta-Stickney, a real estate agent and Chairperson of the Cleveland Area Board of Realtors sees it. “The banks are trying to do loan modifications and hold off on foreclosures,” she notes, that has cut back on the supply distressed homes in Cleveland. Meanwhile, the $8,000 federal tax credit is luring in new buyers. “I don’t’ know if we’re out of the woods yet,” Hosta-Stickney says, “but our numbers are looking better.”
Those federal tax credits do seem to be luring in skittish buyers. Cleveland resident Shari Williams, 45, and her husband Greg, 48, had been renting when Shari got a call in April from her friend, Hosta-Stickney. When the agent told Williams she could qualify for the $8,000 federal tax credit for new home buyers, her initial reaction “I don’t believe it.” Williams thought the money had to be paid back and she wasn’t sure if she would qualify because she’d owned a home in the past. But after reading up on the subject she decided it was the time to dive back in. “That was one of the things that enticed us to buy now,” Williams says.
The couple found a home fairly quickly. They had a lot of homes to choose from since Cleveland has been hard hit by the downturn. “Everything in our price range, the owners had really redone,” Williams says. “We were looking at a lot of really nice properties.” They settled on three bedroom two bath house in the suburb of Brook Park. The house had new carpet, fresh paint, and new kitchen cabinets. “It was redone right down to the bath tubs and sinks.” The house was listed at $134.9000 and the pair got it for $133,000, not including the $5,000 the owners put toward closing costs. A bigger surprise came a few days after the acceptance of the offer when the home was appraised at $145,000. “We were ecstatic about that, “Williams says. In addition to the $8,000 federal tax credit, the pair qualified for an FHA loan with 3% down at a 5 ¾ interest rate. “It’s just been the perfect opportunity,” she says.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.