CLEVELAND (TDB) -- Could Voinovich be out of touch with reality? Federal Reserve economic data seems to show that he is way off base because housing prices have actually risen quite dramatically since the late 1980s in Ohio. In the Cleveland area, homes appreciated anywhere from 4% to 6% a year until the housing bust of late. This may come as a shock to the former two-term Republican governor from Cleveland who moved on to the U.S. Senate in 2000. Voinovich wrongly asserts in his current e-newsletter to constituents that home prices in Ohio have been flat forever -- apparently even during the years he was governor:"Ohio is experiencing a foreclosure crisis that has nothing to do with speculators; Ohio has a foreclosure crisis despite the fact that house prices never went up in the state."
Of course housing has appreciated in value. Ask any Ohio homeowner to dig out his county property tax appraisal from 1999 -- Voinovich's last year as governor -- and compare it to 2008. The records will show a jump. And the the Federal Reserve Bank of Cleveland has produced a chart about Cleveland area housing prices all the way back to the late 1980s (see above), which portrays the rate of increase that Voinovich says "never" happened. A Fed economist reported:
"In the 1987–2005 period, the home price appreciation in the low end of the Cleveland housing market has been noticeable. Homes that are worth less than $111,071appreciated by more than 6 percent per year. Annual appreciation in the high end of the market was a more modest 4 percent over the same period (nominal figures). However, the health of the market deteriorated dramatically after 2005. Since September 2005, the low end of Cleveland’s housing market has experienced 37 percent depreciation, compared to an 11 percent decline in the high group and a 15 percent decline in the middle group."
And there is recent data showing that home prices in Cleveland are beginning to move up. Voinovich must have missed this report in his hometown newspaper, The Plain Dealer.
Voinovich contends that banks and speculators aren't responsible for a drop in housing prices. He says the culprit is the loss of manufacturing jobs across the state -- fewer Ohioans with good jobs means fewer buyers in the real estate market. He's probably on solid ground there. But he looks absolutely silly to say that "house prices never went up in the state."
I have my problems with a liberal like Voinovich, but this appears to an issue of wording. I think/hoipe he means Ohio did not have the ridiculous increase in home values that were seen on the coasts. We moved from Virginia Beach to Cincinnati when I retired and our house in VA Beach more than doubled in value in a couple years. :-) Prices in Ohio grew at a much more moderate (ie: close to inflationary rate) rate.
ReplyDeleteVoinovich is wrong on both counts. Housing prices rose in Ohio before the bust. They rose rapidly in places like Medina County. There was plenty of speculation. Flippers worked Cleveland, Cincinnati neighborhoods. They were like ants all over the cities in the state. Foreclosures are a big problem in Ohio. There have been FBI prosecutions for mortgage fraud. There are investigations going on now. The economy is part of the problem but the banks shovelled money out the door. The loans were sold to hedge funds and other investors all over the world in packages.
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