What’s actually going on in the Cleveland RE market?

[Tal Tamir]

What’s actually going on in the Cleveland Real Estate market?

The investment market in Cleveland is still very strong and I forecast it will stay that way. The reason: we have a lot of investors coming from out-of-state or out of the country where their local markets are completely unaffordable and generate little to no cash flow. This isn’t something new, but will escalate even more given the state of other “hot” rental markets that simply don’t make any sense to invest in right now (Austin, Dallas, California, New York, etc.).

In Cleveland, although the price of properties is higher than in recent years, you’re still able to achieve a strong return on your investment, and real estate investors know that.

Interest Rates - why they don’t matter.

Even with interest rates going up, real estate investors will simply adjust their offers on properties accordingly. At the end of the day, it’s a simple math equation to come up with the returns they need on their investment. Sellers will have to adjust their unrealistic selling prices of 2020-2022 to match the rising interest rates. And in reality, the “leveled-out” selling prices of properties will be in line with what the market calls for, whereas in recent years, investors were able to purchase them at that higher price because interest rates were so low.

It’s really a “give-and-take” correction happening: sellers will have to bring down the over-inflated prices of properties and buyers will be offering at a number that makes sense given the interest rates. The savvy investor also recognizes that rates will eventually come back down and when they do, they will be able to refinance into a lower interest rate loan - so it’s really in their favor to buy as many properties as possible while they are being sold for less, even at a higher interest rate.

Going off of that, the responsibility of pricing in the current market falls on the experienced investor-focused real estate agent to set realistic expectations and pricing guidance to their sellers. The two must work hand-in-hand to price accordingly.

All-in-all, the Cleveland market is neither a buyer’s or seller's market, it is for the foreseeable future, an investor’s market.