New research from the Federal Reserve Bank of Cleveland shows that investors now own up to one in three single-family homes in parts of Northeast Ohio — with a local nonprofit working to reverse that trend.
Real estate investors were responsible for 43% of home purchases last year in some of Ohio’s and western Pennsylvania’s lowest-income neighborhoods, according to the Cleveland Fed.
Much of that buying came from out-of-state firms in places like California, New York, Florida and Nevada.
“Some investors come in and they buy a home, they fix it up and they’re a very good landlord. Or they sell it to an owner-occupant,” Matt Klesta, senior policy analyst for the Cleveland Fed, told News 5 Cleveland. However, not all landlords fix up the houses and re-sell, leaving homes neglected. And, according to locals, absentee ownership has taken a toll.
Klesta’s report, published in early September, outlines the scale of investor buying but avoids policy endorsements.
“We don’t make policy recommendations,” he said. “But we want to get it into the hands of people that do, so they can make that informed decision.”
Actions taken by local authorities to combat large-scale investor home purchases were cited by Klesta, including the Cincinnati Port Authority buying nearly 200 homes — and outbidding a dozen investment firms — after an out-of-state landlord declared bankruptcy.
His research also illustrates racial disparities in regard to areas targeted for mass single-family home (SFH) investor purchasing, with rent burden measuring share of income spent on housing costs.
Local nonprofit pushes back
In Cleveland’s Collinwood neighborhood, Cleveland Neighborhood Progress (CNP) is taking a different approach — buying and fixing up vacant houses for new homeowners, not investors.
“It’s [going to] be a multi-year approach,” KC Petraitis, CNP’s vice president of real estate, told News 5. “And it should be, right?” Petraitis said absentee ownership has taken a toll.
“When you don’t know what your house looks like and you don’t know what your tenants are doing on a day-to-day basis, that’s a problem,” he said.
CNP refuses to buy occupied rentals to avoid displacing tenants and won’t sell to investors. Its stated goal is shoring up so-called “middle neighborhoods” — areas teetering between recovery and decline.
“We went around and we said, ‘Hey, we think we can launch a housing initiative to kind of combat a couple different things,’” Petraitis said. “One was investor activity. Two was building equity for homeowners that still live on these streets, to really make sure that they feel comfortable in these areas before we lead down a pathway of decline by disinvestment.
“(Disinvestment) is a long and slow death. But once it occurs, it becomes very expensive to resolve — if you can resolve it.”
Rebuilding the block
Anne Dalzell and her husband lived in Collinwood for decades and watched the house next door deteriorate after cycling through multiple absentee owners.
“The worst part, from our point of view, was the porch roof was falling down,” Dalzell told News 5.
When CNP purchased the property for $85,000, it invested more than $180,000 in a full renovation — adding two bedrooms, a second bathroom, new siding, a porch, fencing and a garage.
“I was really surprised at how much they did to it,” Dalzell said. “I mean, it was a little two-bedroom, one-bath place.”
The home went under contract this summer for just under $205,000, about $60,000 less than the total project cost. Petraitis said not every renovation will be as extensive.
“It is a boxing match,” he said of competing against investors. “It is not a one-round-knockout kind of situation. We are going to be here for multiple rounds, and we’re not going anywhere.”
Seeking neighborhood stability
Over the last two years, CNP and its partners have bought 19 houses across four local neighborhoods.
The organization hopes to rehab and sell 200 homes through its initiative — backed by nearly $12 million in public and private funding toward a $22 million goal.
“It’s a chess board,” Petraitis said. “I’m gonna lose the pawn here. But I gotta think strategically down the road.”
For longtime residents like Dalzell, the results are already visible.
“We did what we did to this house because we plan to stay here,” she said. “We’re in the neighborhood for the duration.”
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