The cost of new construction in the City of Cleveland continues to rise with several current projects advertising townhomes and brownstones for well over $400,000. This is in stark contrast to the average annual income of a family in the Cleveland-metro area, which the U.S. Census Bureau places at just over $52,000.
William Mahnic is an associate professor in the Business and Finance Department at Case Western Reserve University and says developments are targeting medical and corporate professionals moving to the area.
"What we're seeing here in the City of Cleveland in terms of new residential construction is the majority of the focus is on the very, very high end,” said Mahnic.
Mahnic adds it's a perfect example of the barbell effect with two primary buying groups, those on the very high end and those on the very low end, who typically can't afford new homes.
“Until we see a lot more economic development that targets better-paying jobs for low-income residents of Cleveland, you’re pretty much going to see that barbell staying in effect,” said Mahnic.
There is a small exception. Valjean Walker is part of a group taking advantage of nonprofit CHN Housing Partner's lease purchase program.
Qualifying low-income families lease new construction units for 15 years and then have the opportunity to buy the unit at the end of the term for around $20,000.
Valjean, her children and her mother moved into the home in Cleveland’s Hough neighborhood in 2005. Valjean's mother passed in 2016, but she is still determined to fulfill their dream.
"Our goal was to be the homeowner of this home and I planned on going through with it,” said Walker.
The program is made possible with federal low-income tax credits as well as state and local grants but the end result is an unmatched sense of pride for some who might never have the opportunity to own a home otherwise.
"I know that I'm saving and that wonderful overwhelming feeling to know that you're saving to be a homeowner,” said Walker. “That's a joy."
CHN Housing Partners has helped more than 2,500 people move into 6,000 homes in more than 30 years in the Cleveland market. The group’s blueprint for homeownership will be adopted in the Detroit market as well.
