The halo effect of Cleveland's comeback on housing

Cleveland is on a comeback, and its housing market will likely not be far behind. With the return of basketball superstar LeBron James to his hometown Cavaliers and as host city for the 2016 Republican National Convention, Cleveland is in the money—or at least its economy is likely to see more of it.

As for real estate beyond the basketball arena and the brand new convention center, Cleveland has one of the more affordable housing markets in the United States. Its median metropolitan area home price of $120,000 is far less than the national median, and prices in the city proper are about half that. Like much of the country, however, supply is playing games with home values.

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"Supply of the more desirable properties in sought-after areas is a bit tighter than last year," said Michele Anderson, a real estate agent with Progressive Urban Real Estate in Cleveland. "In other areas it's about the same, but prices are up."

Cleveland-area home prices rose just over 3 percent in September from a year ago, according to Zillow. Supplies are up 6 percent, as higher prices lure more sellers to the market, but sales are still relatively flat from a year ago.

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"There is a real shift from a few years ago, when the lack of buyers forced so many sellers to give up and rent their properties," said Anderson.

Cleveland's housing market was already weak, even before the national housing crash. Ohio currently has the fourth-highest foreclosure rate in the nation, according to RealtyTrac. That is drawing more investors to the market, which could in turn push prices higher in the future, though they haven't really yet.

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"Lending is beginning to open up for investor buyers," added Anderson. "In the strengthening markets, we are seeing the return of the renovator seller. They are buying the distressed homes and fixing them up for resale. Until recently, investors were holding on to the properties for rental."

More so-called house flippers will likely raise inventory in the coming months. There may also be more regular homebuyers coming soon as well. Younger millennials are beginning to see more opportunity in the city by Lake Erie. Its health-care sector is growing, and the draw of LeBron will generate more business for both retail and tourism.