Two World Series housing markets – one long-awaited trophy

October 28, 2016 | By

Baseball fans in two Midwestern cities, Cleveland and Chicago, have been waiting many years to hoist a league championship pennant, let alone a World Series banner. In 2016, the Chicago Cubs have returned to the championship after 71 years, and the Cleveland Indians punched their first ticket since 1997.

Both of these teams have struggled with lore and curses. The Cleveland Indians underachieved for many years and were the punchline of the cult comedy Major League. Since their last pennant in 1945, the Cubs suffered the curse of a tavern owner forbidden to bring his pet goat into Wrigley Field and the indignity of a fan interfering with a foul ball during the 2003 National League Championship Series.

The Cleveland Indians surprised most everyone in 2016, sneaking into the playoffs and then dispatching the mighty Boston Red Sox and Toronto Blue Jays while losing only one game in the process.

The Cubs performed as expected, winning their division convincingly and defeating the San Francisco Giants – recent winners of the World Series in even-numbered years – and the Los Angeles Dodgers.

The two clubs couldn’t be more different. The Cubs feature superstar hitting from Kris Bryant and Anthony Rizzo and great pitching from Jake Arrieta and John Lester. The Indians, on the other hand, sport a more unknown cast featuring Cory Kluber and Jason Kipnis. Like these two teams, Chicago and Cleveland represent two very different housing markets.

A Tale of Two Cities

As The Home Story discovered during last year’s World Series, as the Fall Classic is a tale of two cities, so it is also a tale of two housing markets.

The Chicago metropolitan statistical area has a median income of $50,690 as of 2014 and a population of 2.7 million in the city and 10 million in the metropolitan area. The Cubs’ home park, Wrigley Field, opened in 1914 and is the second oldest stadium in major league baseball, and the oldest in the National League.

The city of Cleveland is only about one-eighth as large as Chicago, with 389,521 residents as of 2014 and about 3.5 million in the metropolitan area. Cleveland’s 2014 median income was $46,960, and has recovered from the dip seen during the 2008 recession. The Indians’ home park, Progressive Field, opened in 1994 and was one of the first of a new generation of ballparks that revitalized urban cores.

And Two Housing Markets

The Chicago and Cleveland markets have experienced similar price appreciation during the past year (6.9 and 6.5 percent, respectively), but the median house price in Cleveland is only 54 percent of the median in Chicago.

Chart 1

Since 2010, Cleveland and Chicago have experienced different inventory trends. Cleveland’s inventory has remained consistent with a slight downward overall trajectory since 2011, with less volatility than the larger Chicago market has experienced.

Chart 2

According to price index data from the Federal Housing Finance Agency, home prices in Cleveland and Chicago remained consistent through the early 2000s, when the housing bubble had a greater impact on home prices in Chicago. Since the recovery, however, the gap has narrowed and both markets have experienced similarly timed volatility.

World Series

 

These two teams are looking to end very long championship droughts, the Indians since Harry Truman was President and the Cubs only five years after the Wright Brothers made their first powered flight.

Likewise, the two housing markets represent similar, though slightly different trends: namely, the more expensive big city against the smaller market team.

With the World Series games tied 1-1 at press time, it’s anyone’s guess which team will raise the trophy this fall.

Adam Korengold is market research analyst for Fannie Mae and an avid Cubs fan. 

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