Earlier this year, the spring market was a house feeding frenzy. Popular homes were receiving 5, 10, sometimes as high as 20 offers. March and April saw a housing inventory of only 1.3 months. It is too early to call for sure, but I believe this was the peak of the rising prices for the Grand Rapids market.
Over the last four months or so, we have seen the inventory levels increasing. Each month we have slowly ticked up to the current level of 1.7 months. That is still a very low level of inventory, however, the day-to-day pace of the market is noticeably slower. Homes are still selling quickly and multiple offers are common, but it is not as ridiculously competitive as it was this spring. Experts have been predicting inventory levels and price increases to level off for a couple years now. It may be finally happening.
In the last few months, the inventory level has tightened again. All the way down to 1.3 months. This is a historical low for the inventory of homes for sale in the Grand Rapids market.
Although inventory was dwindling, the number of buyers increased with the spring market. The result? Feeding frenzy is probably the most accurate way to describe the competition. If a house is priced right and in good condition, it is common place to see 5-10 offers on one property within three days of hitting the market. Open houses look like assembly lines of people going in and out. It is great to be a seller right now. Unfortunately, it is very difficult to be a home buyer at the moment. The buyers who are winning in extremely competitive situations are usually cash buyers, or buyers who have large down payments if they need financing. It makes it especially tough for first-time buyers trying to enter the market.
There are a lot of factors that are important to a seller when considering whether to accept a buyer's offer, especially when there are multiple offers to choose from. Here is a list of some of the most important factors a seller will look at:
1) Price- this is likely the first thing the seller will consider. Most people want the highest price possible for their home. If the buyer is asking for closing costs, the seller will subtract this amount from the offer price to figure what the net amount is. For example, let's say two buyers write offers for the same price of $150,000. However, one buyer is asking for the seller to pay $4,000 towards their closing costs, and the other is not asking for any. One offer is a net of $150k while the other is only a net of $146k. Obviously the higher net offer is usually more desirable to a seller.
Over the last three years of giving market updates, I am starting to sound like a broken record. The real estate story of Grand Rapids, MI in 2015 was quite similar to 2014 and 2013. The inventory of homes for sale has remained low, and prices have been steadily increasing. It has been a great market for sellers and a frustratingly competitive market among buyers. Interest rates went up and down a bit throughout the year. Right now they are sitting around 4.0% for a 30 year loan, which is still quite low when you look at the history of interest rates.
In December 2015, there were changes made to the real estate transfer tax exemptions in Michigan. If you did not qualify previously, but now qualify for an exemption under the new rules, you may go back up to four years and request a refund on the transfer taxes you paid.
So what changed exactly? On 12/16/15, governor Snyder passed a bill that simplified and clarified exemption "U". Exemption "U" applies when the SEV (State Equalized Value) at the time of the sale is less than or equal to the original SEV when purchased. The idea of this exemption is that if you sell your house at a loss, you do not pay transfer tax. The only other requirement is that the home was your primary residence.
Many people enjoy the idea of becoming a real estate investor. An abundance of infomercials and HGTV programming make it seem so easy and glamorous. The reality is that it is not always easy. Real estate can be a great investment, but educate yourself and understand what you are getting into before you make the plunge.
BUYING THE PROPERTY
When purchasing a property, the first step is to get pre-approved for a home loan. Be sure to specify whether you want to purchase a single family or multi-unit residence, and whether you plan to occupy it. Based on this information, there are different types of loans available, and different requirements for each loan type such as down payment amount, interest rate, and other costs. Typically when purchasing investment property, larger down payments are required. When house hunting, you will want to consider a number of factors that make a rental desirable. Location is first and foremost. Size, condition, and neighborhood amenities are other important factors.
If you’re going into the home purchase process well armed with information, you already know how important it is to use your own real estate agent and not the seller’s. If this is news to you, read on.
Real estate agents owe their clients what is known as a “fiduciary duty.” Although it sounds like legal jargon, it simply means that the agent is obligated to act in the best interests of his or her client. What are these interests? At their most basic, the seller’s interest is to sell the home for the most money possible while the buyer is interested in purchasing the home for the least amount of money possible. Of course, both parties have ancillary interests such as the protection of their privacy. The fact is, a seller’s interests and a buyer’s interests are completely different and, in fact, conflict with one another. Let’s take a look at some of the specific interests that a real estate agent’s fiduciary duty includes.
It is tough to be a home buyer right now in the greater Grand Rapids area. Why...? INVENTORY. Inventory is pretty much all we have been talking about for the last 2 years. The lack of inventory of homes available.
Inventory of homes for sale is measured by determining how long it would take to sell all current homes for sale if no new listings came to the market, based on the current rate of how many people are buying. A normal market is considered to be an inventory of 6-6.5 months. Back in 2008, we had a whopping 13-14 months, a market that strongly favored buyers. In 2012, the inventory started dropping and has not stopped. The strong buyers' market is a thing of the past and has been replaced by a market extremely weighted in a seller's favor.
Home Repair Services in Grand Rapids, Michigan is a great resource for homeowners. They offer many different classes to educate homeowners on remodeling and finance. The mission of Home Repair Services is to strengthen vulnerable Kent County homeowners because strong homeowners build strong communities. They believe that home ownership encourages personal responsibility and builds value, dignity, and pride. These are essential components for community vitality.
The real estate story of Grand Rapids, MI in 2014 is quite similar to 2013. The inventory of homes for sale has remained low and prices have been steadily increasing. It has been a great market for sellers and a competitive market among buyers. Interest rates have remained low.
It is suspected that sales are slightly constrained because of the limited inventory. Year-to-date, new listings are down by 7.4%, and the number of housing units sold is up 2.8%. The average sales price is up 6.7% this year, growing from $152,833 in 2013 to $163,171 in 2014. Due to increasing sales prices, the volume of home sales is up by almost 10%.
Great info on everything real estate.