Local Luxury Home Market Remains Healthy

June 17, 2002
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GRAND RAPIDS — The sale price of an existing single-family home in Michigan continues to rise, according to the Michigan Association of Realtors (MAR). 

The association’s housing data indicates the average sale price of an existing; single-family home in Grand Rapids for the first six months of this year was $138,147. 

Grand Rapids Association of Realtors (GRAR) data for the month of July lists the average home sale price as $135,769.

For the first six months of the year, housing prices rose 8 percent over last year, though sale of residential units during the period were down 3.5 percent statewide.

Based on GRAR statistics for the first half of 2001, the average sale price of a home was highest in four metro area communities: East Grand Rapids, $244,690; Grand Rapids Township, $246,790; Cascade Township, $260,242; and Ada Township, $264,380.

Those are just the averages. A surf of the GRAR Web site reveals 399 current listings for single-family homes in the $300,000 to $1 million-plus range in Kent County. Asking prices in the area appear to peak between $2.9 and $3.2 million. 

There are 152 area homes currently for sale on the multiple listing service (MLS) priced at $500,000 and above and 16 have sold in the last 30 days but haven’t closed yet, said Adrianne Hudson, a broker/owner with Prestige Properties. In that market, there also are newly constructed custom home sales that aren’t listed on the MLS.

The $500,000 and up price class isn’t the bread and butter market or the market that most agents typically sell a house in, she said. The price class represents less than 2 percent of the market, but she said it’s a healthy, viable market nonetheless.

As Hudson noted, Prestige Properties specializes in the top 3 percent of the market and between just two Realtors, the firm did $46 million in sales last year.

GRAR data on sales by price class indicates 49 homes priced $500,000 and above were sold from January through July: 23 in the $500,000 to $599,999 range; eight in the $600,000 to $699,999 range; four in the $700,000 to $799,999 range; five in the $800,000 to $899,999 range; two in the $900,000 to $999,999 range; and seven in the $1 million and above range.

July sales in each of those price class categories represented less than 1 percent of overall home sales in the Grand Rapids area.

The seven categories grouped together represented only 1.18 percent of overall sales that month.

The market for homes generally decreases as the price class increases, but a market for higher-end, luxury homes most certainly exists in Grand Rapids, according to local realtors.

“Obviously, I don’t get as many showings on my $500,000 and $600,000 listings as I do on my $125,000 listings. It’s the numbers thing,” said Realtor Lonnie Nemmers, owner of Cascade Properties. “But the buyers are out there.”

As she sees it, the activity in the higher-end market has been steady, but has slowed down somewhat from what it was. Before, when the stock market was booming, that market was booming as well, Nemmers said.

Karol Cooley, a Realtor and partner with Keller Williams of Grand Rapids, also sees a fairly healthy market for homes in the $500,000 to $1 million plus range in the Grand Rapids area, but there may be a little more inventory than there would normally be at this time due to the economic slowdown and subsequent layoffs, she said.

“I think that we have a lot of inventory out there to choose from so that’s why some of the people who get into that market may feel it takes a little bit longer for homes in that market to sell, which it probably does because of the inventory.”

The economy may extend the time a luxury home sits on the market, but that market typically has longer market time anyway, Hudson said. But buyers in that market are solvent; they have significant salary and investment income.

“Basically, that market just continues to roll on,” Hudson observed. “Thus far I haven’t noticed that the economy has made any significant difference. We sold a $700,000-plus and a $900,000-plus house in the last 30 days.”

Kendall Grashuis, a Realtor with Greenridge Realty, said it was a little tentative at the start of the year, which he believes had to do with the stock market uncertainty and consumer confidence being down, but that changed.

“In March, April and May we had a banner three months, particularly in luxury housing,” he said.

He said he has had “really good activity” in the luxury market this year. He said the strongest activity in existing housing sales has been the East Grand Rapids and Forest Hills markets. He’s also reporting activity on a property he has listed for $3.2 million.

“There are definitely consumers out there looking,” he added. “We’ve seen an amazing amount of activity in that price range.”

As with other home sales, location is key. A home priced $500,000 or higher in the Forest Hills area, for example, is likely to sell more quickly than one in a community dominated by average priced homes, Cooley said.

Western Michigan continues to report “tremendous” increases in overall home sales, according to MAR.

Sales from January to June surpassed the first half of 2000 by 5.24 percent. Sales in Allegan, Muskegon and Ottawa counties were up nearly 27 percent. 

Michigan Census data shows a 78.3 percent homeownership rate, which is the third highest rate in the nation. The national rate is currently 66.2 percent.

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