Tips for Grand Rapids' hot residential market
As we turn to the spring real estate market, the greater Grand Rapids housing market is still experiencing a shortage of inventory.
The numbers of closed sales were up 3 percent in January while volume increased by over 12 percent. The area is still experiencing a significant shortage of inventory. According to the Grand Rapids Association of Realtors there is only 1.6 months of available properties for sale. The preferred number is five to six months of inventory, which provides a good balance between a seller’s market and a buyer’s market. If no other homes were to enter the market, it would take less than two months for the current market to totally liquidate.
Pending sales decreased by 4 percent in January, most likely due to that shortage of inventory, but the average home sale price was up by 2.5 percent.
This shortage in inventory has been a continuous theme since late 2013; the trend has continued to drop average days on the market to almost 2.5 months at the end of 2015.
While this shortage is a challenge for potential buyers, it is a fantastic opportunity for sellers. The shortage of inventory has the average home sale price rising at incredible rates. The average sale price of homes in the Grand Rapids area rose from $175,562 in 2016 to $190,477 so far in 2017.
The area has seen tremendous awareness and attention from numerous sources ranking it as one of the best places to raise a family, purchase properties and retire. These rankings lead to an increased number of buyers in the area. With the shortage of new construction and thousands of pre-approved buyers, it’s the perfect storm for instant equity. Many sellers are experiencing multiple offer situations.
Here are six tips that may help you navigate these market conditions:
1. If you are a buyer looking to make a purchase this year, get pre-approved with a “local” lender. The lender will be able to determine how much of a home you can afford and what type of down payment and loan program best suits you.
2. Be patient. The process takes awhile, and if you’re not fully pre-approved your chances of winning a multiple-offer situation are not favorable.
3. Prioritize what you want most in the home and your desired neighborhood. Reach out to a local real estate agent and start determining whether what you want is actually available.
4. Be flexible. Due to the market shortage, investigate other areas, designs, amenities, etc.
5. Take action. Houses are selling incredibly fast and you must be willing to act if you like that house. In most cases, there isn't a lot of time to do multiple viewings, show the friends and family, etc.
6. Be aggressive. If you love the house, be prepared to write an offer the seller can't refuse.
The Grand Rapids area is one of the hottest real estate markets in the country. If you are new to the market or a return buyer or seller, make sure you understand the competitive landscape of the market.