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Housing market Good news but not great for Grand Rapids Realtors
Julie Rietberg, CEO of the Grand Rapids Association of Realtors, had some moderately good news to report recently.
“Let’s call it a good news/bad news — but not what we haven’t anticipated,” she said. “In one sense, the number of (home) sales are up compared to a year ago. But as we expected, until the number of months of inventory gets down to that four- to six-months range, we’re going to probably see the prices fall a bit yet until that turns around.”
Currently, the Grand Rapids housing inventory is at around nine to nine and a half months. That number is relatively high, but down from last summer’s high of 15 months of inventory.
“It’s all good news; the trends are going in the right direction. It’s just that when we say that, people who have their house listed think the market has come back,” said Rietberg. “We’re still in recovery, but we believe we’ve hit the bottom of the curve and we hope we’re moving upward now.”
On average, sales prices are up 11.3 percent compared to January 2009. But Rietberg stressed that those figures, while good news, do not tell the complete story. When looking at totals for year end, the average sales price from 2008 to 2009 was actually down roughly 12 percent.
Sales prices currently are where they were around 1998 — pre-housing inflation boom — and what the market is currently experiencing, Rietberg says, is price correction.
“(Average sales prices) reached a peak of nearly $164,000 in 2006, and in 2009, we’re at $117,000,” she said.
Price point, however, is a big differentiator within the local housing market.
“There’s a big difference in the market between the low, middle and high price points. In the high price points, there’s actually a lack of inventory,” she said. “There are fewer homes in that price range to begin with, but there are apparently more buyers in that price range than inventory available. From my understanding, there are actually some builders building homes in that price range because of that lack of inventory.”
While homeowners are in a hurry for the market to get back to where it was, Rietberg said a slow growth is better.
“We want to grow slowly. We’re going to take a while to grow back to where we were,” she said. “Slow growth is important, if for no other reason than somebody has to have their confidence in the market. If prices shoot back up, I don’t think it will instill confidence.”
For those looking to sell their homes, this most likely means taking a hit on the sale amount. This isn’t a bad thing if those sellers are planning to “move up” to a more expensive home.
“Let’s say your house took a 20 percent hit on value: 20 percent on $150,000 is less than 20 percent on a $250,000 house, if you’re buying up,” she said. “Everybody is in the same boat, so whatever you lose on the sale of your house, you’re going to more than make up for in terms of gains on the house purchased.”
Another trend Rietberg said to be aware of is that interest rates should start to creep up this year.
“It’s probably going to start inching back upward,” said Rietberg. “Rates are so attractive right now, and if, indeed, we’re seeing the curve turn around on the prices, then the old adage ‘Buy low, sell high’ — I think we’re about as low as we’re going to get.”