Kent County home values back to pre-recession levels
Now there just isn’t enough inventory to meet buyer demand.
The long, deep recession that flattened the residential real estate and home construction industries has finally ended, with an early indication that home prices in Kent County rose an average of 7.25 percent in 2014.
Matt Woolford, equalization director for Kent County, said the 2014 increase marks the second or possibly third consecutive year of increasing home values. His numbers are based on projections from sales and appraisal studies.
Noting the Great Recession that began around 2008 was a “prolonged recessionary period in real estate valuation,” Woolford said 2015 represents a return to a normal residential real estate market. Home foreclosures have been absorbed to the extent that foreclosure is no longer having a negative downward pull on the market, in his opinion.
“(Foreclosures) are still out there, but their numbers are nowhere near the influence that they were,” said Woolford.
Woolford’s numbers, which do not reflect new home construction, indicate home values increased the most in Grand Rapids Township at 9.58 percent and in East Grand Rapids at 9.48 percent. In the city of Grand Rapids it was 7.74 percent; the smallest change was an increase of 2.92 percent in Tyrone Township, a sparsely populated rural region in northwest Kent County.
Numbers compiled for 2014 by the Grand Rapids Association of Realtors almost mirror the county’s records. GRAR CEO Julie Rietberg said its home price increase from 2013 to 2014 was about 6.7 percent.
“In the year 2014, we have essentially, on average (for all neighborhoods), fully recovered our prices from where we started to go down” at the start of the recession, said Rietberg.
“It’s a combination of good news, bad news,” she added. “The reason we recovered so well in terms of values is because there is not enough inventory. There are not enough homes for sale for the buyers who want to buy.”
Rietberg said there is pent-up demand from those who could not buy a house during the recession, but during the downturn “the stock of housing wasn’t being replenished.” New home construction plummeted through the recession and stayed that way for years, and that, too, had a lingering negative impact. Now there is a serious shortage of skilled labor for home construction.
According to Rietberg, one home builder told her his company could be building as many as 30 new homes but only has enough skilled workers on hand to build two. The workers are “just not returning to that skilled industry they were in before,” she said.
“We’re seeing a lot of people putting their house up for sale and finding a place to rent in the meantime until they find what they want to purchase,” she said.
Rietberg said just about any house on the market now that is “priced right” receives multiple offers, at least in the Grand Rapids region.
But the good news for home values in Kent County isn’t true across the nation. Rietberg said reports from other states seem to indicate their home values have recovered about half of the value they lost during the recession. Most have recovered from a stagnant market, “but they haven’t recovered 100 percent of their value from that high” just before the recession.
The high in Grand Rapids before the recession was an average sale price of $163,924. In 2014, that average returned to $163,171.
Kent County property values peaked in 2007 at $21.325 billion in taxable value and $24.338 billion in equalized value. By 2013, those numbers were $20.025 billion and $20.992 billion, respectively. In 2014, they increased to $20.353 billion and $21.611 billion. For 2015, those values probably will increase by 6 to 7 percent or more.
“For a number of years, I was in the unfortunate position to be talking about how much value had been lost, and it’s very encouraging now to be speaking about how values are increasing for private citizens,” said Woolford.
About three-quarters of the property value in Kent County is single family residential. Agricultural, commercial and industrial all improved over 2014, too, with agricultural leading at an estimated 7.25 percent. Commercial was up about 4.49 percent and industrial 2.84 percent.
The largest increase for commercial property was in Kentwood at 7.6 percent; the lowest was in Cannon Township, where it went down about 4.5 percent.
Woolford said throughout the recession agricultural land values tended to be the most stable, although agricultural land represents a small portion of overall Kent County property values. Still, he said the ag sector in Kent County is very healthy. The farm economy has been strong in Michigan and farmers are increasing their acreage wherever possible.
East Grand Rapids is rebounding fast in home values, said Woolford. It has a higher turnover rate than some other Kent County communities, but it is a “historically high” value area, along with Ada, Cascade and Grand Rapids townships.