According to this article from CNN Money, the housing market has recovered to the point of around 2003, which is actually not too bad considering 2006 is widely-accepted as the peak of the real estate market. We wont be seeing 5-7% annual increases any time soon like we were predicting back then, but many economists are predicting a small 1-2% increase from this year to next.
By Pete Bruinsma
Great news for people in West Michigan, the real estate market is finally recovering!
According to research on sold homes within the Grand Rapids Association of Realtors data range, February is when this year’s Spring market really kicked in, showing a 40% increase in sales volume in the region as compared to the year before.
Current reports show that the strengthening of West Michigan market will continue. Not only are total number of homes increasing, but value is also increasing. This is a good sign for people worried about foreclosures dragging down prices, bad news for those looking to capitalize on home flips and property investments.
GRAR stats from May 2011 show that 1100 homes were sold in West Michigan, as compared to 1400 in May 2012. Total sales volume in May of 2011 was $123 Million as compared to $180 Million this year. That’s a 20% increase in number of homes sold, and a 32% increase in value.
June continues to be a hectic month for Realtors in the area, and listings continue to sell.
The numbers above are a good indicator that West Michigan is selling fewer “fire sale” listings, and more on normal terms. So how do these numbers translate to property value? CNN Money predicts that the average home in West Michigan will appreciate by 3.6% in the next year. People in West Mighigan, get ready for your homes to start appreciating again!
All Rights Reserved, © Pete Bruinsma 2012
In 1998, I purchased my very first home with an interest rate just over 7% and I was thrilled. It is a 2-unit, I still have it as an investment, and I refinanced just this past week to an non-owner-occupant rate of 4.5%. Being a numbers guy, I calculated that with no re-fis, I would have paid $96,353 in interest until now. If I’d had an original rate like I received this week, my to-date interest would have been $58,377. That’s a difference of $38 Grand!
When I think about it, it is astounding how great the buying climate is today for buyers. You’ve heard that home prices are at a long-time low, but money is also very cheap. This is a wicked combination! I’m focusing on interest rates only for this post. Here is a chart of interest rates, from when I personally started purchasing until now:
What does this mean for you, a buyer in today’s market? Here’s an example:
You qualify now for a $100,000 mortgage. All factors the same, we warp you back to 1998 with 7.1% interest rates. You are now qualified for a $77,000 purchase.
Lets modernize this. Say you qualify in Fall 2011 for a $100,000 mortgage at 4% interest. You wait awhile and interest rates go back up to 5.85%, a rate we saw a couple of years ago. You are now qualified for a purchase price of just over $85,000 with the same down payment and loan terms.
Lets flip it around:
You purchase a $100,000 home and put $3,000 down. Here’s how much interest you pay over the life of the 30 year loan:
7.1% (like 1998): $137,674
4.0% (like right now): $69,713
5.85% (like…the future): $109,007
$100k will get you this home in West Michigan, or one of many others:
Time to make a choice!
(a) Now
(b) Later
Pete Bruinsma is an Associate Broker at Grand Rapids Realty in West Michigan. © www.PeteBruinsma.com
Market Data Compiled 1/25/10 by Pete Bruinsma, GRI.
Sales in past year:
Frequently Requested Heritage Hill Info:
More info on Crime statistics Population Density, Owners vs Renters, School District, can be found here.
Great Article: http://www.rapidgrowthmedia.com/Cities/HeritageHill/