*This post was written at the beginning of the year. (2008) Looking back at the trends that I thought we needed to watch, it’s interesting to review and look back on how these trends worked themselves through the year.
1. Absorption Rates
There has been a significant increase in homes for sale in the Grand Rapids area. Today, there are almost twice as many homes on the market as there were 4 years ago. What’s most important about this trend is the Absorption Rate. This rate is calculated by determining how many months it would take to sell ALL the current homes at the Current Rate of Sales.
For instance if there are 12,000 homes For Sale and 1,000 Homes Sell in January of 2008, the Absorption Rate is 12 or 12 months. Watch to see if this rate increases. If the Absorption Rate for homes in Grand Rapids, Michigan increases inspite of tremendous mortgage incentives, this indicates further weakening in the real estate market.
UPDATE: Inventory of Grand Rapids, MI homes have reduced to approximately 10,250+ by the end of the year, but the number of homes sold has also declined. Our absorption rate still hovers around 11-12 months.
2. Increase in On-Line Activity!
Grand Rapids, Michigan mirrored the rest of the country in shifting towards the Internet for information about housing trends and statistics. Home searches through the Grand Rapids real estate board continued to rise and the Board also launched a new website through which real estate agents will be able to do very detailed statistical analysis for their clients.
Blogging about real estate took off in it’s initial stages and many agents started detailing their expertise through a variety of blogging platforms. About 240 Grand Rapids real estate agents established profiles on the Active Rain networking platform alone. This trend will continue in 2008.
Keep watch on several players who are in the marketplace to determine who has the most comprehensive real estate database for Grand Rapids, Michigan. Those which are currently in the forefront include the Grand Rapids Real Estate Board MLS, Zillow.com, Trulia.com and Google.
2. Monitor the Foreclosures Rate
In recent history, few can remember any time in which there have been so many homes foreclosed on in the Grand Rapids, Michigan area. Last year, the real estate board tasked an advisory panel with taking a critical look at the situation and making recommendations. As a result, Grand Rapids real estate agents had the opportunity to receive additional training about the foreclosure and short sale process.
In addition the real estate board linked homeowners to resources to prevent foreclosures and made an addendum available to homebuyers regarding what to expect when purchasing a home in a short sale or foreclosure situation.
The numbers to watch in this category is a Report which details the percentage of Sales on the Grand Rapids Real Estate Multiple Listing Service that are Foreclosure or Real Estate related. As of last year December 2007 and January 2008, those percentages are 40% and over 50% in January 2008. Another number to watch which is not yet being formally tracked is the number of Vacant Homes which are For Sale or Abandoned. An increase in these numbers will further dampen home prices.
UPDATE: Foreclosure rates soar to 60% by the end of the year.
4. Rental of Homes.
Five years ago, home rentals of single family homes were almost non-existent on the Grand Rapids multiple listing service. in 2007, hundreds of home owners offered lease with option to purchase or a land contract to help shore up funds while waiting for a home to sell or the housing market in Grand Rapids to turn around.
Watch the rental rates of homes with respect to both the number of homes for rent and the type of home. For instance, a significant increase in rental options for homes in the mid to upper price ranges would indicate further weakness in the market. However, if home rentals decrease, this would be a very good sign.
UPDATE: The number of lease/rental listings on the multiple listing service have increased by year end.
5. The Disappearing Real Estate Agent…
If you cannot find your real estate agent, this may indicate that they have left the industry. The first place to look is on-line. If your real estate agent cannot be located on the Internet, it is unlikely that their home listings can either. A profound shift is occurring in how real estate is acquired and the Internet is at the forefront of this revolution.
Watch to see how technology is adapted by individual agents and companies with regards to presentation of homes, providing service options to clients, responding to inquires and facilitating transaction management online.
UPDATE: There has been a decline in agents involved in the business. Since a high of 3,500, the number of real estate agents associated with the real estate board has dropped well below it’s peak.
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