It is not yet noon this Monday morning (12/14/2009). Yet, I have already had several conversations with clients who are disconcerted. On the one hand, they have heard that the market is improving, but the news about their specific home in their specific Grand Rapids, Michigan neighborhood seems to paint a different picture. This information seems at odds with recent headlines.
They are not alone. Those of us in the Mid-West have been listening to the media reports that the economy has turned the corner and that jobs will come roaring back in the spring of 2010. News that seems to obscure the reality that our unemployment rate in Michigan is still one of the highest in the nation. The recent newspaper headlines about the surge in year to date home sales may inadvertently obscure some very pertinent details. Facts which if they happen to relate to the situation in your particular neighborhood may dramatically alter your perception of the real estate marketplace.
It is said that perception creates reality. But it is the facts which ultimately ground reality. But facts sometimes mask the underlying assumptions which serve as their bedrock foundation.
While it is true that there has been an increase in sales over the past year (sales year to date over 2008 are currently up above 35%), it is ALSO true that these sales have largely comprised of distressed properties and therefore PRICES have been driven down almost 13% since the same period last year. And 2008 is on the record for being a year in which home equity plunged dramatically across the nation.
Going back to the conversations I alluded to earlier…in one case, a home that was sold for $90,000 just a mere 3 years ago has been re-sold and closed in June of this year for $38,000! This is not an isolated situation. I have witnessed many homes within the last year that are now retailing for 60% – 75% of what they would have retailed for 3-5 years ago. That’s quite a loss!
So how does one reconcile these numbers? Are homes selling? Yes! Are there bidding wars on the best deals? Absolutely! We’ve had the experience of being told to ‘take a number’ to await word on a multi bid situation. Most of these homes selling today in bidding wars are retailing so far below normal market values, that buyers are waiting in line to get a good deal.
But even these situations should be approached with caution. Under- market pricing does not guarantee a smooth path to home ownership. Some of these homes have been abandoned and severely neglected or they may have hidden underlying issues. It’s important to do careful and thorough research and to have a complete inspection.
If you’re considering flipping a property for a quick profit, it may be prudent to check with your mortgage company to ensure a comprehensive understanding of potential limitations of your financing vehicle in the new lending environment.
Lastly, make sure you have a realistic appreciation for the current housing values in you area. A below market purchase not only impacts the homes around the neighborhood, but will also impact the re-sale value of the remodeled home you intend to place back on the market to some extent. This factor should also be kept in mind when contemplating an area which has been dramatically impacted by the housing crisis.
We are available to provide comprehensive counsel and statistics on neighborhoods in the Grand Rapids area for home owners, home buyers and investors. Please contact us for a confidential inquiry at: firstname.lastname@example.org
But as the conversation proceeded, I learned that Marcia Vander Woude who is also an Adjunct Professor at Grand Valley State University was involved in much more than a part-time real estate career.
Marcia began to share her passion about Health Intervention Services and invited me to come by and take a tour. Prior to our connection through a showing request, I had never heard of Health Intervention Services although this mission of mercy and healing has been functioning in some capacity in the local area since 1988.
Health Intervention Services, (HIS) is a faith-based, non-profit 501 (c)3 health care center which is located in the Burton Heights neighborhood in Grand Rapids, MI. “HIS is founded on the belief that the intrinsic value of all people justifies the right to quality health services that promote physical, emotional, and spiritual wellness. ” (quote from promotional sheet)
While touring the facility, I was surprised to see how comprehensive the care offered on site was. Included were dental care, optical care, comprehensive medical and dental care, psychological and social work counselling, medication assistance and spiritual encouragement.
The service is staffed almost entirely by volunteers…over 130 of them of which 76 are medical professionals and a small crew of 10 full or part-time employees. It’s extraordinary to think of what this group of committed individuals has accomplished in just this past year by averaging over 1,000 patient visits each month!
HIS also collaborates with other community organizations to maximize the utilization of scarce resources in challenging economic times. Patients who visit the center participate on a sliding scale fee base with the minimum payment being $20.
On December 9, 2009 there will be a special fundraising concert to help raise money to fund the organizations’ efforts which will enable them to continue their work in caring for people. The concert features World Renowned Tenor, Carlos Seise who will be performing at the Basilica of St. Adalbert located on 704 4th St. NW Grand Rapids, MI. Tickets can be purchased for $40 or $25 (special rate for Seniors over 60+ or Students) by contacting Marcia at email@example.com or Thressa @firstname.lastname@example.org.
It is really heartening to see the difference that this organization is making at a time when so many people are in need of health care assistance in our local community.
Health Intervention Services (HIS)
15 Andre St. SE, Grand Rapids, MI 49507
616-475-1363 web: www.hisgr.org