For more information about the Grand Rapids Symphony or the Picnic Pops series…click here.
This article was posted by Steve Harney. It is excerpted with permission. The issue of Shadow Inventory is already impacting the real estate industry throughout the country and is definitely a factor in the Greater Grand Rapids Mi area. The percentage of homes Sold in distress sales through during the month of June 2010 for the Grand Rapids was slightly below 50% of the total volume of transactions. The total number of homes Sold in June (907) was already significantly lower than the two years prior.
It is critical that homeowners who intend to Sell their homes be aware of this issue when it comes to pricing a property for Sale. As the article notes, there are a number of factors impacting the Shadow Inventory and as this is a fairly fast moving situation, it is likely that there will be some significant variations and shifts in the days ahead. If you’re interested in a more detailed analysis or a market trends analysis about the homes in your neighborhood, please contact Audu Real Estate.
Article by Steve Harney ~ July 13, 2010
There have been some extraordinary numbers being bantered about when talking about the number of foreclosures that will be coming to market over the next 18 months. Different studies have estimated that number to be between 5-8 million. Let’s take a look at one of these studies today and see how these totals are being calculated.
The Financial Analysis Journal last month posted an article titled Dimensioning the Housing Crisis in which they break down how they arrived at the number of 7.13 million foreclosures about to come to market.
When looking at foreclosures, it is important to realize we are not talking about only those homes currently owned by banks (REOs) but instead the probable number that will be owned. To decipher that number, we must look at two things:
- The percentage of foreclosures and the percentage of homes in delinquency
- The probability of liquidation (cure rate)
The article breaks down the percentage of foreclosures and the percentage of homes in each delinquency category:
At the end of the third quarter of 2009 (last data available), a staggering 14.1 percent of mortgages in the MBA survey were in some stage of delinquency: 4.47 percent of units were in foreclosure, another 4.41 percent were 90+ days delinquent, 1.67 percent were 60 days delinquent, and 3.57 percent were 30 days delinquent.
These percentages put the actual number of homes in danger at 7.89 million.
THE CURE RATE
Cure rates measure the percentage of loans exiting delinquency and returning to their current payment status each month. These percentages have plummeted over the last several years as the housing market has suffered.
The cure rate is most negatively impacted by unemployment and negative equity. Neither of these are expected to improve in the near future.
THE FINAL TALLY
Below is a table using both the percentages and the cure rates to determine the number of potential foreclosures coming to the market.
The first column shows the percentage of homes in each category of delinquency. The middle column are the current cure rates for each category. The last column is the total percentage of each category that will wind up as a distressed property.
The study estimates 7.13 million distressed properties will come to market.
What does this mean to you?
Whenever there is an increase in supply of an item, there is downward pressure on pricing. The houses coming to the market will be sold by the banks at discounted prices. Home values will be impacted dramatically.
A Scenic Trip, Just A Little Off The Beaten Path Brings You To This Lovely Setting Just Minutes From The Hustle And Bustle Of City Living. This Is Country Living At It’s Best.
This 4 Bedroom, 3 bath Ranch Style Home Features Soaring Ceilings In The Living Room, Brand New Wood Laminate Flooring Throughout The Living/Dining Areas Set Within An Earth Tone Inspired Palette Of Freshly Painted Walls Throughout .
The Kitchen Which Includes Updated Appliances, Opens Off The Dining Area To A 3 Season Porch~ Thus Expanding Dining And Entertainment Options. The Downstairs Walk-out Has 2 Additional Bedrooms And A Bath. Outside, You’ll Love the simple beauty of a rustling brook, Plus Space a large garden area for domestic animals (Including A Large Storage Shed) All This On Just Over An Acre, Just Minutes From I96 & M-6.
One thing that showing hundreds of homes through the years teaches you is this…Home Sellers can do a lot to show their home in a manner that gets it SOLD!
I have always found it mildly astonishing that homeowners who spend thousands of dollars in upgrades and improvements to their homes fail to invest time and effort in a few critical areas to ensure that their homes are perceived well in the eyes of potential buyers.
Some homeowners might be surprised to find out how far a little money will go. Particularly when you put $500 against a backdrop of tens of thousands of dollars which are left on the table because a home does not sell or sells far below the listing price.
Here are just a few Simple Things to Keep in Mind when you are showing your home to ensure it shows Sold!
In a competitive market, there are hundreds of homes vying for a buyer’s attention. There are some homes which don’t receive even ONE showing request in a 6 month period. When you place your home on the market, be prepared to SHOW IT. If you’re not…WAIT, until you are. Yes, it may cost you a little in sleep and inconvenience, but in this market, if a real estate agent calls to show your home when there are 50 others like it…don’t count on being given a second chance. COST: Time & Effort ~ Dollars – ZERO
If you can’t clean your home…hire someone else to do it for you. Why deduct Thousands of dollars from you life through a possible sale just because you can’t or don’t know how to clean a home. Buyers love the smell of ‘clean’ about as much as they like the smell of ‘new.’ A good new home cleaning crew will cost about $250…loss of a sale or a discount on a home on the market for over 6 months…15-20 percent of your initial asking price. COST: approx $150 – $250
De-Cluttering is probably the single biggest thing that most homeowners can do fairly inexpensively to Show their Home Sold! Hire a storage unit…beg your friends to store stuff in their basement; whatever you have to do…get your stuff out!
But, to clear your home most effectively will require going beyond the basics of clearing out excess furniture and belongings and neutralizing. Sometimes you need to do just a little more to be most effective…
COST: approximately $50/month for storage if required
Hiring the Services of a professional stager to primp your home may be the best investment you can make in the home selling process. Staging does not need to be an exorbitant cost. In fact a good staging experience will probably save money by attracting more potential buyers or creating a better response to your home when it is shown.
COST: Initial Staging Consultation: $75 – $150
Price it for the Market!
Today’s Grand Rapids Mi real estate market is changing so rapidly that even real estate agents find they must regularly check to verify that listing prices for homes are in line with the reality of the marketplace. A decade ago, an appraisal was valid for at least six months. Today, it may only be valid for 30 days.
As a home owner, it’s important to invest time in getting professional counsel about how to price your home. You can contact a real estate broker to get a FREE Certified Market analysis, or hire an appraiser for several hundred dollars. What’s most important is that you ensure that whoever you hire does have the experience and proven results. Hiring the right person is even more important in challenging times. The wrong one can be a draining tax on time and resources.
COST: FREE ~ CMA (Certified Market Analysis) Appraisal: $ 275 – $350
Less Time & Hassle on the Market
Moving on with your Life!
Think about this…What bank or investment fund would give this sort of potential return on your investment of $500? Where else could you put in $500 and enjoy living in a nice, clean well arranged environment with the potential of making it back fairly quickly by a Sale?
Copyright 2010 Audu Real Estate All Rights Reserved
Today, the entire world is watching the finals in the World Cup between the Netherlands and Spain. Grand Rapids, MI and the West Michigan area has a large community of people from the Netherlands. So today, I’m rooting for Orange. ~ the Netherlands. We’ll see how things turn out.
Picture is courtesy of my photostream on flickr. Our sons played soccer on a travelling team for many years. It’s a game that requires a tremendous amount of discipline and perseverance. Here’s to all who have worked so hard in this World Cup and have given us many moments of sheer joy in the artistry of the game!
*This post was a response to a question posted on Trulia. It has been one of the most frequently visited responses since we began assisting folks with answers to real estate questions on that site. So we thought it would be helpful to share with visitors to Grand Rapids Real Estate Musings who may also have similar concerns. We’ve also added more detailed information here to help our readers. Here’s what we posted in response to the question:
HOW DO WE FIND HOMES FOR SALE WITH LAND CONTRACT OR RENT TO OWN OPTIONS?
We have assisted clients who are in situations similar to the one you described. The good news is that there are more options available today than there have been in recent history. There are also some particular pitfalls which you should be aware of so you can avoid some regrettable results.
The Grand Rapids Association of Realtors MLS system allows real estate agents to search for land contracts and other terms which may indicate a willingness on the part of the current home owner to rent or lease with an option to buy.
In addition, we search beyond the borders of the local MLS to assist clients with locating suitable homes on sites such as Craigslist. However, it is extremely important to negotiate these type of transactions correctly.
There should be close coordination with a reputable lender as well as a written lease and purchase contract which protects your interests and provides options for you in the future. When this is not done properly, you can easily loose a lot of potential hard earned equity. You should also consider the possibility of doing some additional research to determine if the home is currently in default. Some buyers have moved into homes only to find that the home was being foreclosed on due to the non-payment of the mortgage.
We’d be happy to sit down with you or talk over the phone about the specifics concerning your situation. There is no obligation. When we understand what you are looking for, we can research and forward listings which you can review in the comfort and convenience of your home.
You may also visit our website or blog to read about the experiences of clients we have helped recently.
Grandville, MI Real Estate Statistics ~ June 2010
Like many areas of the West Michigan real estate landscape, Grandville, MI has been impacted by the rise in foreclosures and short sales which have accounted for an increasing number of transactions within the past year.
The graph below is provided courtesy of the Grand Rapids Association of Realtors. There has been a downward trend with regards to home prices. The median sales price is $81,000 compared to approximately $120,000 in June of last year (2009) while the average sales price hovers at around $100,000.
Current inventory on the market is just under 9 months, but home owners who are successfully selling their homes seem to understand what the market requires to get to the closing table. Houses priced to compete effectively in the current market are selling within 93.72% of the list price. There are currently 114 homes on the market and the average number of days on the market for homes which have sold is 72.
Chart & data provided courtesy of the Grand Rapids Association of Realtors
Fulton Street Farmers Market is a vibrant market located in the heart of Grand Rapids on Tuesday, Wednesday, Friday and Saturday between the hours of 8:00 a.m. – 3:00 p.m. The market features all sorts of goods including locally grown produce and arts and crafts. It remains one of my favorite things to do on a summer weekend morning. This post was written last year for another of my blogs, but the experience still resonates. Enjoy! 🙂
It was the tour of homes which had me driving past the market and unable to resist, we decided to pop in to see what was going on. When we arrived at noon, the place was packed! We were lucky to find a parking spot. It had been a very long time since I had visited, and the market has certainly grown in popularity.
The stands had a colorful variety of fruits and vegetables, fresh bread, some select meats, arts and crafts, spices, health and beauty products and fresh flowers. Talking to local farmers was great. On more than one occasion, I heard merchants say they were selling out of products.
The appeal of the fresh market has grown as more people become concerned about environmental issues and supporting the local economy. Did you know that the average product in your grocery store travels over 1000+ miles to get to your table? In addition, several area restaurants, including popular sites like Marie Catribs, the Green Well , GRAM Cafe andRestaurant Bloom also highlight the fact that they strive to serve locally grown produce and food items on their menus.
The Fulton Street Farmers Market is located at 1145 E. Fulton Street, in Grand Rapids, MI. 49503. The Market is the oldest of it’s kind in West Michigan, having started in 1922.
Permanent stands have been set up in the middle of a parking lot which allows local farmers to back their trucks in and unload their wares. Visitors to the market walk through the middle.
What I found especially delightful was the diversity of people…old, young kids and babies, moms and dads, foreigners, black & white…everyone was enjoying the sights, smells and sounds of the market. We were even serenaded by a young guitarist who set up shop just outside the display area which made an interesting experience even more enjoyable.
Grand Rapids Real Estate Statistics…June Report 2010
The real estate community in Grand Rapids, MI released the monthly report tracking real estate activity within the metropolis today. It was a mixed bag. In the good news column, the average home price has continued to rise in small increments. The average price of $117,061 is up 2.8% from June of 2009. Inventory levels have also remained fairly stable in spite of the potential for a significant influx of bank owned homes (sometimes referred to as Shadow Inventory).
In a press release from the Grand Rapids Association of Realtors today, Julie Rietberg, CEO of the Association, commented on the June numbers.
“While home under $100,000 are still a majority of the sales, we are seeing an increase in the percentage of sales in the $250,000 to $500,000 homes.” she said. “Homes in this price range can be considered ‘move-up homes’ for the sellers of the homes that first time buyers purchase. This is a sign that there is strength in the West Michigan market beyond the first time home buyer tax credit. The number of homes sold in all categories above $250k outpaced that of 2009.”
Against this back-drop, the number of distress sales also rose to approximately 50% of sales activity, a trend which has been creeping upwards since the beginning of the year. The impact of this rise can be seen in the decrease in total sales volume year to year. The total sales volume for June of 2008 and 2009 hovered within the range of $132 Million. Today, the number is closer to a little over $98 Million.
For home purchasers, these numbers when combined with historically low interest rates still represent an opportunity to invest in real estate . Home sellers should continue to be proactive in staging their homes to create a memorable experience during showing visits from potential buyers and must also be realistic in appreciating that pricing a home today requires an accurate evaluation of what the market value is within the context of your specific neighborhood.