3 Reasons Why Selling Your West Michigan Home in 2011 Could be A Smart Move!

For many of you reading this blog, your first instinct to this bold title might be…Really?  C’mon, Lola…are you serious?

Yes, I am.  Absolutely.  I’m going to share with you 3 Solid Reason for why Selling Your West Michigan in the 4th Quarter of 2011 could be a smart move.  You may actually look back and say…Why didn’t I do this earlier.

Now, this post is for those of you who have been considering putting your homes on the market, but have hesitated because there has been so much negative press about the housing market.  You may have outgrown your current residence or had a life-change such as a marriage or new baby.  Perhaps, you NEED to move because you’ve been transferred or you have lost a job and can no longer afford your current payments.  Whatever, the reason…read on.

1.  The Real Estate Market in Grand Rapids, MI is steadily improving…

Statistics available from the Grand Rapids Association of REALTORS, the industry trade association that monitors housing sales and prices indicate that over the last year, home sales and prices have stabilized and are now beginning to show modest gains.   Area REALTORS are posting increased Sales numbers and it is anticipated that Sales will rise above the levels in 2010, the  year in which the  Home Buyers’ Tax Credit boosted an artificial increase.  What’s noteworthy is that this activity has occurred despite double digit unemployment in Michigan and continued challenges in the financing sector.  If you have owned your home for at least 10 years,  consider obtaining a Market Analysis of your area to determine your current equity position.

2.  Mostly Serious Buyers Remain…

Getting a mortgage to purchase a home today is an event worthy of celebration!  Although interest rates have fallen dramatically, guidelines for lending and regulation associated with loans have increased dramatically.  This has resulted in much higher qualifying standards for home buyers today.  Approved Buyers have been vetted through stringent standards.  They are also better educated with access to the Internet and the ability to compare the value of their real estate investments.

Buyers today understand the economics of a Housing Sale; they know that many homes are priced 30% BELOW the market value.  Subsequently, many area REALTORS report the rise of multiple offers as competition for homes which are priced to Sell increases.

If you own your home without any obligation/mortgage OR have lived in your home for 10+ years, you may be well positioned to enter the market place right now.  As Inventory levels have declined in recent months, the available supply has diminished at just the time when Buyers are focused on getting into their new homes before serious snow begins to fly in West Michigan.

3.  Almost 14,000 Homes Sold  Just Yesterday!

Yep!  You read that right.  Even with all the dire statistics, home sales continue to average just over 5 Million per year nationwide.  If you average that to a daily rate, that means that on the average,  14,000 homes sold within the past 24 HOURS around the nation.  One of those homes could have been yours!

Here in West Michigan, we are selling approximately 1,000 homes per month.  That means that EVERY DAY, 30-35 homes are Selling right here in your community.  While some of those homes are being bought by investors or are homes Sold due to distress situations such as Foreclosure and Short Sales, many are not.  In fact…the majority of homes Sold are not.  Over the past year on average approximately 43% of homes Sold each month have been due to a hardship situation.  But, that means that 57% of home Sold – the majority – have NOT been distress sales.

If you would like a detailed analysis of the housing market in your West Michigan neighborhood or if you’d simply like to talk about your options, please contact us.  616-791-0511

In A Nutshell…Grand Rapids MI Real Estate Summer Market Statistics

The summer real estate market in Grand Rapids has included some positive momentum in several key areas.  Here are the highlights in a nutshell.
  • New Listings for the month of July were down almost 23% from  the previous year (1,255 for 2011 vs 1, 628 in 2010).  An even greater differential was observed YTD with listing inventory down 28.5%.  We have witnessed a slow down in the number of foreclosures coming to the market.
  • Another encouraging trend is the volume of Closed Transactions which are up by almost 45% from a year ago.  The average days on the market for a successfully CLOSED transaction in July of 2011 was BELOW 90 days!  However, it’s important to note that for vacant properties, the average days on the market remains fairly high at over 300.
  • Average home Sale Price was also up by 17.1% with average home Sale Price also up by just under 19%.  The average home Sale Price in July 2011 is now $136,183 and the average home Sale Price overall for the month is $132,289.
  •  Investors are purchasing properties at bargain rates in the case of distress sales. The volume of homes sold through Short Sales has hovered between the 40 – 45% range which is lower than many areas of the State.

Winter in Grand Rapids, MI…Will the White Stuff Bring Good News for Home Sales?

What started with gently falling flakes  which quickly melted has now tossed a snowscape blanket of brilliant white throughout Grand Rapids, MI.  It’s beautiful!  The first big snow fall of the year always is.  I’m looking out my window and admiring how pristine everything looks.  The trees which were devoid of leaves are now flecked with specks of white.  Time to get out the Christmas tree and think about Christmas shopping…

Today, the numbers for November sales were released by the Grand Rapids Association of Realtors®.  There’s definitely some news to bring good cheer to the season.  November’s sales numbers have held steady,  which is particularly significant given the drops in sales which the industry experienced in the summer months.  Inventory remains high at 9.9 months of supply, but this is lower than the almost 12 months of supply that we had 12 months ago.  Condo sales are a surprising bright spot with an increase in sales of 23% over the same period last year.

If you’re thinking of purchasing a condo, there are a lot of attractive options to look at.  If you will require financing, make sure you check with your lender to ensure that your condo will qualify for the particular type of financing that you need.  This is especially pertinent if you are going to be using an FHA type loan.

If you’re thinking about putting your home on the market, it’s important to understand the specific dynamics in your area and price range.

Every neighborhood in Grand Rapids has it’s own trends and these need to be understood in order to have a home listing enter onto the market successfully.  Because Short Sales and Foreclosures are still a factor in our area, it’s critical that the impact of any home sales activity include this data and that home sellers understand the time it will take to market a home and what needs to be done to facilitate a Sale.

Are There Over 7 Million Foreclosures Coming?

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.

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Are There Over 7 Million Foreclosures Coming?

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:

  1. The percentage of foreclosures and the percentage of homes in delinquency
  2. The probability of liquidation (cure rate)

THE PERCENTAGES

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.

To read additional comments on this blog or other articles by Steve Harney, please visit his site.

Positive Periwinkle: Is the Spring 2010 Real Estate Market in Grand Rapids MI Encouraging You?

Positive periwinkle

Well, the numbers for the first couple of months of the year 2010 are in.  And there’s more good news than many anticipated in Grand Rapids, MI.  Although, there was some lethargy in the overall US market, Grand Rapids, MI has continued to buck the downwards trend in some significant areas.

If you’re a homeowner, you should be know that 2010 has started off in a good way.  There has been a 13.4% increase in overall homes sales so far (from 759 in the same period in 2009 to 861 today- January figures) and the average Sales Price is trending significantly higher…TODAY at $106,409 vs $95, 182 – January stats.  These numbers trend even better for February with average Sales price of $111,457. If you EXEMPT Short Sale and Foreclosure activity, those numbers jump closer to the $140,000 range!

So you’re probably thinking…What’s going on with Distress Sales?  Well,while  they do continue to exert a significant dampening trend on the Grand Rapids, MI market place.  It is worth noting that the percentage of Short Sales declined from just over 57% of total sales volume in January to 50% in February.

This is an important number to track, because it is a foreshadowing of the true health of the marketplace.  There are still troubling indicators in the larger economic sphere as jobs continue to be an issue in Michigan.  I think two additional issues are also in play here and may make it difficult to get an accurate grip of the true state of affairs.  The expansion of the Home Buyer Tax Credit last year to include a larger number of potential buyers until April 30, 2010 and the fact that mortgage rates continue to be exceptionally low but are expected to increase in the latter part of the year.  On the positive side… many banks have finally figured out how to systematize the Short Sale process and are streamlining the approval path relatively speaking.  Hopefully, this will help drain the pipeline of excessive inventory a little more quickly.

Another indicator you might find interesting is this:  the Median Price increased from a middling $60,000 – $62,000 to almost $80,000 in February 2010.  In the luxury market, we’re also seeing signs of encouraging activity.  Many homes in the $400,000 + range were especially hit hard with losses in the past year.

Last year, approximately 80 homes Sold in this Price Range (over $400,000).  However, just since January, there have been 11 homes Sold in Grand Rapids, MI over the $400,000 price mark! If you’ve been wondering about the possibility of selling an Executive level home, it may be time to get ahead of the curve and take a fresh look at your prospects. Audu Real Estate is available to provide an extensive analysis of the market including strategic advice in positioning your home advantageously.  Contact us at 616-791-0511.

In case you’re curious…here’s some interesting information about periwinkle. 🙂

picture courtesy of Franco Folini

Reconciling Confusion…Making Sense of Conflicting Statistics in the Grand Rapids, Mi Real Estate Market!

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:  info@auduhomes.com

Dramatic Home Sale Increase in 2009 Grand Rapids MI Housing Market Over 2008!!

iStock_000006856473XSmallGood News on the housing front & just in time for the Holidays in Grand Rapids, MI. In a market which has seen the worst of times in recent years, arecent article in the Grand Rapids Press heralding an increase of 35 PERCENT in home sales over 2008 was more than welcome…local professionals are ecstatic!

It’s been great to touch base with so many agents who tell me they are busy again. We sold most of our inventory within the last couple of months and are “re-stocking the shelves.” The ‘HOT PRICE’ range is $100,000 ~ $140,000.

This has helped to increase the average Home Sale Price to $109, 826 which was 3.2 percent higher than the same period in 2008. But…year to date, home prices are still down by 15.1% over 2008, a number which can be attributed to the on-going issues with foreclosures and short sales in the local market.

Other noteworthy improvements in the Grand Rapids, MI market include the decreased number of Short Sales and Foreclosures in September and the possibility of the extension of the Home Buyer tax credit which served to enable over 200,000 new jobs last year according to a quote by Jerry Howard, President of the National Home Builders Association in this article.

Now, all this good news does not necessarily indicate we are totally OK. There are still huge inventory of foreclosed properties which have not yet been placed on the market and joblessness continues to be a scourge on the Michigan economy.  As we near the end of the year, what happens in these two areas as well as the credit markets will send strong signals about the on-going journey of recovery.

If You’re a Homeowner…

These past several months have created some glimmers of hope.  Inventory levels have declined and housing prices have inched up.  More importantly, Sales have increased substantially. One of the critical assessments that homeowners who need to sell a home can make is the OPPORTUNITY COSTS CALCULATION.  It’s a fairly simple calculation which aids in determining how long you should hold on to your home, if this is a time to sell your home and what your carrying costs without a Sale actually are.

An Example...Calculating the OPPORTUNITY COST

For example, let’s say your home is valued at $140,000.  You’ve been in the home for less than a decade and you currently owe approximately $120,000. The OPPORTUNITY COST is determined by taking approximately 10% of your current expected Sales Price and dividing it by 12.  In this case:

140,000 X .10 = 14,000

14,000 / 12 = $1,167 = OPPORTUNITY COST per month

That number $1, 167 is approximately what it will cost you EACH MONTH if home prices DECLINE another 10% over the next 12 months. This year, home prices declined approximately 15% overall from last year, and since 2006, there has been a 30% DECLINE nationwide.  So an improvement to a decline of only 10% is not unreasonable.  You can manipulate the numbers to see a range of options, but most experts seem to think that we can expect declines within the neighborhood of 6% – 10% in home prices over the next year.

An Example…Calculating Your Specific OVER-PRICING PENALTY

OPPORTUNITY COST + CURRENT MORTGAGE PAYMENT = OVER-PRICING PENALTY

For example:  $1,167 + $1,100( est. Mortgage Payment) = $2, 267 (OVER-PRICING PENALTY PER MONTH)

OR…$27,204 PER YEAR

Adding the OPPORTUNITY COST to your current mortgage payment gives you a unique perspective of what it will actually be costing you to OVER-PRICE your house in today’s market.  If you’d like a detailed report about housing & pricing in your specific Grand Rapids, MI neighborhood, please give us a call at 616-791-0511 or e-mail us at info@auduhomes.com.