Market in the Grand Rapids Area is in full swing: a seller’s market undoubtedly. But there are still opportunities for investors wishing to acquire new properties.
To better grasp what’s happening, GRAR makes available quarterly updates, as effective charts. In short, we are experiencing the lowest average number of listings in the first quarter of 2019 than in the past 16 years. Along, the average home sale price has increased to the highest ever experienced since 1998. At the peak of the 2006 market, before its collapse, the average home price was $163,924, compared to today’s $229,276!
At this time, we are observing multiple offer situations, as we have witnessed in the past four years, more or less. Over 20 offers for properties priced below $200,000 seems the norm, with winning bids going as high as $35,000+ above asking, waiving inspection, and non-refundable EMD’s. These properties are being sold within days anywhere a deadline to present offer is set, and within hours or before broadcast in all other cases.
Per my personal experience, and through in-depth conversations with other REALTORS®, it seems that cash offers have been dwindling, whereas financed offers, including FHA’s, are now the majority. One way to interpret this data could be that investors are seeing fewer opportunities to make a speedy profit, while many first-time home buyers are competing to make their first purchase.
Therefore, whereas investors look for properties in which to quickly build equity (REO’s, fixer-uppers, TLC’s etc.) most buyers are seeking turn-key dwellings. This is why move-in ready properties seem to be attracting the highest number of offers, and top dollars. Sellers are taking note, and responding adequately, marketing perfectly updated properties, in some cases with amenities found in higher-priced homes.
But what’s happening above the average selling price? Let’s look at single-family residencies priced in the $250,000 to $299,999 range.
Units sold are down compared to last year – while volume is increasing. In Kent County, in March 2018, 72 units were closed and 103 went pending, compared to 58 and 92 respectively in March 2019. Similarly, year-to-date numbers in 2018 were 157 closed and 223 pending, versus 138 and 203 in 2019.
Per my recent personal experience, I have observed a different attitude in sellers of properties in this price range than sellers of lower priced-homes. In my opinion, this is not fully in line with buyers’ desiderata. Could this vacuum soon become the new investor’s niche? We don’t have a definitive answer, but data is below.
Sellers of properties above $250,000 and below $299,999 seem to be generally placing more outdated properties on the market. These units seem listed too high in relation to what they offer, and typically above comps. Even if they are not necessarily selling at such high asking or above, they are selling nevertheless.
A good number of these 3- or 4-bedroom properties were built 15 to 25 years ago. The majority has original roofs, utilities, and appliances. Understandably, the investment needed to replace these expensive items might be among the reasons behind owners’ decisions to sell. Other reasons are outdated floor plans, bathrooms, kitchens, and amenities. At the same time, this is not what a good number of buyers at this price-point are expecting.
These are the twenty-one (at the time of writing) single-family properties within a 10-mile radius from downtown Grand Rapids, priced $250,000 to $299,999, built in the last 25 years. If we exclude the eleven (at the time of writing) new-builds, to-be-builts, and the ones who just hit the market, all other properties have been sitting unsold from 10 days to several months. Six of them experienced one or more price reductions – a sign that these properties were overpriced at the time of listing.
Of the 37 sold year-to-date, 10 sold below asking, and 9 at asking price; 2 sold above the $300,000 mark, one of which was newly built in 2018; 16 properties took from one month up to 171 days to sell.
Personally, I just experienced a multiple-offer situation in which we offered less than asking – with some attention to other details. Seller chose our offer. Property sold in one day.
The real estate market in Grand Rapids is rapidly changing. In order to be ahead of the curve, data analysis and direct experience is needed. Contact a REALTOR® for all your real estate needs. Happy house hunting everyone!