Home prices outpace income

Average Kent County home price leaps to more than $300,000.
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The pandemic disrupted a lot of things, but home prices were not one of them.

According to the Grand Rapids Association of Realtors, the average home price in Kent County has increased by 25% from January 2019. The average home price in January 2019 was $232,902 and the average home price in August 2021 was $309,530 in Kent County.

In the city of Grand Rapids, the median housing price in January 2019 was $159,900 and it is currently $245,000, per REDFIN.

Seth Ballas. Courtesy Lindybeth Photography

“The number of homes at the median price currently available in metro Grand Rapids compared to just two to three years ago has shrunk considerably,” said Seth Bellas, loan officer and branch manager for Churchill Mortgage. “If you’re talking about what the average family can really afford these days, it’s slim pickings, so buyers have to pivot by being ultra-aggressive at eliminating personal debt.”

Despite the increase in home prices and limited inventory, wages have struggled to increase, and the pandemic didn’t make it any better as employers were forced to let employees go or furloughed them. According to Bellas, the median income growth from January 2019 to now is 8% in Kent County.

The latest data from the website Department of Numbers, which contextualizes public data on economic measures, stated the median household income for residences in Kent County was $66,532 in 2019.

Fannie Mae tracks the average household income in specific areas to determine loan eligibility and they have the current household average income in Kent County for October at $80,800,” Bellas said.

“The difference in the average home price is around $77,000 and the difference between the median wages in 2019 and 2021 is around $14,000 during the same amount of time, so the median in home prices is much higher than that of annual wage growth.”

He said the available housing inventory shrunk by more than half in the last two years (1.3 months on the market in July 2019 to 0.6 months in July 2021) while debt-to-income ratios rose to levels that disqualified some previously qualified buyers.

Nevertheless, Bellas, said more and more people are moving into the Grand Rapids area from places such as Texas, California, eastern Michigan, Chicago and other major metropolitan areas because of job opportunities and quality of life. As a result, they are in search of homes.

With limited inventory, home prices continued to move upward during the pandemic, in part because people realized they didn’t want to stay where they were. Although there was a shutdown, it didn’t deter real estate agents from giving tours of homes digitally.

I think that there was a huge increase in buyers flooding the market because they realized, as a result of the pandemic, they were spending a lot of time in homes or apartments that they didn’t really love,” Bellas said. “They were kind of trapped in those smaller spaces for long periods of time. They didn’t have enough room. They didn’t really have a place dedicated for an office or a work-from-home setup, so there was an increase in competition in the housing market.”

That only magnified the discrepancy between home prices and wages, however, and as a result lenders now are trying to help individuals close the gap.

“The math is going in the wrong direction, so I think the evolution you’re seeing with many local lenders is an increasing specialization in debt counseling and money management,” said Bellas. “It can seem like a mountain for many first-time and working-class buyers, but it can be done. We recently worked with a couple who took their monthly debt load from a plus $3,500 to under $1,800 while paying off $112,000 in consumer debt. They’re on their way and others can be, too.”

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