The residential real estate market in West Michigan is picking up right where it left off.
The first quarter of this year saw an unusually busy period, but that was quickly quelled in the second quarter due to the state’s shutdown because of the coronavirus.
Since Gov. Gretchen Whitmer partially reopened the state, however, the market has been surging forward.
“Just on closed sales in January, the Greater Grand Rapids market was up about 24% from the same time in 2019, so that was a pretty drastic increase,” said Dave Veldkamp, co-owner of RE/MAX of Grand Rapids. “The amount of new listings that we put up was about 9% in that month, so we had a strong month both for closings and new listings coming up.”
Although the governor’s “Stay Home, Stay Safe” order was put in place in March, Veldkamp said there already were sales pending in the first quarter, so several companies were allowed to close sales throughout April.
“It wasn’t until May when we saw a drastic change,” he said. “There is a service called ShowingTime that tracks all the showings that happen and get scheduled, and they break it down by state. In Michigan, the big drop during the shutdown showed those showings went to zero. Now they have ramped up again and we are showing homes at twice the rate as we were last year at this time.”
Ryan Ogle, principal broker for Blu House Properties, said he didn’t know what the real estate market would look like coming out of the shutdown, but since June he said the market has been a “gangbuster.”
“I think it is because our market was doing so well in January and February, we were just hitting our stride there to go into that spring market and we were going to be super busy, and then we just stopped,” he said. “I think there was a pent-up demand, almost like a log jam. I also think that people being at their house for two to three months realized they want a different home; they want to quarantine somewhere else. ‘If I am going to be stuck at home, maybe this isn’t the home for me.’ Maybe a small amount of people were thinking that, but I think that played a role (in the high demand now).
“There is a huge demand for homes in the $300,000 and below range. That first-home buyer range has gone up a bit in Kent County, but it is not uncommon to get 30 showings and 10 offers if you are in that price range and the home is in good condition.”
During the lockdown, real estate companies had to quickly adjust to social distancing requirements, cleaning and disinfecting public spaces and be innovative in the way they were doing showings.
Jason Wheeler, director of communications for PURE Real Estate Management, said his company implemented virtual tours for its units and created automated leasing and move-in processes.
Rachael Veldkamp, wife of Dave Veldkamp and co-owner of RE/MAX of Grand Rapids, said the shutdown reduced business by 80%, but they were able to close some transactions during that period with buyers only seeing the property through virtual tours.
“Our agents did a great job trying to make accommodations,” she said. “We were teaching sellers how to use their devices to videotape and then we would have the buyer’s agent with the buyer virtually walking through while the seller was videotaping, and the listing agent was on the video call as well fielding questions. We successfully did close some transactions.”
Jason Carpenter, associate broker at Keller Williams Realty, was not so fortunate. He said he started feeling the impact of the coronavirus when the stock market initially crashed in March.
“We had a few pending deals and a few deals in place that buyers just walked away from,” he said. “We had listings that got delayed and we had some values dropped with transactions that were sold during that period because we had sellers who were a little bit nervous as to where the market was going to go coming out. It was an altogether perfect storm because we had the oil issue going on with Saudi Arabia and Russia. We had the stock market, the coronavirus and the threat of a lockdown and then an eventual lockdown, so it kind of hit home for a lot of people thinking, ‘Maybe it is not a good time to purchase a home right now.’ We didn’t know what everything would look like coming out of this. We heard everything from, ‘it will be a V-shape recovery to the next Great Depression era,’ so there was a little of a speculative nervousness going on in the market as a whole.
“I had about $15,000 in commissions walk out the door in that week when everything went sideways. We just had deals that fell apart. Some of them were more commercial-oriented, but we had some buyers just walk away from deals.”
Now that the residential real estate market is on an upswing, its future is still speculative, especially with the increase of coronavirus cases around the country, the high unemployment rate and the presidential election in a few months.
Despite the unemployment numbers, Carpenter said the majority of people are able to pay their rent and mortgage because of federal help, but that can change if the unemployment rate remains high in the next few months and people are strapped for cash. He said that may result in more inventory coming onto the market.
Rachael Veldkamp said whenever it is an election year, there is uncertainty in the real estate market and changes in the lending restrictions. Nevertheless, she said she anticipates that the Grand Rapids real estate market will continue to be strong throughout the rest of the year.
“Nationally, the economists are saying that the spring market that we usually see earlier in the year will shift to the summer and the fall, so we are anticipating a really good summer into the fall,” she said. “There will not be much of a change from last year other than it being shifted a few months. All indicators show that housing is one of the industries that is going to bounce back because of all the circumstances surrounding low inventory nationwide. So, we are anticipating a really strong year, especially in West Michigan, because we are protected a little bit because we have so much industry growth here. The medical community here is strong, so we often don’t feel the effects like other big cities do as quickly when it comes to any changes in the market.”