The number of single-family homes sold in the greater Grand Rapids area in July was 681, compared to 1,040 in July 2009. On the other hand, condo sales are “one of the gems” in the residential real estate market here, according to Julie Rietberg, CEO of the Grand Rapids Association of Realtors.
As to that grim number for single-family home sales in July, Rietberg said real estate sales professionals believe that people who were planning to buy this year decided to act before the federal tax credit for first time homebuyers expired at the end of April.
“What we believe happened is that January through April (sales) robbed a bit of May through August,” said Rietberg.
Rietberg said she would be more concerned about the low July numbers if there wasn’t a logical explanation. “If you look at year-to-date, the numbers are still healthy — almost the same as last year,” she said.
July saw a slight decrease of 1.3 percent in year-to-date sales: 7,009 compared to 7,108 for the same period in 2009.
On the plus side, single-family home prices were up for the eighth consecutive month, compared to the same months last year. In July, the average single-family home price was $117,412, up 2.6 percent over July 2009 at $114,475. Year-to-date, the average sales price is up 10.9 percent compared to 2009.
The inventory of homes for sale dropped to 8,148, putting upward pressure on home prices.
“One of the gems in this market has been condominiums,” said Rietberg. “We’ve seen a 51 percent increase in the sale of condos so far this year.”
By the end of July, year-to-date residential condo sales in the Grand Rapids area were about 582, compared to 386 last year, according to Rietberg. The total number of condos sold in 2009 was 731, compared to 697 in 2008 and 989 in 2007.
The median price of Grand Rapids area condos is $115,000, although the average price is $179,000, according to real estate statistics cited by Rietberg.
Downtown condo buyers tend to be perceived as young professionals who like urban living, while suburban condo buyers often tend to be retirees. However, there has been a blending of those demographics lately regarding downtown condos.
“We’re also seeing a lot of business people who are nearing retirement who are excited by the prospect of being downtown. I know several who have purchased downtown and are currently renting those condos until such time as they actually retire,” she said.
Rietberg and other real estate agents also have received calls from individuals who have chosen a downtown condo as their summer home, but live elsewhere in the winter months, typically Florida or Arizona. “We’ve seen a pick-up in the number of those, as well,” she said.
Rietberg’s database currently shows that there are approximately 966 condos for sale in the greater Grand Rapids area.
Compared to 2007 condo sales, with 989 sold, the number available now is “a year’s supply. That’s a big supply, a healthy supply. We like to be in the five- to six-month supply,” said Rietberg.
Mortgage rates reached 50-year lows by the end of July, with conventional 30-year mortgages at slightly under 4.5 percent interest. “I’m actually a little surprised at that,” said Rietberg. “I didn’t think they’d dip down much more than they were. That’s terrific news.”
But the rules have obviously changed on who qualifies for a mortgage.
While Rietberg said she would be reluctant to say it is “harder” to get a mortgage now, she does agree that “the banks are checking much more closely than they did that you are indeed financeable and in a position to pay it back.”
“I think they were a little too free with loans in the last several years, and they’ve tightened those restrictions back up to, let’s say, ‘pre-boom’ days. Your loan-to-income ratios have quite frankly gone back to where they should be.”
Rietberg noted that in the past, the general rule of thumb for homebuyers was that the mortgage payment, taxes and insurance should not exceed 35 percent of the buyer’s income.
“For a while they had gone kind of well-beyond that 35 percent, and it was allowing people to stretch themselves too tight. I’m not blaming the banks entirely; people have to know what they can and cannot afford. And that doesn’t count the people who have lost their jobs.”
“I think it’s safe to say that banks are certainly more cautious than they have been, but I think in a reasonable way,” added Rietberg.
The residential rental market also reflects the times. Rietberg said the rental industry is “competitive, too. You’ll see a lot of apartment complexes giving away incentives.”
Demand is up for single-family homes, she noted.
“It’s been easier to rent houses than it has been in the past, because I think there are a lot of families that have been displaced that perhaps prefer a home versus a smaller apartment. In that sense, yes, I think homes have been easier to rent than they have in the past.”
Tom Koetsier, president of the Rental Property Owners Association of Kent County, said the general feeling among his constituents is that “things are pretty good. There are plenty of rentals — you need to stay competitive. But there are plenty of tenants out there.”
He agrees the mortgage problems have generated more renters, “but also, the mortgage problems have led to more houses being available to rent.”
As for foreclosures, “investors are buying these houses and turning them into rental properties,” said Koetsier.