Traverse City, Ann Arbor home sales point to brighter 2013
In parts of Michigan, a “For Sale” sign in front of a house is quickly followed by another: “Sold.”
Realtors from Grand Rapids to Ann Arbor to Traverse City are reporting trends notably absent in Michigan for years. Home values are rising. And marketable houses in decent shape are often snapped up in a matter of days.
“It's been incredibly busy,” said Dani Hallsell of the Ann Arbor Area Board of Realtors.
“What we do have is going very, very quickly. Days, if not short weeks.”
Home sale prices were up 9 percent in 2012 in the Ann Arbor area compared to 2011. The average sale price for January 2013 was $232,751, an increase of 34 percent over $173,865 in January 2012.
An improving economy is part of the reason. But Realtors also report a shrinking inventory of homes, putting upward pressure on price. And that is because many homeowners who would like to sell their homes are still “underwater” on their mortgages, owing more to the bank than the home is worth.
A year ago, there was about a year's worth of housing inventory on the market in the Grand Rapids area, according to Terry Westbrook of the Grand Rapids Association of Realtors. That has shrunk to four months or less.
“About 25 percent to 30 percent of those who said they are interested in selling their existing house are in a negative position and they don't have the cash to pay that off,” Westbrook said.
While the average home price rose 10.5 percent last year to $121,889 and the number of homes sold rose 32 percent, the number of new listings remained flat. At the end of December, the Realtors showed 16,389 new listings for the year, just nine more than in 2011.
For February, the average sale price of a home was $141,180, 12 percent higher than $125,699 in February 2012. A limited inventory tilts the advantage toward the seller, Westbrook said
“It makes it tough for people to find a house today. The ones they do find go very quickly.”
Rising home prices are certainly good news for local units of government, battered by years of plummeting values and declining tax revenues. But officials caution that any rise in taxable value will be less dramatic.
Under terms of Proposal A, passed by voters in 1994, increases in taxable property value are capped at 5 percent or the rate of inflation, whichever is less. The taxable value of homes is reassessed to reflect true market value only at the time they are sold. That limits how quickly municipalities can recoup years of dropping property values.
Real estate trends in a five-county area around Traverse City point to a robust recovery in housing.
In 2012, single-family home sales jumped by 26 percent in the region, from $392 million in 2011 to $553 million, according to the Traverse Area Association of Realtors. In an area that encompasses Antrim, Benzie, Grand Traverse, Kalkaska and Leelanau counties, the average price of homes sold grew by 12 percent, from $182,621 to $204,553.
The number of homes sold in Grand Traverse County was up 28 percent, with the average price up by 10 percent. In Leelanau County, the number of homes sold spiked by 44 percent, with the price up by 7 percent. In Leland, the number of homes sold was up by 22 percent and the average price by 32 percent.
But those numbers are not yet fully reflected in assessed residential property value. Compared to a statewide average drop of 4 percent in property assessments from 2011 to 2012, Grand Traverse County's residential value fell by 1.1 percent, Kalkaska County by 2.4 percent, Benzie County by 2.7 percent, Antrim County by 4 percent and Leelanau County by 7.8 percent.
That is due in part to limitations set by Proposal A and the fact property values are set at the beginning of the year, so they typically lag sales values for the entire year.
James Baker, equalization director for Grand Traverse County, foresees only modest growth in taxable value for all property . He calculates it will climb by less than 2 percent in 2013.
“It's just starting to peak up,” Baker said.
Ted Roelofs worked for the Grand Rapids Press for 30 years, where he covered everything from politics to social services to military affairs. He has earned numerous awards, including for work in Albania during the 1999 Kosovo refugee crisis.
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