Is the Grand Rapids housing market the hottest it has ever been?
At the very least it’s the hottest it’s been in years, making it hard for homebuyers — particularly first-time buyers — to find and secure a home purchase.
With most of the amenities found in larger cities, a much friendlier cost of living and quick access to multiple great natural features, Grand Rapids is a desirable place to live. With that in mind, Realtor.com named the Grand Rapids-Wyoming market No. 26 on its list of 100 hottest U.S. markets in 2021.
“Yeah, sure it’s intense,” said Scott Rider, a real estate agent with Grand River Realty. “But the overall process isn’t life-threatening. It’s possible. The news makes it seem impossible at times, but it’s still possible.”
That pace continued into 2022.
According to Redfin’s January figures — the latest available when the magazine went to print — the median sale price for a home in Grand Rapids was $217,750, up 10.5% year-over-year. That is in part, of course, because supply is low; 252 homes sold that month, down 10.6% compared to same month the year prior.
“That’s the simple answer, inventory is at an all-time low,” Rider said. “If you follow any news around West Michigan, you’ll hear the stories about how competitive the market is and that mostly comes from the fact that the same number of houses are being sold each year, but the amount of houses to choose from is low.”
The lack of supply comes from a new generation of first-time homebuyers, an influx of people moving to West Michigan and sellers worried about selling and having to jump into the competitive market. While the supply is low, it’s still a solid value to residents, Rider said.
“It’s truly a wonderful time to live in this area,” he said.
This year could be a bit more tame than last year, as the market peak hit in August 2021, when the median sale price reached $252,000. The market hit new heights, and the rapid clip at which homes flew off the market made it challenging for real estate agents and buyers alike who were used to the old way of working through the process. The extra experience and news coverage likely will lead to more productive situations as buyers and sellers find their way, he said.
“Real people were trying to make some very impactful and important decisions about the largest financial investment they make, and they did it, they found a way,” Rider said. “2022 will be no different; buyers and sellers will find a way to navigate.”
The market still is hot and very competitive, according to Redfin’s competitive score, which gave Grand Rapids-Wyoming a score of 89 on a scale that goes to 100. It notes homes are selling approximately 3% over asking, with more than half going for more than asking.
The average January home sale in Kent County was $318,620, up 18.8% year-over-year, according to the Grand Rapids Association of Realtors.
With average home prices surging throughout the last year across the country, many assume a crash might be on the horizon. Don’t hold your breath. While that could be true for some markets, there is some thought West Michigan was just catching up to the actual value of the region.
Even at this stage in climbing home prices, Rider said he believes a new home still is a solid investment for those looking for a new dwelling.
“As interest rates rise and some real buyer fatigue hits, it’s very likely that we see prices level off,” Rider said. “Grand Rapids is just catching up to national numbers in a lot of ways. I’m not asking people to compare house prices in New York City to Grand Rapids, but the days of homes costing less than $150,000 are very likely behind us. I can agree on a plateau at some point, but a long-term regression would be very surprising.”
The real estate market slowed down a bit during the winter according to statistics, but it still proved extremely difficult for some buyers to find their way into a home, competing with cash offers, institutional investors and a variety of tactics that could ultimately make the deal riskier — like waiving inspections and guaranteeing the gap between purchase price and the appraisal value. That last one is a particular danger for first-time home buyers with limited liquid cash looking to find their way into a comfortable home at the upper end of their budget.
Unfortunately for eager buyers, it still could be an uphill battle to buy a home this summer — the traditionally “hot” real estate period. There are fewer homes for sale, and while interest rates will rise this year, they still will be relatively low compared to a decade ago, so home buying likely will stay a hot activity in 2022.
“West Michigan is going to be competitive for buyers again this summer,” Rider said. “Without a short-term way to truly increase inventory, I expect competition with waived inspections, appraisal gaps and buyers finding creative ways to land a dream home.”
Sellers seemingly still will have the advantage heading into a home sale, but a prospective home buyer does have options.
“Aligning with a knowledgeable agent will be key for buyers,” Rider said. “A buyer’s goals and expectations will really drive their decision to dive into a bidding war or find alternative options to land a home. I never want to see anyone feel stuck or make a bad investment.
“Sometimes it’s OK to take a breath and reevaluate the situation.”
This story can be found in the May/June 2022 issue of Grand Rapids Magazine. To get more stories like this delivered to your mailbox, subscribe here.