Submitted by Anonymous on Sun, 05/06/2007 - 05:00.
Michigan housing market in a bad slump
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Area real estate professionals said it's a stunning turnaround from a local real estate market that expanded by double-digit annual increases for much of the last decade. "It's astonishing, absolutely,” said Conklin, owner of Appraisal Office Biz in Traverse City. "We're seeing a lot of sales that are below what the market value might have been even a year or two ago.”
The state's lengthy economic slump continues to chip away at the region's once-percolating real estate market. Land values are slumping and property foreclosures continue to surge throughout Michigan.
New construction activity is stagnant and local governments are starting to see the impact in their yearly land value totals, figures that determine local tax base and revenues for services. It's a trend likely to continue, as virtually no one expects Michigan's flagging economy to rebound in the near future.
"I would say I'm not expecting any dramatic turnaround anytime soon,” said Judith Lindenau, executive vice president of the Traverse Area Association of Realtors. "I think prices will fall a little bit more before they turn around.” Cherie Robinson, a Realtor in Traverse City, says the market changed. "Three or four years ago in this neighborhood, (homes) would be on the market for a week,” she said. Just up the street, Kristin Sulecki said offers have been "all over the board” for her century-old Victorian home. "I'm not sure people know what to offer,” she said.
She and her husband recently dropped their asking price about 1.6 percent. On the upside, the couple can get a good deal on a larger nearby home if their property sells. "We're going to get it at what it was appraised at two years ago,” Sulecki said. Combined with the cooling real estate market, new construction projects have fallen off dramatically over the past 18 months. The lack of new construction, combined with slowing land value increases, is starting to pinch local governments, which are beginning to lay off workers and make other cuts.
New construction in Grand Traverse County slipped almost 20 percent in 2006 from the previous year, and forced the county to reduce building department staff.
The same thing is happening in Wexford, where a drought of building permit requests caused the county's human resources committee to make a recommendation to slash the building department and make all but one of the positions part time. Officials said other adjustments were made in the budget to avoid making cuts, but tough economic times made it necessary to leave workers without benefits and one of them, the zoning director, possibly out of a job.
Wexford Commissioner Thomas Akers said he's noticed that construction is not the only weak sector of the economy. "Right now it looks really bleak, not only in the building business, but in the retail business,” Akers said.
Akers, who owns Manton Hardware, said his business typically picks up this time of year with people buying fertilizer or seed for their lawns, planning to paint their house, or some looking for supplies to tackle a repair or remodeling project. This year's been slow, Akers said.
"In general, people are sick and tired of winter and they're ready for spring, but there's something in the economy that's holding it,” Akers said. Both real estate and financial professionals said there's little doubt the area's real estate market is experiencing a ripple effect from southern Michigan economic woes created by the domestic auto industry's decline.
"We have a lot more auto-related companies in the Traverse City area than most people think,” said local banker Mark Eckhoff, president of Fifth Third Bank Northern Michigan.
The state's tough economic times sent property foreclosures soaring throughout the state, totaling almost 30,000 in the first three months of the year, according to California-based RealtyTrac that tracks property foreclosures across the country. That's up more than 32 percent from the fourth quarter of 2006, and up almost 30 percent from the same period last year.
More than 100 of those first-quarter foreclosures were in Wexford County, with almost 40 in Grand Traverse County.
Eckhoff said part of the reason for the foreclosure surge is the failure in the sub-prime lending industry, which provides financing for home buyers who don't qualify for traditional mortgage loans. "We've seen that here in Traverse City, and we've seen it in other parts of the state, as well,” he said.
Those foreclosures also will have a lingering effect on property values, experts predict. It will take thousands of potential home buyers out of the market, and soften the demand for second homes in northern Michigan from propsective buyers elsewhere in the state.
According to data from the Michigan Association of Realtors, the volume of residential property sales was down last year in 38 of the 41 local real estate agent associations. Statewide residential sales were down 13.6 percent in 2006. Average sales prices were down in 32 of those 41 districts, with an average state-wide reduction of 2.3 percent.
The tough times in the real estate and new building sectors are starting to show in land value data compiled by area counties to determine their local property tax base. Wexford County's total state equalized valuation (SEV) of property in 2006 — theoretically half of its "true cash” value — increased by just 4.2 percent last year to a little over $1.3 billion. That's the lowest increase in county land values in more than a decade, and well down from the double-digit increases experienced from 2000-02.
Other area counties are seeing similar trends. Crawford County's SEV increased just 2.9 percent this year to just over $756 million, while Otsego County's was up 3.3 percent to more than $1.6 billion.
Some counties with extensive lakefront property saw higher SEV increases than the inland counties, but the rate of growth is still slowing. Grand Traverse County's SEV increased 6.8 percent in 2007 to just over $5.84 billion, but that was down almost 3 percent from the 9.7 percent increase in 2006. One exception was in Leelanau County, where the 2007 SEV of nearly $3.8 billion was up 9.3 percent from last year, compared to a 7 percent increase two years ago.
Experts said the real estate slowdown isn't totally unexpected. Lindenau said it's unlikely the market would have continued growing at the double-digit rates of a few years ago. She also said the region hasn't seen the extreme downturns in real estate prices experienced in other parts of the state.
Source: Traverse City Record-Eagle
The state's lengthy economic slump continues to chip away at the region's once-percolating real estate market. Land values are slumping and property foreclosures continue to surge throughout Michigan.
New construction activity is stagnant and local governments are starting to see the impact in their yearly land value totals, figures that determine local tax base and revenues for services. It's a trend likely to continue, as virtually no one expects Michigan's flagging economy to rebound in the near future.
"I would say I'm not expecting any dramatic turnaround anytime soon,” said Judith Lindenau, executive vice president of the Traverse Area Association of Realtors. "I think prices will fall a little bit more before they turn around.” Cherie Robinson, a Realtor in Traverse City, says the market changed. "Three or four years ago in this neighborhood, (homes) would be on the market for a week,” she said. Just up the street, Kristin Sulecki said offers have been "all over the board” for her century-old Victorian home. "I'm not sure people know what to offer,” she said.
She and her husband recently dropped their asking price about 1.6 percent. On the upside, the couple can get a good deal on a larger nearby home if their property sells. "We're going to get it at what it was appraised at two years ago,” Sulecki said. Combined with the cooling real estate market, new construction projects have fallen off dramatically over the past 18 months. The lack of new construction, combined with slowing land value increases, is starting to pinch local governments, which are beginning to lay off workers and make other cuts.
New construction in Grand Traverse County slipped almost 20 percent in 2006 from the previous year, and forced the county to reduce building department staff.
The same thing is happening in Wexford, where a drought of building permit requests caused the county's human resources committee to make a recommendation to slash the building department and make all but one of the positions part time. Officials said other adjustments were made in the budget to avoid making cuts, but tough economic times made it necessary to leave workers without benefits and one of them, the zoning director, possibly out of a job.
Wexford Commissioner Thomas Akers said he's noticed that construction is not the only weak sector of the economy. "Right now it looks really bleak, not only in the building business, but in the retail business,” Akers said.
Akers, who owns Manton Hardware, said his business typically picks up this time of year with people buying fertilizer or seed for their lawns, planning to paint their house, or some looking for supplies to tackle a repair or remodeling project. This year's been slow, Akers said.
"In general, people are sick and tired of winter and they're ready for spring, but there's something in the economy that's holding it,” Akers said. Both real estate and financial professionals said there's little doubt the area's real estate market is experiencing a ripple effect from southern Michigan economic woes created by the domestic auto industry's decline.
"We have a lot more auto-related companies in the Traverse City area than most people think,” said local banker Mark Eckhoff, president of Fifth Third Bank Northern Michigan.
The state's tough economic times sent property foreclosures soaring throughout the state, totaling almost 30,000 in the first three months of the year, according to California-based RealtyTrac that tracks property foreclosures across the country. That's up more than 32 percent from the fourth quarter of 2006, and up almost 30 percent from the same period last year.
More than 100 of those first-quarter foreclosures were in Wexford County, with almost 40 in Grand Traverse County.
Eckhoff said part of the reason for the foreclosure surge is the failure in the sub-prime lending industry, which provides financing for home buyers who don't qualify for traditional mortgage loans. "We've seen that here in Traverse City, and we've seen it in other parts of the state, as well,” he said.
Those foreclosures also will have a lingering effect on property values, experts predict. It will take thousands of potential home buyers out of the market, and soften the demand for second homes in northern Michigan from propsective buyers elsewhere in the state.
According to data from the Michigan Association of Realtors, the volume of residential property sales was down last year in 38 of the 41 local real estate agent associations. Statewide residential sales were down 13.6 percent in 2006. Average sales prices were down in 32 of those 41 districts, with an average state-wide reduction of 2.3 percent.
The tough times in the real estate and new building sectors are starting to show in land value data compiled by area counties to determine their local property tax base. Wexford County's total state equalized valuation (SEV) of property in 2006 — theoretically half of its "true cash” value — increased by just 4.2 percent last year to a little over $1.3 billion. That's the lowest increase in county land values in more than a decade, and well down from the double-digit increases experienced from 2000-02.
Other area counties are seeing similar trends. Crawford County's SEV increased just 2.9 percent this year to just over $756 million, while Otsego County's was up 3.3 percent to more than $1.6 billion.
Some counties with extensive lakefront property saw higher SEV increases than the inland counties, but the rate of growth is still slowing. Grand Traverse County's SEV increased 6.8 percent in 2007 to just over $5.84 billion, but that was down almost 3 percent from the 9.7 percent increase in 2006. One exception was in Leelanau County, where the 2007 SEV of nearly $3.8 billion was up 9.3 percent from last year, compared to a 7 percent increase two years ago.
Experts said the real estate slowdown isn't totally unexpected. Lindenau said it's unlikely the market would have continued growing at the double-digit rates of a few years ago. She also said the region hasn't seen the extreme downturns in real estate prices experienced in other parts of the state.
Source: Traverse City Record-Eagle
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