Driven by the lowest home prices in decades, the Michigan housing market has little chance of ever catching up with home prices that residences were once selling for but markets have made compelling improvements over their disastrous fall-outs. The “Big 3” auto companies re-hiring of thousands of workers should eventually help the state recover.
As Michigan gains traction in its recovery from a housing depression that has lasted longer than anywhere else in the country, the economy is being transformed with incentives for new businesses to move to the state.
Home prices have been rising in Detroit, battered by the auto industry and a loss of population to other states. Housing sales should be bolstered through the remainder of the year, despite the expiration of the federal tax credit for home buyers. Low mortgage interest rates and favorable home prices should still be inviting for investors, who are looking to invest for the long haul in Motor City. But the uphill battle that Detroit faces is expected to take a number of years to achieve. Housing Predictor has lowered its forecast for Detroit. Average housing appreciation for the year is projected to be 12.7% as foreclosures hamper the market.
Bank assisted short sales and foreclosed REO sales compose the majority of sales in Grand Rapids, where an unusually even pace of sales existed as a result of the federal tax credit. The sell off has resulted in an early slow down of the market for the year. High unemployment is the area’s major concern as inventories of homes listed for sale remains high.
Even though Grand Rapids is located well out of Detroit, it has a sizeable auto parts business that it provides to the Big 3 auto makers that contributes to Grand Rapid’s economic woes. Foreclosures make up nearly half of all sales in much of Michigan and as foreclosures rise the inventory will offer more deals to buyers in Grand Rapids as bankers slash prices to sell the inventory. Grand Rapids is forecast to see average home prices appreciate a slighter 8.7% for the year as a result.
Lansing home sales hit a new high for the first time in four years as a result of the federal tax credit for buyers, but then slowed. The largest percentage of single family homes sold during the spike came from bank owned and assisted short sales. The boost in sales should last over the remainder of the year, but at a slower pace as buyers become accustom to a market that is making efforts to re-establish a balance.
Home prices are also projected to increase substantially over the remainder of the year, despite double digit high unemployment that hampers the area’s economy from a full recovery. Joblessness is not, however, as high in Lansing as in other areas of Michigan, which should add to growing strength for its housing market. Lansing is forecast to experience average home price appreciation of 13.6% at the end of 2010 for the year.
In Marquette the second home vacation market has seen an increasing number of mortgage holders walk away from homes as a result of being either unable to afford their loans or not seeing any other way out. The Upper Peninsula of the state attracts summer visitors to enjoy the area every year, but economic issues present a troubling time for the region.
Marquette is far removed from the problems of Detroit, but the lingering financial crisis still hinders its economy. As a result, Marquette is forecast to experience less appreciation for its market forecast at only 7.9% for the year.