The headlines over Michigan have been blazing for years. The state is in financial ruin, more than two-thirds of its biggest city residents have left and the real estate market is in shambles. But wait a second… Things just may be getting better in Michigan, the state that entered the housing bust first.
Prices have gotten so low in parts of Michigan that investors swooped in for bargains. Home sales have climbed for months, indicating that at least things aren’t headed south anymore. And the prices on some homes are actually rising. That’s right—going up!
“We can probably say it’s the start of a recovery,” said Realcomp CEO Karen Kage, whose company tracks housing sales in Detroit. The areas median price has dropped from $172,000 in 2005 before the real estate crash to $70,000, according to the National Association of Realtors. But existing home sales, driven by record low mortgage rates are up and the high-end is actually seeing some pricing increases. Leave it to the rich to drive the MotorCity’s prices back up.
However, Detroit is hardly out of the woods yet. The foreclosure crisis has a lot to do with things. A court ruling by the Michigan Court of Appeals stopped foreclosures on 400 homes. The halt happened after the court issued a ruling that lenders using the services of Mortgage Electronic Registration Systems (MERS) violated the state’s foreclosure process.
A class-action lawsuit filed by two Michigan counties against the company may slow the filing of foreclosures, and allow home prices to artificially increase during the interim. MERS is being sued by thousands of counties as a result of its cooperation in the foreclosure of homes throughout the U.S.
The cases could linger in U.S. courts for years to come, delaying perhaps hundreds of thousands of homes that have defaulted from foreclosure. The U.S. Supreme Court is expected to hear the case, but that may not happen for years to come, delaying the housing recovery. What this means for Detroit is lower home prices over the short term as consumers remain leery about the economy and the marketplace. Homes in the region are forecast to decline less than last year, however, an average of 3.5%.
In Grand Rapids housing sales have been tumbling, but the average price of a home has risen. Prices got so low more buyers are making purchases aided by low mortgage rates. In 2008 the average home was selling for just under $100,000 in Grand Rapids, but thanks to lower rates and an improving job market in some sectors of the community prices are forecast to decrease a modest 2% in 2012.
Home sales are trending upward in Lansing, despite high unemployment levels in the region. Home prices are still sinking as the market meets resistance with most home buyers who are shopping for deals. Prices in Lansing are forecast to decline 2.8% in 2012. Marquette is also projected to see more sales during the year on average dollar losses of 3.2%.