As Michigan gains traction under government orders to shift into making new smaller cars for better fuel efficiency, the state is battling against a housing market that has been deteriorating for years. But there are housing markets in Michigan gaining strength and already show recoveries may be underway.
In Grand Rapids for instance, home sales triggered by the governments' first time home buyers' tax credit are on the upswing, and home prices are actually rising. Job lay-offs in the auto industry have hurt the local economy with other business closings, many of which catered to the auto industry. Home prices are some of the highest in the state. But additional foreclosures projected in 2010 will pressure prices.
However, the expansion of the federal tax credit to move-up buyers should help the market to gain momentum moving into the spring season. Located well outside of Detroit and free of much of its influence, Grand Rapids is forecast to see average housing prices rise 2.7% in 2010.
Even with the tax incentive housing sales are sliding in Detroit, and home prices are some of the lowest in the nation for any metro area. Unemployment tops 17%. It's no news that Detroit is hurting in the financial crisis, but mounting evidence is beginning to show that Detroit may not be far from the bottom of the market. Would it not be for the fact that so many people are still leaving for jobs elsewhere, Detroit would already be on the way back up.
| City |
Forecast |
| Detroit |
− 8.2% |
| Grand Rapids |
2.7% |
| Lansing |
− 7.7% |
| Marquette |
3.2% |
Bloated foreclosure sales were the bread and butter of Detroit's housing market for the longest time, but non-foreclosure sales are increasing as the inventory shrinks. More foreclosures expected in the early part of the New Year will weaken the market.
Auto makers will need to sell more pick-ups, which command upwards of $30,000 each before the local economy and the housing market finds more stability and that will only develop when new home builders and others in the construction trades go back to work. Detroit will also have to do better when it comes to attracting new businesses before a turn around develops. Housing Predictor forecasts average housing prices to decline less in 2010 at an average of 8.2%.
Michigan's housing crisis has less of an impact on the Upper Peninsula, where many vacationers go to enjoy the summer sun. The area offers a high quality of life out of the hustle and bustle of the big city. In Marquette home sales are showing signs of getting on a steadier path with the addition of the move-up buyers tax credit expansion. Home prices are forecast to appreciate 3.2% for the year.
In Lansing, job losses and an over supply of homes are weighing on the market and pressuring home values. Mortgages that are harder to get are deteriorating the economy in Lansing. Foreclosures compose the majority of home sales and are expected to remain the source of most sales for at least the next year. Lansing home prices are forecast to drop an average of 7.7% in 2010.
