After several years in the doldrums, the Lansing area residential housing market is perking up.
The Greater Lansing Association of Realtors says 125 more area homes were sold last month than in January of 2011. Real estate professionals say low interest rates and housing inventories, falling unemployment and rising valuations are behind the upswing. WKAR’s Mark Bashore spoke with GLAR President Jeff Burke to learn more.
JEFF BURKE: The average sale price has gone up consistently for the last six months. Buyers are more confident in the market, which is kind of getting them out more to purchase. Houses are really kind of coming on and off the market quick.
MARK BASHORE: What other forces out there account for this increased activity?
BURKE: I think one of the forces in play is there is a little more job security. Our unemployment rate’s dropped and actually I think we’re in the top ten, if not number seven, in the country as far as the place to go to open up a business. So I think the security with buyers more confident that, ok, their jobs are a little bit more secure. They’re getting out there, and with the inventory being so low and the average sale prices starting to rise, it’s kind of sparking people that the market is starting to bounce back.
BASHORE: You have referred to a pretty tight inventory and I think some listeners are confused by that because after the housing bubble burst, we were led to believe there were all kinds of properties on the market. Why is the inventory so tight?
BURKE: Well what you have is you have a lot of sellers that were trying to sell their homes at possibly a higher rate that they’ve decided just to take them off the market.
BASHORE: A lot of people seem to think interest rates are about to begin rising, perhaps significantly. Is that behind the increase in demand as well?
BURKE: I don’t think that’s the main factor. We’ve been hearing that interest rates may be rising for quite some time and they’ve stayed fairly consistent in the 4, 4.5 percent range for I’d say about a year now. There’s always a risk that interest rates are going to go up (and) obviously as interest rates go up, you get less house for your money. But I don’t think it’s the number one, driving factor.
BASHORE: What role is foreclosed homes playing in the current upswing?
BURKE: Well right now the banks are putting houses on the market at such a low dollar amount that they’re creating auction atmospheres in the houses. There are 14 days where they won’t accept investor offers, which is sparking owner-occupants—basically buyers that are going to live in the house. So coming on (the market) at such a low amount and getting about five, six, eight bids on them—they’re actually driving them up to a market-value price, getting them off the market probably in less than a week.
BASHORE: And those will be owner occupied homes?
BURKE: Yes, the majority are owner occupied homes, which buyers are buying them to live in them and raise a family.
Another nice thing is that sellers in the market--people in non-foreclosed homes—are able to compete with those houses now, whereas before they were more of a detriment because they actually were competing against foreclosures. You get banks putting houses on the market and being that they’re off the market in less than a week, then it allows the other homes to sell as well.
BASHORE: So you’re finally seeing valuations in the Lansing area start to rise a little bit, is that it?
BURKE: Yes it is. We’ve had anywhere from a four percent even to as high as a 13 percent increase in average sale price, from anywhere—Grand Ledge, Holt, East Lansing, Okemos, Haslett, Dewitt and even Lansing. So it’s been positive.
BASHORE: Are valuations higher enough that people who have been upside-down for a few years may not be anymore?
BURKE: You’ve got people that might be right on the line there that it might affect. It just depends on their situation—when they bought and obviously how much they owe. But if it’s priced right, condition’s right, location’s right, the amount of buyers out there that are looking for something like that, there’s quite a few. So (you could) possibly get someone out from under their house, if they couldn’t do it the last couple of years.