Five Star Real Estate’s Blog

It is time for a market update. What is happening in the Grand Rapids market? Several trends are apparent.

Values are declining in the West Michigan market. Ten percent of the homes currently for sale are either repossessed or in the process of being repossessed. Because the banks can afford to cut prices to move inventory they have adversely affected market values for the entire market. All neighborhoods are feeling the brunt of this trend from Ada and Cascade, to Rockford and Walker- all neighborhoods. Yours and mine included. Nobody seems to be exempt.

Why is this happening?

· Employment issues have negatively impacted our market. Delphi in Coopersville closed, Steelcase not so long ago employed 10,000 plus in West Michigan now only 5,000, they used to build refrigerators in Greenville- not any more, Johnson Controls has closed plants in Holland. I could go on but you get the message, I’m sure.

· Sub-prime loans- loans essentially issued to people who never should have been given a loan. Many lenders made loans to buyers who were not able to honor their financial commitments. These homes are being repossessed in massive numbers.

· Equity loans- Too many people resorted to using the equity in their homes as a source of cash and borrowed the maximum against their home’s value. Suddenly because of an employment issue they need to sell, only to find that between their original mortgage and their equity loan they now owe more than their home is worth.

Keeping it in perspective.

· This too shall pass. We have experienced difficult times in the past and we will again in the future. Do you remember 1980-1981-1982 when the entire country was in a recession and mortgage rates were 14, 15, 16, and 17%. I remember those days all too well, but we got through it and moved on. We will get through this and hopefully have learned some valuable lessons.

· Opportunity is knocking. Change is relative when buying or selling. Someone may sell an entry level home for less than they had hoped, but when they buy up they will get an even better bargain. Now is actually a great time to move up. For first time home buyers the inventory is vast and the opportunities are almost unbelievable. While the news media would have us all believe the sky is falling (because that is what sells) the reality is that there is opportunity at every turn.

Let’s all keep our chin up and persevere.

Jeff Blahnik

Five Star Real Estate