Falling Michigan Home Prices Hurt Bottom Line for Sellers
If you have real estate on the Michgian housing market you have been unable to sell, consider Walter Hutchinson. He isn’t selling just one home in a static real estate market, he has 15 houses listed for sale in the Cadillac, Manton and Lake City areas.
Hutchinson has been buying and renovating homes for the past 25 years. Some were sold along the way and others became rental properties. Today, he has 60 single-family home rental units in his investment portfolio and the time to cash in has arrived.
“I’m ready to retire now and want to cut back a little,” he explained.
Working full time at his business for the past three years, he’s not concerned about losing money on his investments despite the sluggish and flooded real estate market. For the most part, Michigan mortgage activity has waned throughout 2006 and 2007.
“It depends on how bad you want to sell,” he said. “I won’t take a lot less because they are rented.”
However, most sellers aren’t in the same fortunate situation and may be forced to accept less for their properties than they ever anticipated. During the past four years market prices for Michigan homes in the area declined 5 to 10 percent, according to Exit Realty agent Sheila Richardson.
The market has many home sellers trapped in a Catch-22. Houses that are moving are those priced around $100,000 and these are typically the home owners who can least afford a loss. But they’re also the ones most likely to attract attention from those seeking mortgage loans.
“It’s not in someone’s best interest to sell unless they have to,” said Shirley Schafer, home mortgage broker/owner of Pro Realty of Cadillac. “But it’s a great time to buy.”
Especially if you are looking at higher-end homes, according to the realtor.
“We probably have a three-year supply on the market of homes priced over $100,000,” Schafer said. “A lot of it is lakefront or acreage.”
Waterfront and acreage properties are considered luxuries. “It’s not something the average buyer can aspire to,” she said.
Area buyers tend to be first-time home buyers in their 20s or early 30s, but some migration from southern Michigan is also taking place.
“People are coming in from downstate,” Richardson said. “They left their jobs or got buyouts.”
Despite the recent collapse of the subprime lending system, mortgages are still available and attractive for buyers with good credit scores, she said. The no-down payment mortgage aids buyers, as well as new incentive programs that eliminate the closing cost.
“The seller pays all closing costs,” Richardson explained. “You raise the selling price. The seller then gets out with all proceeds at closing and the money is there to cover closing costs.”
While she takes an optimistic attitude, the uncertainty of the future causes her concern with the recovery of home values likely to come as a response to growth in the local job market and industry’s ability to attract higher paying jobs.
“In another five years, we could be worse off,” she said. “We all might be selling our homes for 50 cents on the dollar.”
SOURCE: The Cadillac News