Summary: Inventory is still lacking within the Grand Rapids, Michigan real estate market, and forecasts suggest that this will boost home prices through 2018 and into 2019.
In 2017, a real estate report published by Realtor.com singled out Grand Rapids as having one of the tightest housing markets in the country. Back then, the city had one of the lowest inventory levels of homes for sale.
According to the January 2017 report: “Since late 2010, the city has experienced net in-migration for the first time in a decade, creating way more housing demand. Twice in 2016, Grand Rapids even made it onto our monthly list of hottest markets.”
Well, here were are in spring of 2018, and not much has changed. The Grand Rapids real estate market still has inventory levels that are well below what is considered to be normal. So it’s no surprise that economists are issuing housing forecasts calling for additional price growth in this market.
A Lot of Demand, Not Enough Supply
Housing analysts and economists say that a “balanced” real estate market has around five to six months worth of supply. In theory, that’s how long it would take to sell off all of the housing stock currently listed for sale, if no new properties came onto the market in the interim. This metric gives us better insight into local real estate conditions in cities across country.
According to the latest MLS data and real estate reports, Grand Rapids, Michigan had about a 0.9-month supply of homes for sale as of March 2018. You read that right. The city had less than a one-month supply of homes earlier this year. (You’ll recall that a supply of five to six months is considered normal and balanced.) So clearly we are talking about a very constrained real estate market with limited inventory.
By comparison, Lansing and Detroit both had more than a three-month supply of homes for sale during that same month. The nation as a whole was slightly below the three-month mark in March of this year.
Forecast for Grand Rapids Housing Market: Price Growth
Given these tight inventory conditions, it’s no surprise to see Grand Rapids housing market forecasts that call for rising prices through 2018 and into 2019.
Zillow is just one of several sources that have issued positive predictions for the city. As of May 2, 2018, the company was reporting a median home value of $181,447 for the Grand Rapids real estate market. That was an increase of 10.2% over the same month a year earlier. Looking forward, Zillow’s economists forecast that the median home value in the area will rise by 4.9% over the next 12 months or so.
In April 2018 Ryan Ogle, president of the Greater Regional Alliance of Realtors, told Michigan Radio that the Grand Rapids housing market is experiencing an “inventory crisis” — his words. He said that local real estate professionals are also referring to it as a “logjam.”
There are more buyers than sellers, which makes the market very competitive for those seeking a home. And those homeowners who are thinking about selling often won’t even list their homes until they can find somewhere else to live. And so the cycle perpetuates itself.
While there is ongoing construction within the local housing market, it’s currently not enough to correct the supply-and-demand imbalance. When asked how long it might take for the this market to “balance out,” Ogle told Michigan Radio that it could be two years or more, due to the lengthy nature of the home-building process.
Disclaimers: This article contains predictions for the Grand Rapids, Michigan real estate market through 2018 and into 2019. Projections, data and commentary were provided by third parties not associated with the Home Buying Institute. As a general rule, we make no claims or assertions about future housing conditions.