Bob Brick has been selling real estate in the Traverse City region since 1973. We check in with him to get his market perspective on waterfront homes during today’s economic tumult.
Give us a flyover of the mood you are seeing in the waterfront market.
People are curious about waterfront property, but it’s hard to predict much these days because the market is so uncertain. It is a buyer’s market, and everyone is looking for foreclosure stuff, comparing what the property was mortgaged for versus what the banks are willing to take for it now, and the banks are crashing prices as fast as they can. What we’re seeing now is 40 percent of the homes selling are foreclosures.
What about beyond the foreclosure market?
Our area never really had the big real estate bubble that some places had, so while prices have pulled back, they have not collapsed. We never had the surge in immigration that the coasts had, and that was a key factor in the bubbles they saw. Since 1999 45 million people have immigrated to the U.S. They went to the coasts.
Share some advice for people shopping foreclosures.
Know what you are getting into as far as the condition of a foreclosed property. I have seen some really lame management of foreclosed properties, with pipes that have frozen and burst, and the house has filled up with mold and other things. I’ve seen where a foreclosure management company in Dubai hires a company from Detroit to come up here to winterize the property, but they don’t know what they are doing this far north. It can be barely controlled chaos.
How else is the economy affecting the market in waterfront?
Well, Michigan has the fifth-highest number of second homes in the country. We have so many lakes. And that property is a very solid part of a bank’s loan portfolio and of a private individual’s assets. And most second homes have mortgages on them. So, when a family’s cash flow gets short and you can only make one mortgage payment, you are going to pay your primary home mortgage, and put the cottage up for sale. But, on the buyer’s side, second-home mortgages can be tougher to come by, because you cannot use your primary home equity as down payment any more. And jumbo loans in Michigan—mortgages above $417,000–are charged a higher interest.
Do you think that long-term, waterfront in general will weather the housing turmoil well?
Michigan has a reputation for some of the best waterfront anywhere in the country. People will still be looking at the attractiveness of our area. And Northern Michigan in particular is blessed with clean, clear, fresh water. We are focused on the economy now, but long term, water is the most precious commodity we have. That’s why people love living on it. I don’t know why, but being on a boat, a canoe, an inner tube, whatever, the water is special here, and that’s why people still love to find a place on the water.
Any final piece of advice for waterfront shoppers?
Always know what the non-homestead property tax will be.
Bob Brick, RE/Max Properties Bayshore, 231-941-5600, ext. 203, [email protected]