When you think trends, what is the first and foremost trend that pops to your mind?
If there’s a trend, it’s that our inventory levels are slimming down, We are transitioning from a buyers market to a sellers market, but we’re not quite all the way there. The best thing is that real estate prices have stabilized and in some cases are even increasing.
Give us some back story on that … what’s causing that market situation?
A couple of things. As far as the economy goes, the demographic of who we sell resort real estate to, the economy has been very, very good to those people. And in addition, Northern Michigan has had lots of exposure nationwide. On top of that, every 10 years or so, there is a surge in our regional economy here and things really start to click hard. We are in one of those times now.
So, the resort, secondary home market is hot thanks to wealthy people doing so well in this economy, but what about the primary home market, houses in which working families live?
The primary market is also very healthy, although the inventory levels are not high there either. What’s helping there is more people want to live in Northern Michigan now because you can work from virtually anywhere. If you were given the option to work in suburban Grand Rapids or Northern Michigan, which would you choose? And, by the way, you are seeing a similar thing in the second home market. Technology allows people who still want to live in Cincinnati or Chicago or wherever, to come here far more frequently and stay longer than ever before because they can continue to do their daily business from here. They will work a portion of their day, and then they go out to get on the water, golf, hike, bike, whatever.
The bottom line to me is people are living these hectic, fast-paced, very intense lives in equally intense workplace environments. Their daily grind is stressful to say the least. So it’s a very appealing idea that you can come up here and disengage from that immediate stress in life and re-ground yourself, refresh and recharge the batteries. That is what Northern Michigan is about. It used to be you’d sit on the dock to recharge. Today people want to mountain bike, run … they recharge by being active.
When the new lending laws went into effect after the crash, where people could not use paper equity from an existing home as down payment on a second home, some speculated that the second home market would take a big hit. Has that happened?
Not really, we’ve really seen very little lasting impact from the crash of a couple years ago. We do see a disproportionate number of people purchasing homes with cash today. Sometimes they might get financing after the fact, but buyers are coming to us with tremendous resources today.
What will we see when interest rates go up?
Interest rates are so low that I think any minor adjustments will have little effect on our marketplace. When I bought my first home I thought I’d hit a home run with a 10.5 percent rate. I just don’t think a slight bump in rates would have a significant affect us.
We hear a lot about the need for workforce housing, more affordable homes. Where do you see that happening?
It’s hard to build something on a piece of land in Northern Michigan and make it affordable. But yes we have an affordable housing shortage. We are trying to work with state and federal agencies that do provide some grants and TIF money. Also, we will see bedroom communities grow. Look at other communities like Aspen and Martha’s Vineyard—when places get out of reach, bedroom communities develop for those places. Here we are starting to see it as well.
What about now, this summer. What’s the mix?
I would say we are in a very strong economy in Northern Michigan. That translates to a pretty strong real estate market. The thing for people to remember is that we live in an ever changing world and we’re linked inextricably to the world’s events. That being the case, We counsel people that now is the time. Now is the time to buy. Now is the time to sell. Take advantage of the market we are in now, whether that is a cottage on the waterfront or affordable in-town home. The current conditions bridge all of those markets.
This article was originally published in the July 2016 issue of Traverse, Northern Michigan’s Magazine.