On the Move - City2Shore Gateway Group April 2023

On The Move BLOG  March 2023

 
West Michigan is once again having a bit of a housing crunch. Buyers might call it a crisis.  The fact is there are several reasons we are back in this condition again and they are not “covid” related.

1. There is an inventory shortage.  The current generation of first-time homebuyers are entering the market but the older generations are not selling their homes. Many refinanced at much lower rates (under 3% in many cases) so there is no real drive to purchase or build when today’s rates are hovering around 7%.
2. While 7% interest is not that bad of a rate (still below the 30-year average) it is still more than double the rates we saw in 2021. Therefore, there is no desire to sell. Further, interest rates of under 3% is essentially “free money” from lenders as homeowners with historically low interest rates are also seeing their home value increase by 8-12% per year in West Michigan.  If you are earning 5% plus interest on your investment and using someone else’s money to do so- you essentially have free money.
3. Nationwide inflation is going to hurt Michiganders with the highest property tax rate increase ever. 5% will be the number this year, but it could have been much higher if it hadn’t been capped in 1996 at the rate of inflation or 5%, whichever was less. The current DC administrations issues with the economy are being felt worldwide but locally your summer tax bill is going to jump significantly. If you currently escrow your taxes with your mortgage, you will have a shortfall, so get ready for the lenders to make those adjustments meaning your monthly mortgage payments are about to jump.
4. I discussed this in my recent WZZM News channel 13 interview.

• See that interview here: https://www.wzzm13.com/article/news/local/michigan-property-tax-making-biggest-jump-in-decades-from-inflation/69-51d9771c-7c9b-44ce-98a5-8f9b78782783

5. To meet the housing shortage needs of 2023 in Kent and Ottawa Counties, builders would have to build nearly 50,000 new homes/condominiums