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How Is The Grand Rapids Housing Market For Real Estate Investment?

Grand Rapids Real Estate Market Insight

If you are looking at buying a house in Grand Rapids as a potential investment opportunity, you must read till the end. Grand Rapids in Michigan is home to around 200,000 people. That makes it the second largest city in the state and the largest on the west side of the state. However, the Grand Rapids housing market includes the larger metro area that is home to around a million people. The Grand Rapids-Wyoming metro area includes Kent County, Barry County, Montcalm County and Ottawa County. Let’s discuss top ten reasons to invest in the Grand Rapids real estate market. But, before that, we shall take a look at some of the real estate market data and trends in Grand Rapids, MI.

Grand Rapids is the fastest growing community in Michigan. The Grand Rapids metro area ranked second on a list of 10 housing markets nationwide that are “poised for takeoff,” according to a new study by Trulia. The main factors were the affordability, employment growth and low vacancy rates.  It was ranked as the top housing market nationwide by Trulia in the same study in 2017. Grand Rapids is poised to attract people and have strong demand for housing in the market. Investing in Grand Rapids rental property can yield a favorable return on investment.

Grand Rapids Real Estate Market

Original Photo via Pixabay

Grand Rapids Real Estate Market Forecast 2019, 2020 & 2021

The median home value in Grand Rapids is $158,800 on Zillow. Grand Rapids home values have gone up 13.1% over the past year and Grand Rapids real estate market prediction i that they will rise 5.0% within the next year. The median list price per square foot in Grand Rapids is $132, which is lower than the Grand Rapids-Wyoming Metro average of $145. The median price of homes currently listed in Grand Rapids is $169,000 while the median price of homes that sold is $157,100. The median rent price in Grand Rapids is $1,400, which is higher than the Grand Rapids-Wyoming Metro median of $1,350.

Grand Rapids Real Estate Market Forecast

Graph Credits: Zillow.com

A study released by Realtor.com, shows that out of the 100 largest metro areas in the U.S., the Grand Rapids metro area is projected to have the biggest percentage increase – 8.2 percent – in price growth in 2019.

LittleBigHomes.com publishes forecasts for the trend in home prices in 380 Metropolitan Statistical Areas. The forecast for the trend in the Grand Rapids housing market for the 12 months ending with the 3rd Quarter of 2019 is up. The Accuracy of the Trend Projection for Grand Rapids is 90%. If this Housing Market Forecast of Grand Rapids is correct, home prices will be higher in the 3rd Quarter of 2019 than they were in the 3rd Quarter of 2018.

Grand Rapids Housing Market Forecast 2019 – 2021

The forecast for the trend in the Grand Rapids housing market for the 3 years ending with the 3rd Quarter of 2021 is up. The Accuracy of the Trend Prediction for Grand Rapids is 86%. Accordingly, LittleBigHomes.com estimates that the probability for rising house prices in Grand Rapids is 86% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018. Check this page each quarter for updates to the Grand Rapids Real Estate Market Forecast.

You can check this page of LittleBigHomes each quarter for updates to the Grand Rapids Real Estate Market Forecast.

Grand Rapids Real Estate Market Trends

Real estate properties are moving up in value throughout Grand Rapids, MI. Grand Rapids real estate market trends indicate an increase of $10,000 (6%) in median home sales and a 4% rise in median rent per month over the past year. The average price per square foot for this same period rose to $130, up from $121. Trulia has 569 resale and new homes for sale in Grand Rapids, MI including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

The median sales price for homes in Grand Rapids for Nov 7 to Feb 6 was $170,000 based on 881 home sales. Average price per square foot for Grand Rapids was $130, an increase of 7% compared to the same period last year. The median rent per month for apartments in Grand Rapids for Jan 12 to Feb 12 was $1,450.

Grand Rapids Real Estate Market Trends

Graph Credits: Trulia.com

As per the real estate company named Redfin, the Grand Rapids housing market is most competitive. Homes in Grand Rapids receive 2 offers on average and sell in around 15 days. The average sale price of a home in Grand Rapids was $161K last month, up 7.1% since last year. The average sale price per square foot in Grand Rapids is $107, up 9.2% since last year. Homes in Grand Rapids typically receive 2 offers. Homes sell for about 1% below list price and go pending in around 15 days. Hot Homes for sale in Grand Rapids, MI can sell for about 2% above list price and go pending in around 5 days.

Grand Rapids Housing Market Summary

  • Median Sales Price: $170,000 (On Trulia)
  • Homes For Sale: 569 (Trulia)
  • Median Rent Per Month: $1,450
  • Median Household Income: $44,800
  • Home Owners: 67%
  • Single Residents: 36%
  • Median Age: 34
  • College Educated: 36%
  • Transportation: Mostly Car dependent, Public Transport Available

There are 512 homes for sale in Grand Rapids, MI, ranging from $14.4K to $9M on Realtor.com. 78 of which were newly listed within the last week. Additionally, there are 401 rentals in Grand Rapids, with a range of $400 to $4.3K per month. In December 2018 the housing market in Grand Rapids, MI was a seller’s market, which means there were roughly more buyers than there were active homes for sale. Seller’s markets are generally more advantageous for sellers rather than buyers.

Grand Rapids Housing Market Trends

Graph Credits: Realtor.com®

In December 2018, the median list price of homes in Grand Rapids, MI was $169.9K, trending up 9.6% year-over-year. The median listing price per square foot was $106. The median sale price was $167.1K. On average, homes in Grand Rapids, MI sell after 52 days on the market. The trend for median days on market in Grand Rapids, MI is flat since last month, and flat since last year.

Grand Rapids Housing Market Trend

Graph Credits: Realtor.com®

There are 289 schools in Grand Rapids, MI. There are 103 elementary schools, 65 middle schools, 51 high schools and 70 private & charter schools.

The median list price in Grand Rapids is $281,000 on Movoto.com. The median list price in Grand Rapids went up 2% from January to February. Grand Rapids’s home resale inventories is 311, which decreased 17 percent since January 2019. The median list price per square foot in Grand Rapids is $183. January 2019 was $180. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in February.

Grand Rapids Real Estate Market Trend

Graph Courtesy: Movoto.com

Grand Rapids, MI Single Family Homes

As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in Grand Rapids, accounting for 58.09% of the city’s housing units. Other types of housing that are prevalent in Grand Rapids include large apartment complexes or high rise apartments ( 18.46%), duplexes, homes converted to apartments or other small apartment buildings ( 16.99%), and a few row houses and other attached homes ( 6.20%).

The most prevalent building size and type in Grand Rapids are three and four bedroom dwellings, chiefly found in single family homes. The city has a mixture of owners and renters, with 52.19% owning and 47.81% renting.

Grand Rapids Foreclosures And Bank Owned Homes

Mortgage delinquency is the first step in the foreclosure process. The percent of delinquent mortgages in Grand Rapids is 0.6%, which is lower than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Grand Rapids homeowners underwater on their mortgage is 3.8%, which is lower than Grand Rapids-Wyoming Metro at 4.2%.

On RealtyTrac, there are currently 159 properties in Grand Rapids, MI that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 340. In January, the number of properties that received a foreclosure filing in Grand Rapids, MI was 88% higher than the previous month and 7% higher than the same time last year. Home sales in Grand Rapids for December 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home was $0. The median sales price of a foreclosure home in Grand Rapids, MI was $0, or 0% higher than non-distressed home sales.

  • Homes for Sale = 340 (RealtyTrac)
  • Recently Sold = 840
  • Median List Price = $175,000 (3% drop vs Dec 2017)

Grand Rapids Home Prices And Appreciation Rates

Grand Rapids real estate appreciated 41.09% over the last ten years, which is an average annual home appreciation rate of 3.50%, putting Grand Rapids in the top 10% nationally for real estate appreciation. If you are a home buyer or real estate investor, Grand Rapids definitely has a track record of being one of the best long term real estate investments in America through the last ten years.

Grand Rapids home values also show how hot this market is. They have gone up 13.1% over the past year, according to Zillow which predicts they will rise another 5% by Jan 31, 2020.

NeighborhoodScout’s data show that during the latest twelve months, Grand Rapids’s appreciation rate, at 5.45%, has been at or slightly above the national average. In the latest quarter, Grand Rapids’s appreciation rate has been 3.69%, which annualizes to a rate of 15.59%. Importantly, this makes Grand Rapids one of the highest appreciating communities in the nation for the latest quarter, and may signal the city’s near-future real estate investment strength. Relative to Michigan, their data shows that Grand Rapids’s latest annual appreciation rate is higher than 50% of the other cities and towns in Michigan.

10 Highest Appreciating Grand Rapids Neighborhoods Since 2000: By Neigborhoodscout.com

There are 35 neighborhoods in Grand Rapids. East Grand Rapids has a median listing price of $449,000, making it the most expensive neighborhood. Madison Area is the most affordable neighborhood in Grand Rapids, with a median listing price of $104,900. According to Trulia, Grand Rapids’ Alger Heights neighborhood is the hottest neighborhood in the Grand Rapids metro area.

These are the best neighborhoods in Grand Rapids for real estate investment because they have the highest appreciation rates.

best neighborhoods in Grand Rapids MI

Courtesy: Neighborhoodscout.com

Should You Invest In Grand Rapids Rental Homes?

If you are looking at buying a house in Grand Rapids as a potential investment opportunity, the city is one of the strongest in the state in terms of continual property value. The average estimated home value in the Grand Rapids metro was $187,900 in October 2018, up 8.9 percent from the same time last year, according to Trulia. The median property price in Grand Rapids is below national average and as appreciation rates slow down in the US housing market 2019, the Grand Rapids market will remain a relatively affordable place to invest.

If you are looking to invest in rental homes for sale in Grand Rapids, you must read this. These things make Grand Rapids real estate market stand out when it comes to choosing a place to invest in 2019 and beyond. Here are the top ten reasons to invest in the Grand Rapids rental properties for cash flow.

1. The Relatively Strong Local Economy Propels Growth

The unemployment rate in Grand Rapids is around 3%. This healthy unemployment rate attracts people from across the area, fueling demand for Grand Rapids rental homes. Why is Grand Rapids growing? It is home to a large medical sector, an industry that grows as the population ages. The city has always had manufacturing, but they’ve been somewhat diversified. There were multiple major furniture manufacturers, colleges and brewers in the area, but the city leaders sought to attract other businesses, as well.

2. The Student Market That Is Sure to Grow

Any city with a large university will have a strong rental market catering to students, and the Grand Rapids real estate market has that due to schools like Aquinas College, Grand Rapids Community College, Calvin College, Davenport University, and Cornerstone University. However, they build upon it with the MSU medical school that relocated here in 2017 and the multiple affiliated research facilities.

If you want to rent to students in the Grand Rapids real estate market, you can also look to the suburbs and house students from the massive Grand Valley State University campus; that has over twenty thousand students. Grand Rapids is great place for investing in Airbnb rentals as well. There aren’t any strict Airbnb regulations set as yet. Anyone who wishes to rent out a room or property on Airbnb in Grand Rapids must receive a license from the city.

3. Detroit’s Decline Is Grand Rapid’s Gain

Detroit was once the fifth largest city in the United States. It has fallen to 20th place with fewer than 700,000 people. In comparison, Grand Rapids is gaining population. The city has seen roughly 1% annual growth since 2010. As a point of comparison, the state’s population as a whole is flat, and almost a sixth of the units have seen a five percent or greater population drop since 2010.

This means that the Grand Rapids housing market is almost unique for seeing increasing demand for property and increasing rental rates.

4. Healthy Demographic Trends Keep It Going

The Grand Rapids area has a strong economy and younger than average population. It is seeing many residents choose to trust in the future and have children. This explains why two thirds of its growth is due to births, not migration. This is partially due to people moving from areas lacking jobs hitting the stronger Grand Rapids economy before choosing to have those kids they always wanted. This will fuel demand for the Grand Rapids real estate market for years.

5. The Affordable Property Going Up in Value

The median home price in Grand Rapids is around $170,000. That is well below the $220,000 national average. Yet demand is such that property values are increasing. The median home in Grand Rapids was worth just $135,000 in 2016. The steady demand for properties will keep the prices for homes in the Grand Rapids real estate marketing growing at least at the rate of inflation for the foreseeable future. This is excellent news, since it protects the value of your investment.

6. The ROI Is Hard to Beat

Median monthly rate hovers around $800 a month, but you’ll get far more for single family Grand Rapids rental homes. Median gross rent hit $900 in 2017. This is a far better rental rate than you’d see if you bought those Detroit homes on the market for $100 or the back taxes. In fact, the median gross rent for Grand Rapids rental homes is slightly better than the state average. You would of course see higher rates for three and four bedroom Grand Rapids rental homes.

You can do even better if you’re in one of the more expensive Grand Rapids real estate market. For example, rents are around $1400 a month in neighborhoods like South Hill, Southeast Grand Rapids and Roosevelt Park for two bedroom apartments, and you can get much more than that for a single family home with several bedrooms.

7. Housing Supply Is Tight

The vacancy rate for rental properties in Grand Rapids was reportedly around 3% in 2017, somewhat below the 5% state average. This is a significant improvement over the vacancy rate for Grand Rapids rental homes near 10% in 2010. The Grand Rapids housing market is notable for the relatively large share of homeowners. About a third of Americans rent, whereas only a quarter of locals do.

This creates strong demand for the rentals that do exist by those who cannot or will not buy a house. It also limits turnover among long-term residents. In contrast, the rapid abandonment of other Rust Belt cities allows home buyers to have their pick of properties.

8. There Is Room for Rental Rates to Grow

Rental rates can be measured in dollars. However, the best way to determine how much higher they can go is to look at the percentage of the average resident’s income going toward rent compared to what they could afford. This metric allows you to determine which markets are tapped out because people can’t afford to pay more.

In 2017, the average Grand Rapids resident spent 17% of their income on rent, a nearly 1% increase over 2016’s rent as a fraction of income stat. This means Grand Rapids rental properties are downright affordable, since the national average is 20%. Grand Rapids provides a lower cost of living than much of the rest of Michigan as demonstrated by the 18% of household income needed to pay rent.

A side benefit of the strong job market has been the growth of local incomes relative to rent; in 2016, the rent as a fraction of income ratio was nearly 18%. This means that rents in the Grand Rapids housing market haven’t gone up as fast as incomes but can therefore go up faster.

9. Property Taxes Are a Relative Bargain

We’re going to say property taxes here are a relative bargain because they are higher than the national average – but lower than the taxes you’d pay for properties in nearby cities. For a $150,000 home in the Grand Rapids real estate market, you’d pay around $2700 in property taxes. A comparably priced home in Detroit would generate a roughly $5000 tax bill.

A potential benefit of owning homes in the Grand Rapids housing market than somewhere like Texas is the fact that property taxes are managed by a cap rate system. In a cap rate system, the initial tax bill is assessed based on the value when you buy the home. However, the assessed property values increase at the rate of inflation, regardless of demand. This saves you from the 10% annual tax bill increases hitting Texas home owners year after year.

10. The Future for House Flippers Is Bright

The relative lack of supply of housing stock in the Grand Rapids real estate market and limited supply of new apartments and condos to suit the growing luxury market means the only way to meet demand is by moving up. The area isn’t going to see many new apartment towers. But it is seeing many people buy up older, small homes and turn them into spacious luxury homes or multi-family units.

That explains why Grand Rapids was the seventh best market for house flipping back in 2017.This is in part because properties could be bought for less than $80,000 and sold for the $150,000 or better median price. A side benefit of working in this market are the lower than average kitchen and bathroom remodeling costs.

Grand Rapids Real Estate Investment Properties

Maybe you have done a bit of real estate investing in Grand Rapids, Michigan but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Grand Rapids, MI. Detroit may have once been the poster-child for Michigan, the truth today is that Grand Rapids is leading the way. Its diverse, growing economy is fostering a steadily growing population and strong housing market that are one of the best in the country for mid-sized cities.

Different neighborhoods of Grand Rapids, MI have different aspects at play but for the most part you are able to have a quality house to rent out. And if you decide to flip it in the future, you are likely going to get a favorable return on investment with the property you purchase, no matter the location in the city.

Buying an investment property is different from buying an owner-occupied home. The investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business. 

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.

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Apart from the Grand Rapids real estate market, you can also invest in El Paso, Texas. El Paso real estate is affordable with several large renter populations. Demographic growth and job growth are attracting residents to a market that can’t grow with demand, and that makes it an excellent opportunity for investors.

El Paso is notable for its affordable real estate market. The average pay is well below the American average income, but houses are cheaper, too. For example, El Paso was the only city to hit a Realtor.com list of most affordable metropolitan areas. However, that doesn’t mean there isn’t high demand for El Paso rental houses.

The median rent here is around $800 a month. You could see significant ROI on rental homes in premium areas, since an apartment rental in the better areas fetch around $1600 a month. For example, El Paso rental houses near the Mountain View command higher rates because they are home to military families and retired Army personnel who pay to be close to work and military medical facilities.

Another market that we suggest is the housing market in Chattanooga, TN. Chattanooga is a small city seeing significant growth. It is attracting people from around the state, and they stay due to the excellent quality of life and strong economy. Its population growth has been a steady nearly 1% a year for almost a decade. The strong job market and relatively young population explains why the Chattanooga area saw population grow roughly 1.1% in 2017.

And since the 2010 Census, the city has been the second fastest growing big city in the state. If it is successful in cultivating local high tech startups and new businesses, it will see even faster growth as it attracts people to work here that then buy homes in the Chattanooga housing market and start their families here. If you’re buying Chattanooga rental homes, the high sales taxes don’t affect you. The city has been promoted in a number of articles as a great place to retire, and that is only made more so by their tax freeze for seniors.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Economy
https://www.experiencegr.com/meetings-blog/post/grand-rapids-is-growing-and-people-are-noticing

Detroit comparison
https://www.mlive.com/news/index.ssf/2018/05/detroits_population_still_fall.html

Demographic trends
https://www.mlive.com/news/grand-rapids/index.ssf/2016/03/michigans_fastest-growing_metr.html

Home values and unemployment rate
https://realestate.usnews.com/places/michigan/grand-rapids
http://www.city-data.com/city/Grand-Rapids-Michigan.html

ROI
https://realestate.usnews.com/places/michigan/grand-rapids
https://www.deptofnumbers.com/rent/michigan/grand-rapids

Rent as fraction of income
https://www.deptofnumbers.com/rent/michigan/grand-rapids

Student market
http://humanmedicine.msu.edu/
https://www.collegesimply.com/colleges-near/michigan/grand-rapids

Property taxes                                                                                          https://www.movoto.com/foundation/property-taxes/grand-rapids-property-tax-how-does-it-compare-with-other-major-u-s-cities

House flipping
https://www.mlive.com/business/west-michigan/index.ssf/2017/08/grand_rapids_is_nations_7th_be.html

Market Data, Trends And Forecast                                                                            https://www.zillow.com/grandrapids-mi/home-values                                            https://www.littlebighomes.com/real-estate-grand-rapids.html https://www.realtytrac.com/statsandtrends/foreclosuretrends/mi/kent-county/grand-rapids https://www.neighborhoodscout.com/mi/grand-rapids/real-estate          https://www.redfin.com/city/8694/MI/Grand-Rapids/housing-market https://www.trulia.com/real_estate/Grand_Rapids-Michigan                    https://www.realtor.com/realestateandhomes-search/Grand-Rapids_MI/overview      https://www.movoto.com/grand-rapids-mi/market-trends                              https://www.mashvisor.com/blog/grand-rapids-housing-market-2019                https://www.trulia.com/research/2019-markets-to-watch                                  https://www.movoto.com/guide/grand-rapids-mi/grand-rapids-real-estate-market-trends


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