New Normal: Housing market still hot in northwest Lower Michigan
The scenic coasts, quiet woodlands and many tourist attractions are only a few of the reasons why Northwest Michigan gets swarmed with visitors every year.
Traverse City brings in around 3.5 million visitors each year. That translates to about a billion dollars in direct spending according to the city's tourism bureau.
Over the pandemic year, however, people have gone beyond just vacations. The regional real estate market is becoming increasingly crowded. Many people buy homes about as fast as realtors can sell them.
“People say, Well, how is the market?" said Pat O'Brien, a
Boyne City-based realtor. "My answer is, it's very fast. It's very fast.”
O'Brien’s real estate business specializes in properties around Lake Charlevoix. Over the past few months, he said it’s normal for homes to sell the week they hit the market - if they make it there in the first place.
As demand for housing grows, property values continue to reach for the sky. O’Brien said pandemic life is likely to blame.
“There's been a lot of businesses that have allowed their employees to work from home," O’Brien said. That, I think, has been a big part of the push. ‘Well, if we can do this here, why don't we go up and do it somewhere that we really love the area?’ i.e. Northern Michigan.”
While cooped up at home you may have asked yourself, ‘is this really where I want to live? Am I comfortable here? Maybe I could use a bigger bathroom?’
Those are the kinds of questions the Dodsons had to ask. They had always fantasized about living in Traverse City, but, counterintuitively, the opportunity never presented itself - until they lost their jobs due to COVID shutdowns.
Andrew Dodson said he didn’t realize how lucky they were.
He and his wife were under contract for a new townhome north of Denver when they fell out of work. Andrew said they took it as a sign to live "more intentionally" in a place that made them happy.
They were able to secure a home near downtown Traverse City before the housing bubble expanded after the new year. Still, Andrew said their new home cost about four hundred and fifty thousand dollars.
Andrew said he won’t be moving again anytime soon – and the market agrees. On a national level, home prices continued to rise, in some cases dramatically.
“Since we’ve closed, I’ve followed the houses in the neighborhood and I’m just amazed," he said. "There’s a house down the street that sold for I think 1.2 million. I keep following the houses in town of similar size and they’re going for 50, 60, 70 over what we paid.”
According to the Zillow Home Value Index, home prices rose 9.1 percent over the past year since the start of the pandemic
Ginny Fey is a Traverse City realtor with Real Estate One. According to data she received in July, home inventory in Northwest Michigan is tiny compared to the population. More than half of the available houses were more expensive than what Andrew Dodson paid for his new home.
“Crazy. That's the first word that comes to mind," Fey said. "The challenge is there are so many buyers out there that are competing for these listings, that they're typically gone within 10 days.”
To make matters worse, the average price of building a new single-family home increased by nearly $30,000 due to climbing lumber prices according to the National Association of Homebuilders. When labor shortages are added into the mix, that number can grow even more.
While Andrea Pagel was able to acquire property on Old Mission Peninsula just before pandemic shutdowns, she said her house currently under construction still rises in price.
She said she had to pay her builder 50% more out of pocket for lumber.
"It's like everything's affected. It's affecting us right now," Pagel said.
The current state of the housing industry spawns’ problems - not for the remote workers or retirees – but for the nurses, tradespeople, and other blue-collared workers of the region.
Research by Networks Northwest, a data agency that encompasses 10 Northwest counties, shows the population to be on a steady incline since 2010 - the pandemic only exposed an issue the Grand Traverse region has faced for a while.
As more people move to the bay, the area loses affordable housing options for those who will always need to show up for work in person.
“We have a lot of people living comfortably," said Traverse City Mayor Jim Carruthers. "But all those people demand services, people to cut their lawns, people to clean their homes, people to serve them in the restaurant. You need the service class to come in and support all that.
Carruthers said the city government has made efforts to provide housing at all price points. Earlier this summer the state provided funding for rental units on West Front Street. The project is expected to generate capital investment and create jobs.
However, Carruthers said housing options will soon need to expand beyond city limits. He said at that point collaboration between the city and the surrounding counties will be key to stabilizing housing in a very crowded piece of the state that’s only getting more expensive.