Homebuying millennials, strong economy, make Grand Rapids the nation’s hottest housing market

Posted on June 6, 2021MLIVE

ADA, MI – Millennials like Clay and Gem Jewell are why Grand Rapids is being touted as the nation’s hottest housing market for 2016 by Trulia, a national real estate research firm.

After renting for the past year and a half, and with a baby on the way next spring, the Jewells decided it was time to take the plunge and buy a house.

The couple, both occupational therapists for Spectrum Health, bought a four-bedroom house on Ada Drive SE for just under $200,000 in October.

“We felt like we really weren’t getting any return on our monthly rent payments,” said Clay Jewell, 32.

The couple, who met as students at Western Michigan University’s downtown Grand Rapids campus, say they love living and working in the Grand Rapids area and want to stay.

“We felt it was time to kind of have a place to call home and settle a little bit,” said Jewell, adding several of their friends are buying homes or are considering home ownership.

Trulia housing economist Ralph McLaughlin says Grand Rapids rose to the top of their national survey because of its affordable housing, its growing economy and a large population of millennials, the largest group of prospective home buyers.

“More than a third of millennials are telling us that they plan to buy a home by 2018, but that jobs and down payments are key to turning them into homeowners,” said McLaughlin, whose study also measured the online activity of persons searching for homes and the number of vacant homes in a community.

The Grand Rapids market was not at the top of any scale, but it registered high on all of the five scales, enough to put the region at the top of the nation’s 100 largest housing markets, McLaughlin said.

Charleston, South Carolina, was ranked second while Austin, Texas, was ranked third. The Warren-Troy-Farmington Hills area was ranked 51st, while Detroit was ranked 87th in the study, which included a survey of 2,000 households conducted by Harris Poll.

Here’s how Grand Rapids scored on each factor:

Millennials: Persons aged 18-35 make up 24.8 percent of Grand Rapids’ population – 17th highest in the nation. “Millennials represent the biggest potential pool of renters and home owners going into 2016 and 2017,” McLaughlin said.

Employment growth: Grand Rapids was 22nd in the nation with a 3.5 percent job growth rate, McLaughlin said. A strong job market means home buyers will be able to save for the down payment needed to get into the housing market, he said.

Affordability: A middle class family in Grand Rapids can buy a middle class home for about 22 percent of its income – 14th best in the nation, according to Trulia’s research. That’s far lower than the nation’s coastal regions, where housing is more expensive.

By contrast, a middle class family would have to spend 77 percent of its income to buy a middle class house in San Francisco. In Boston, the ratio is 36 percent, while New York home buyers would spend 42 percent of a middle class income to buy a middle class home.

Inbound vs. outbound housing searches: For every 110 would-be home buyers who searched for houses in Grand Rapids from outside Grand Rapids, 100 persons were searching for houses outside of Grand Rapids area from inside Grand Rapids, according to Trulia’s research.

By contrast, Detroit registered a .71, meaning only 71 persons were looking for houses in Detroit compared to 100 Detroit residents who were looking elsewhere.

Vacancy Rate: Just 1.8 percent of Grand Rapids’ housing is vacant, according to data that compares the number of registered post office addresses to the number of available residences. By contrast, Detroit had the nation’s highest vacancy rate at 12.1 percent.

According to the latest figures from the Grand Rapids Association of Realtors, West Michigan home sales were up 11.5 percent through the first 10 months of 2015. The average home price was $177,919 – up 8 percent – through the end of October.

McLaughlin said an expected rise in mortgage interest rates should not affect the benefits of home ownership. “Nationally, interest rates would have to rise to about 6.5 percent for the costs of buying to equate to renting,” he said.

While buying a home remains cheaper than renting in 98 of the nation’s 100 housing markets, McLaughlin said a building boom in the multi-family market will offer renters some relief from sharp rental increases.

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