Archive for the 'Michigan' Category

Sales of repossession homes in Grand Rapids, Michigan slowed slightly in October, but foreclosure sales and short sales are expected to rise again over the next weeks and months because of the increase in foreclosure filings in the metro area.

As reported by a foreclosure tracking firm, the number of foreclosure filings in Grand Rapids in the July to September quarter rose by nearly 9 percent from the previous quarter and by more than 25 percent compared to filings during the same period last year.

A total of 2,415 residential units in Grand Rapids received default or foreclosure notices, representing one out of every 132 households in default or foreclosure.

Meanwhile, total house sales in the metro area in October soared by 35 percent compared to total sales in October last year, with the average sales price increasing by more than three percent from the same month last year to $109,826.

According to officers of the Grand Rapids Association of Realtors, the growth in home sales occurred despite more than 9 percent of decrease in filings from October last year. They also contended that the increase in the average sales price happened because of the drop in short sales and in sales of lower-priced repossession homes in September.

In September, the average sales price dropped by more than 15 percent to $104,327, compared to the average sales price in the first three quarters of 2008.

According to Julie Rietberg, chief executive of the realtor association, the most active area of the market continues to be in single-family houses in the price range of $100,000 to $140,000. She added that whereas before home sales typically drop in the fall, home sales this September continued to rise because of the large number of first time buyers who took advantage of the federal tax credit.

There are a lot of advocates calling for the extension of the $8,000 federal tax credit because of the significant role it played in home sales increases and in home ownership programs for lower-income families throughout the country.

But there are also real estate professionals who have mixed feelings about the extension of the tax credit program. Grand Rapids lender Tom Vanderwell said he personally supports the extension of the program to help cut down the number of repossession homes, but he added that the policy is not good for the overall economy if it is extended indefinitely.

Cheap foreclosed homes are in abundance in Detroit for investors who have cash. Because of the extremely low price levels of houses for sale in some parts of the city, sellers have been favoring cash bids.

Besides, banks have been rejecting loan applications with amounts lower than $35,000. Having been burned by speculators in the past, banks now are very selective in the kinds of home loans they are providing, tightening the credit environment and making cash-low investors or home buyers unable to buy bargain-priced properties.

According to realtors in Detroit, the image of the city is now changing from its identity as Motown and Red Wings, from its rank as the fifth largest city in the U.S. and from its position as a major U.S. manufacturing hub to an image of bargain-priced foreclosed homes.

Now, the news is full of stories of Detroit homes being sold at $6,900. Realtors in the city talk about getting calls from other countries asking about cheap foreclosed homes.

But in addition to the cash requirement, investors planning to buy bargain houses in Detroit need to be prepared about repair costs. Despite the cheap home prices, opportunities for flipping in the city no longer abound. In comparison to other cities with cheap foreclosures such as Las Vegas, Detroit has a lesser chance of price appreciation in the near future, so flipping is no longer an investment option. The city has dropped sharply from its ranking as fifth largest in the country to eleventh.

The investment strategy of buying, fixing and renting out a home is now what is viable in Detroit’s real estate sector. Buyers need to be prepared to spend at least $15,000 for repairs, in addition to closing costs.

Smart buyers need to bring a contractor with them when inspecting cheap foreclosed properties in Detroit. They need to be able to obtain an accurate assessment of repairs to be done and the total costs of repairs, so they would know the overall amount of money they are going to invest in a certain property.

Out-of-state buyers also need to contact reputable agents and rental managers and talk with nonprofit redevelopment agencies in Detroit so they can avoid investment mistakes that could burn them.

Additionally, prospective investors are also advised to drive around Detroit neighborhoods to look at areas that have positive prospects for redevelopment. Cheap foreclosed homes near hospitals, universities or commercial areas have better prospects for higher rentals.

Government foreclosed homes in Montague City, Michigan were acquired last week by GSMB LLC from the U.S. Department of Agriculture. The two-building apartment properties called Channel View were foreclosed by USDA in 2007, when there were only a few tenants.

Today, as the apartment properties are being renovated at a cost of more than $1.5 million, nearly all the units are occupied.

Before the closing of the sale, Gary Shaw, co-owner of GSMB, asked city officials of Montague to provide his firm with the city’s Payment In-Lieu of Taxes incentive so his company can work within a certain budget to rehabilitate the properties.

Shaw also argued that since his firm was expressly instructed not to increase rent levels, his company needs the PILOT incentive. The apartment units are classified as Equal Housing Opportunity housing units.

The council granted Shaw’s request and voted to provide him with four-percent PILOT. The city has not collected taxes on the apartment buildings since 2007 when the properties were seized by the USDA and became government foreclosed homes.

To rehabilitate the apartment properties, GSMB took out a $1.534 million loan. Among its planned repairs and improvements are the replacement of siding and roofs, remodeling of common areas and interiors and installation of energy-saving windows and water and heating systems.

According to Shaw, his company is experienced in renovating apartment buildings. His firm has also recently acquired and renovated two apartment complexes in East Tawas which were built by the same construction firm that built Channel View. He added that the apartment units have almost identical layouts.

Shaw also said that the renovation work would create employment opportunities for local contractors. His firm is now accepting bids for the work, according to Shaw.

Next year when all the apartment units have been renovated and occupied, the city government will inspect the properties and then set the rental rate, which could increase or remain unchanged. If the rent increases, the amount of money to be earned by the city through the PILOT scheme would also increase.

During the interview with city officials, Shaw was asked why he purchased the properties despite the rental limits and the rehabilitation expenses. Shaw said that his firm received a developer’s fee and that he was given the option to rent out the government foreclosed homes outside the Equal Housing Opportunity restriction after 30 years of paying the mortgage.

Michigan foreclosed properties need special attention from the state because they are contributing to the high ranking of the state in a chart of states based on housing foreclosures, unemployment changes and participation in food stamp programs.

Unemployment benefits would end for about 100,000 people in Detroit and across Michigan in January next year. The schedule is the limit in the period of time that people who are struggling to find jobs could receive unemployment benefits.

The housing market in the Michigan city of Detroit is showing some signs of recovery, according to industry analysts. They noted the marginal decline in property prices, rising home sales and reduced inventories as indications that the housing market is stirring from its deep slumber.

The city of Detroit in Michigan has found another way to address the growing REO property listing in the area. This time, the help comes from artists who heard about the city’s very low home prices.

With 12,564 foreclosure filings in February, Michigan maintained its 6th ranking in RealtyTrac’s chart of foreclosures by state. Michigan was also 6th in foreclosures by state rankings in 2008 and in January

Detroit Mayor Ken Cockrel has proposed to demolish about 2,350 derelict and abandoned homes in blighted neighborhoods using about half of the $47 million provided by the U.S. federal government to tackle its foreclosure problems. An estimated $8 million will be spent to repair certain vacant houses and about $4 million will be used to build new homes.