Northern Michigan’s Real Estate Market is Hot. Getting Even Hotter.
The winner of the Red Hot Best Realtor voting category, Tom Krause, of Krause Realty Solutions, shares his perspective on the state of Northern Michigan’s real estate market and gives tips for buyers.
Let’s start with a flyover. What’s the short take on what you are seeing now in the field?
The market is very hot right now. We are seeing anything below $250,000 selling in weeks, sometimes within just a couple days. And there are multiple offers on almost every home.
That sounds intense for buyers.
Yes. It is tough on buyers, especially if they don’t know their realtor well and they are looking for advice on how far above asking price do they go—it takes a lot of trust. No fun for them. For one recent property I was involved in, there were four realtors lined up in the parking lot at one time to tour the property. There was a house yesterday that had five showings in one day and sold immediately.
Buyers be ready …
Buyers have to come prepared. Be preapproved, know what they want, and when they see it, move. This is not a time to wheel and deal and think you are going to steal a property. Since the first of the year, in Grand Traverse County, 420 homes were listed in the $100,000 to $250,000 range and 281 have already closed. In the $200,000 to $400,000 range, there have been 279 home listings and 160 have closed. The inventory is very low.
Is the main driver so many buyers or just that the inventory is low?
The inventory is very low, yes. But the world has discovered our little part of the world, and now I’m getting calls from both coasts—California and New York. In some cases we are doing everything over the phone. They will fly in for one visit to check out the property and that’s it, buy it and fly out the same day. The Pure Michigan campaign is giving national exposure to this place. And the Good Morning America vote [Most Beautiful Place in America, August 2011] a few years back is what really set it all off. You have the airport, the dunes, the freshwater, great restaurants and very low crime.
America is having its ah-ha moment about our area.
The number one comment I get is, “I was flying in on the plane, and I was in shock at the beautiful water. I had no idea.” People do not know about the Great Lakes in the rest of America. It’s unbelievable. They are picturing some kind of dirty brown lake. So they are blown away. And they get to swim in freshwater, not saltwater.
What other types of demographics are shaping the market?
One thing we are seeing is, as people get older, like in Leelanau County, they are selling their homes in the country and moving into town. So that is adding even more pressure to the in-town properties. They don’t want to fight the snow and just want to just live closer to town. There’s a great deal of desire to live in town, in Traverse City.
We keep hearing of how well the various new downtown condos are selling.
We are starting our project on Grandview, by the Candle Factory, and it will have 12 residential units in the first phase. People are fighting for spots. And you can see why. It’s downtown, but you have a water view, look over the marina, can walk to the movies and restaurants.
If older people are moving out of countryside settings like Leelanau, is that making room for families there?
You don’t really see that so much, unless they have family connections out there or if they are farmers or something like that. Most families want to be close to town because kids are so busy these days. There’s sports and dance and the Y, and kids want to be part of that. I see families wanting to be within five miles of town, 10 miles at the most. The people buying the countryside homes tend to be more 50-somethings, late 40s, with grown kids.
The big topic of conversation in Traverse City and other Northern Michigan towns is affordable housing. Do you see any solutions coming there?
The problem is with the land costs and the fees to connect to water and sewer, and construction costs at $150 a square foot, you just can’t make the numbers work. I used to be a builder, believe me, if you could make money building affordable houses, people would be building them. They’d sell like hotcakes. But you can’t get your money back.
So it might take tax-financed land or something like that?
Yeah, maybe. It’s complicated.
Traverse City’s granny flats didn’t help?
The planning commission put a limit of 10 per year on those, but of the 10, only three got built. Some people asked that the quota be raised to 20 a year, but the commission said they had to study it more. It’s too bad because these units are really cool, and people could live there and walk to work and not have to add cars to the city streets.
What about some of the outlying small towns, like Kalkaska or Elk Rapids? What kind of activity are you seeing there?
Elk Rapids is doing great. We just opened up an office there, actually. Kalkaska is also picking up momentum. It’s in a kind of sweet spot there. They’re about a half hour from Gaylord, Grayling, Cadillac and Traverse City, so they can tap into jobs in any one of those towns. Kingsley is a little slow right now, so that is a place where you might still be able find some deals.