2019 Traverse City Real Estate Forecast: A Lot Like 2018
By Ross Boissoneau | Jan. 10, 2019
While some national forecasts look ahead rather pessimistically, local experts say real estate sales this year will likely be similar to 2018.
“It’s stable. Not static, but stable,” says RE/MAX Bayshore realtor Bob Brick of the market. “Barring any catastrophe, it should look similar to this year and last year.”
Mike Schmidt, president of Coldwell Banker Schmidt Realtors, concurs. “I don’t think it will be much different than 2018,” he says.
Nationally the forecast is more mixed. The Wall Street Journal reports that the pace of real estate speculation is slowing, which it calls “a sign of the darkening outlook in the U.S. housing market.” It cites the downturn in the number of new home loans issued with terms of three years or less, which it says are typically used by investors looking to make a quick profit.
The national forecast by the National Association of Realtors is slightly more positive. It says consumers should expect home sales to flatten and home prices to continue to increase, though at a slower pace.
If 2019 mirrors the past couple years, that’s good news, as the last couple years have been strong locally. Though 2018 lags behind 2017, most feel that is due to low inventory levels rather than any change in buying or selling attitudes. And while the number of homes sold is down, the median price is up and the time a property is on the market is down, both pointing to strong demand.
Kim Pontius, executive vice president of the Traverse Area Association of Realtors, says such a leveling off is to be expected. “We’ve had several good years, record years for real estate. I think this is a cooling-off period.”
On the commercial side of things, the attitude is similar: 2018 wasn’t quite as good as 2017, and the lack of inventory could see 2019 also trending in that direction. But if the economy continues to be strong, so should the market. “The volume was a little down,” says Kevin Endres, CEO of Three West. “It’s a short inventory. We have buyers, investors who want to get in, but (owners) don’t want to sell.”
All say the region and the Traverse City area in particular remain in demand for both residential and commercial real estate. “This is a unique market,” says Pontius, noting that this region recovered from the recession more quickly than most of the rest of the state.
Brick says the industry still is far better than it was 30 years ago. “That was a roller coaster ride. Interest rates were 13 to 16 percent – it was very difficult to sell or to get financing.”
It’s highly unlikely mortgage rates will increase to that point, but if they do continue to rise, that could further put a damper on the market. Then again, a slow increase might spur activity. “As interest rates go up, it gets people to do something,” says Endres.
Whatever the market, Pontius is not concerned about a real estate bubble developing, much less bursting. “All those things floating around out there about a housing bubble – there’s not,” he says confidently. While the 2018 housing market slowed, he sees it as a plateau rather than a downturn. “It was a strong year by all indicators. It (the level of business) is almost more manageable.”
All agree that the one segment of the market that is most lacking is the so-called starter homes, priced between $100,000-250,000. That’s particularly true in Traverse City proper, where the desirability of downtown locations pushes property values up. For many, the solution is to purchase a home in bedroom communities such as Kingsley, Kalkaska, or Interlochen. “The outlying areas tend to be stable,” says Schmidt.
Pontius says younger buyers are now looking between the suburbs and the more rural areas – the so-called exurbs. He also notes that the recession also impacted the construction industry, leading to many skilled workers leaving the workforce for other states or other fields. “The truth is you can’t build fast enough. If we could and it was in the right price strata, we’d be much busier than we are now. Grand Traverse County is in need of a couple thousand starter homes.”
On the other hand, the market for second homes continues to be strong. “We’re seeing some of the high-end sales that we haven’t seen in a while,” says Schmidt.
Brick says that is an indicator of a good year. He says Michigan is typically in the top five states for second-home sales, and a strong economy helps make such sales possible. “A waterfront cottage is a luxury purchase,” he says.