The Grand Rapids Business Journal published this article recently. They are forecasting a 27% increase in home values over the next three years. That is quite a lofty goal, since home prices have already increased by about 13% over the last year and a half. The double digit appreciation reflects the market correcting itself as the foreclosures and short sales that were dominating inventory dry up. My prediction is that prices will continue to increase, but eventually we will hit a plateau of normal growth, maybe 3% per year. However, the one factor that could keep home prices going up at higher rates is the growth of our city. Grand Rapids has been receiving a lot of attention over the last two years and is making top 10 lists left and right. 2014 will be a very interesting year for real estate in general, but especially for Grand Rapids and the surrounding communities. Read the article below:
If you’re thinking about buying a home in the Grand Rapids market this year, Forbes thinks it’d be a good investment.
The Grand Rapids-Wyoming housing market ranks No. 11 on Forbes’ “Best Buy Cities: Where to Invest in Housing in 2014,” a 20-market ranking posted last week.
Forbes teamed up with Local Market Monitor, which pulled data for the 100 largest metropolitan statistical areas — a geographical designation used by the U.S. Census, with populations of at least 575,000 to determine the ranking of the best housing markets to invest in this year.
Markets were ranked based on population, home prices and the local jobs economy.
“Each of our Best Buy Cities have high population and job growth, relatively low home prices and are still considered under valued,” according to Forbes. “This makes them fairly low-risk investment opportunities for buyers who are smart and know not to overpay.”
The market’s investment potential was measured by comparing its “equilibrium” home price with the actual average home price in the cities.
“The equilibrium home price tracks what the average price for a market should be — if speculation, weird distortions in local income and other factors (like the housing collapse) weren’t present in the market,” according to Forbes. “The measure presumes that prices will eventually return to this level. When homes are far under the equilibrium price, investors are getting a good buy and can expect to make a good return.”
The Grand Rapids market earned its No. 11 spot, thanks to an equilibrium home price of $184,794 and an actual home price of $138,596. That’s a difference of 25 percent. The market also has a three-year growth forecast of 27 percent.
Originally published by Charlsie Dewey, January 2, 2014