Traverse City Record-Eagle

April 7, 2013

Real estate boom is back in northern Michigan

BY MATT TROUTMAN mtroutman@record-eagle.com
Traverse City Record-Eagle

---- — NORTHPORT — Erika Humphrey and her husband, Corey, drove by their dream house several times.

The young couple had been all over the world after they graduated from the Great Lakes Maritime Academy, but never considered living anywhere other than Leelanau County after their son was born.

"It’s a wonderful place to raise kids," Erika Humphrey, 28, said. "I grew up here and I’m so happy that I did. The people are so kind that we love the small town vibe."

They spent almost a year looking at houses in the Northport area — from fixer-uppers at the low end of their price range to expensive homes with million dollar views — but eventually closed on the home Erika had always commented on when they cruised by. The four-bedroom Northport home they selected turned out to be "perfect," and needed just enough cosmetic work to let them style it exactly to their taste.

"We actually didn't want a big home," Humphrey said. "The layout of it has enough storage, bedrooms and bathrooms without being overwhelming."

The Humphreys are far from the only interested home buyers drawn to the Grand Traverse area. Local real estate agents say housing demand is bouncing back after years of sluggish sales during the economic downturn. It may even lead to new home construction, if demand outpaces supply.

Housing sales increased 22 percent last year and totaling $553 million, according to Traverse Area Association of Realtors statistics. The association covers Grand Traverse, Antrim, Benzie, Kalkaska and Leelanau counties.

Kimberly Pontius, TAAR executive vice president, said sales look to stay strong this year; 142 sales totaling $26 million closed in February.

Home prices this year thus far averaged $192,000, still less than $225,000 in 2007, before the economic downturn.

"We could have a very active year in 2013 if the economy continues to improve," Pontius said.

Stephen Parafin, a real estate agent with 45th Parallel Realty in Elk Rapids, said three factors led to a localized "small boom market":

"Great (interest) rates, it's still the lowest prices in 10 years ... and pent-up demand."

Pontius said the Grand Traverse region has "micro markets" that each have their own quirks.

Downtown Traverse City homes — which have always been in demand — are attracting both retiring baby boomers and Generation Y millennials interested in an urban setting.

"These two competing market segments ... are making the urban area of Traverse City and the towns and villages more appealing," he said. " ... (I)t is pent up demand. Last year a lot of transaction activity had to do with people coming in from outside the area."

Parafin said Traverse City and waterfront markets have been "on fire" for the last three months, but the trend was not region-wide. Rural areas in Antrim and Kalkaska counties have not kept pace with hotter local markets.

But Chad Anderson, office manager at Coldwell Banker Schmidt in Kalkaska, said more people are looking for housing in Kalkaska County because they work in oil and gas exploration. The Kalkaska area is experiencing its own boom in the gas and oil industry.

"The main spark in the activity comes from having to buy cheaper than you can rent," he said.

Jonathan Oltersdorf with Oltersdorf Realty in Suttons Bay said many of his clients come from out of the area. Some, like the Humphreys, looked to return to Leelanau County. He said some areas are reaching 10-year lows in inventory.

"One problem we are seeing is buyers can’t find a home," he said.

Ken Kleinrichert, a real estate agent with Coldwell Banker Schmidt in Traverse City, said the overall local market has a "very healthy" six months of inventory. He said there's been little to no new construction, but that could change this year, based on some indicators.

"We’re seeing some activity, he said. "People are looking at building as an alternative."

The Grand Traverse County Construction Code Office reported 206 new residential permits last year, compared with 134 in 2009. Its records do not include Garfield Township.

Oltersdorf said prices for homes in the Grand Traverse region may be poised to rise as the economy recovers and the area continues to receive national exposure.

"I know it's a cliche, but it's definitely a buyer's market," he said.