New Homeowners In Michigan Beware: Your Home’s Value May Be Rapidly Changing
It's been an extremely difficult year for new homeowners in West Michigan. At the start of 2022, we read multiple reports that West Michigan is one of the most competitive housing markets in the country. Between a renters shortage to rising home prices due to growth in the area, moving can be a real headache.
And many people who purchased homes earlier this year may have found themselves looking for longer, putting in more bids than average, and some people even claimed to see people paying $50-100,000 more than asking value, just to ensure they get the home they're looking for.
But that practice of doing "whatever it takes" to get the perfect home may be the undoing of some homeowners dream homes.
According to a report from Moody Analytics two thirds of the housing markets in the country are overvalued by at least 25%. Out of 210 metro areas identified, 10 of them come from Michigan. Two of those most overvalued markets are located in West Michigan.
What cities in West Michigan have the most 'overvalued' properties?
The two cities who are set to see the value of houses drop most quickly are Muskegon and Grand Rapids.
Muskegon currently sits at the worst in the state with a 72.2% overvaluation on average for their properties, meaning that a lot of people in the area have overpaid by nearly 3/4 what their home should be valued.
Grand Rapids / Wyoming is coming in second in the state with an average of 52.6% overvalue on our homes. While this number is much lower than our friends to the north of the city, it's still alarming because the number set as "noticeable" in this survey is only 20%.
The majority of the other overvalued cities for property run along the 94 corridor, and all of them are in the lower half of the state.
What does this mean for homeowners?
Don't be surprised if the next time you have your home appraised, it's not worth as much as you expected. Because of the false inflation caused from bidding wars earlier this year, it's likely the actual value of these homes will return.
This means if you overpaid for your home and you have a mortgage, you may be paying way more than you should have had to, and for longer, just to make up the difference.
And if you aren't in a fix rate mortgage, your payments could go up while your home value sinks, leaving you in a losing situation if you plan to sell your home down the line.
What should I do if I'm looking for a home in these areas of Michigan now?
Yes, you'll see your dream home sixteen times, and you'll be mad when you get outbid, but making the smart move is going to be the one that saves you down the line. While experts say we aren't likely to have another housing bubble crash like in 2008, this is the type of behavior that cause major problems. Plus, your patience could pay off when someone else loses a home they overpaid for that you can snatch up for a reasonable deal down the line.