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twoshort

Grand Rapids Real Esatate Market

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I think the juxtaposing of median incomes in an area with median home prices is the metric that works for me. If the median family cannot afford the median priced home, based upon the traditional 25% of gross monthly income standard (which has been stretched to 30 and above by FANNIE MAE and FREDDY MAC)

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I posted this article a couple of months ago, and I tend to agree (maybe closer to 10%). Comparatively speaking though, there are many cities worse off. HIX has it, that the threshhold for affordability was pushed up to 28 - 36% nationwide, which created an additional block of home-buyers that wouldn't normally qualify. This coupled with expanded programs from lenders such as ARM's, Interest Only, 40 yr mortgages, etc. has also allowed people to buy into the housing market who wouldn't have 10 - 15 years ago. Also, as people pulled money from the stock market and put it into real estate, that added to the problem. How many times have you heard people say "Real estate never goes down in value, does it?". :wacko:

However, I don't foresee a crash in our future, but a definite continued softening. We'll just experience what most of our parents have been through multiple times in the past, and we'll be fine. Just think, there was a time when the housing market sucked AND interest rates were 12 - 15% :shok:

BTW: the parameter they used (I believe) for this study was they took what a house could conceivably "rent" for vs. what a typical mortgage payment on the house would be. The difference between the two determined the "overinflated value" percentage.

And I should add that Grand Rapids is still one of the most affordable housing markets in the country, compared to median income.

http://www.nahb.org/fileUpload_details.aspx?contentID=535

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There will not be a housing crash. Housing is a commodity and there will always be demand of some level. Stocks on the other hand can lose all of their value in one day if the company falls out of favor. Will prices fall or stabilize - yes, will they crash - no.

Furthermore, GR is very insulated from this. Traditionally this market has been very undervalued when compared to the national norm (typically Minneapolis). If anything, we are finally getting to normal levels. Places in the country that are well beyond the norm will feel the impact much more, but this is mainly isolated to the East and West coasts.

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