Recently, the West Michigan real estate market and Grand Rapids real estate market have taken off, with inventory of homes for sale dropping to an all-time low and the average home price in the area increasing. This has been beneficial not only for local homeowners and real estate investors, who are finally able to sell their properties for a reasonable price or refinance and get out from being “underwater” or “upside down” on their mortgage (by owing more than the home is estimated to be worth), but also for local communities on a larger scale.
When the Great Recession hit in full force in 2008, Michigan had already been experiencing a long-term economic slump, brought on in no small part by the ongoing outsourcing of the blue collar manufacturing jobs that were once the backbone of our state. Housing prices in many cities had been on decline for some time, and the national real estate bubble popping led to many homeowners losing their properties or struggling just to make the minimum monthly payment on their mortgage. This, in turn, led to housing values dropping further in many areas, with a glut of inventory of homes for sale. Civic taxes, obtained by taxing real estate via millages, dropped substantially in many areas, forcing budget cuts in everything from local schools to law enforcement and emergency responders.
According to a broad analysis by Mlive published in the Grand Rapids Press over the weekend, in many areas, property tax rates are the highest they have been since 1994. However, given the massive drop in home values, in many communities, these higher property tax rates were doing very little to ameliorate the issue of declining tax income. Now that residential property values are on the rise, so is tax revenue (or anticipated tax revenue) in many of the most populated counties in the state of Michigan. Here in Kent County, for example, the average property value of residential homes has increased by 3% since 2014.
Of course, property tax rates and county tax income are still down when compared with pre-recession figures. Mlive states that the total value of all taxable properties in Michigan is still 10% below what it was in 2008, despite being up 2.6 percent this year when compared with figures from 2014. Overall, property taxes paid are down 8.6 percent when compared with their all-time high set in 2007, before the Great Recession. It will take more time for the market to completely rebound, but the increase in tax income and property values can only help speed the process.
As tax revenue increases, infrastructure and community investments will improve and increase, leading to Michigan communities appearing more appealing to new homeowners and investors alike. If you are planning on buying a home or selling one in what remains of 2015 or in 2016, now is the time to begin discussing options, neighborhoods, and price with an experienced realtor. Contact Pyxis Realty today to list your property for sale or to begin the process of searching for a home for purchase. You can count on receiving top-notch service and expert advice on local real estate markets.