LANSING — Priced at $255,000, a Roundtop Road home with vaulted ceilings, hardwood floors and an address within the Grand Ledge Public Schools district hosted a busy open house on Sunday.
Realtor Laura Guild warned that serious lookers should drop their highest and best offers, because the house was likely to be sold fast.
Patrick and Pat St. George, a retired couple now living in a Delta Township condominium, refused to get in a bidding war. They aren’t ready yet, having just started looking for a new home, one where they said they can “age in place.” Their wish list: A home that at minimum has a laundry on the first floor, good accessibility features and a price point within their range.
Patrick, 81, and Pat, 79, are hopeful since they feel more fortunate financially than young professionals starting out and paying off years of student loan debt.
“Everybody says the economy sucks and that the interest rates are too high and it’s the worst time in the world to sell your house. The flip side is offers are going in just bam, bam, bam,” Patrick said.
The St. Georges may have to look longer than they expect to get a home with those features. Then again, they may not.
The residential real estate market in Greater Lansing is expected to have slightly more homes sold at modestly higher prices than 2023, although what the Federal Reserve does with interest rates could alter the difference, experts said.
Regardless, don’t expect a return to the skyrocketing housing prices seen in 2020 and 2021 when interest rates briefly dropped below 3%, the lowest in many years.
About 85% of mortgage holders are locked into sub-5% interest rates, which kept many homeowners from selling their home and buying another at interest rates that peaked at 7.8% the week ending Oct. 26 and fell to an average of 6.6% by Dec. 28, according to Freddie Mac.
A Realtors.com forecast calls for a 1.2% increase in home sales across the Greater Lansing region, with prices expected to rise by 6.2% compared to 2023 prices.
“The higher rates affect the home buying power and there’s a housing shortage,” said Doug Petroff, president of the Greater Lansing Association of Realtors. “When there’s an egg shortage, the price of eggs goes up. Same with housing, except it’s more expensive. We have a lack of inventory in the local area.”
Average home sale prices continue to rise
Average home sales prices in Greater Lansing rose 4.6% last year, according to figures from Rooted Real Estate of Greater Lansing. Those numbers include home sales in Eaton, Ingham and Clinton counties and Portland.
Every major community except for Mason saw increases in average home values, led by Bath, where average home prices rose almost 20% in a year from $249,157 to $298,700. Bath Township is one of the fastest growing parts of the Greater Lansing area, second only to Okemos.
There were also double-digit gains in average home prices in Portland, Potterville Grand Ledge, DeWitt, Laingsburg and the Holt/Dimondale area.
DeWitt had the highest average home prices in the area, with 12.8% growth to $381,746, followed by Okemos, where average prices rose 4.9% to $369,172.
The smallest growth in average home prices was in East Lansing, where home values rose 3.5%, to $287,603 from $277,795.
Lansing saw prices rise 9.4% from $127,312 to $139,275, while East Lansing saw the smallest increase in average prices. Mason average home prices fell 7.7%, dropping from $260,155 to $240,200.
A Realtors.com forecast calls for average home prices to continue to rise, up 6.2% over 2023 averages and 42% higher than the 2017-2019 period.
The median home price in the Greater Lansing area was about $174,000 in January 2022. It hit a high of $237,000 in June and was at about $200,000 in December, according to figures from the Greater Lansing Association of Realtors. The local market tends to favor the summers, with higher average sales prices and in recent years more than 700 homes for sale, compared to about 350 during the winter months.
The region remains popular
Petroff said the affordability of the area, compared to other parts of Michigan and the Midwest, is a big attraction along with Michigan State University and Lansing being a capital city.
The area remains one of the most affordable metro areas, with median incomes in Lansing of around $51,000, which Realtors.com says is about 60% more than the minimum to qualify for a mortgage. Realtors.com said Grand Rapids is one of the most affordable communities in the nation, with higher median incomes and higher average home prices than the Greater Lansing area.
Lansing is forecast by Realtors.com to be the 22nd best of the nation’s 100 largest metro areas. The list does not distinguish between a buyer’s or seller’s market and is based on an expectation of changes in price and the number of homes sold.
Grand Rapids area home sales are expected to rise at a faster level, about 6.1%, and median sales prices are expected to rise 7.2%, where Realtors.com forecasts the western Michigan region as the ninth best market in the U.S.
The Detroit area, ranked at No. 36, is just out of the top third of the nation’s metro areas. The Realtors.com forecast calls for a drop in home sales (6.7%) and an increase in sales prices (10.9%).
Housing shortage driving prices up
The national housing shortage is also one of Michigan’s problems, said Brian Connolly, an assistant professor of business at the University of Michigan, with a focus including real estate.
“There’s a problem of both high housing costs and also low inventory,” he said. “There’s just not a lot of housing available, whether it’s rental or for sale, particularly in the really fast-growing markets across the country.
“The actual cost of homeownership has gone up dramatically because the monthly payments on an 8% mortgage are so much higher than they were on the 2% or 3% mortgages so if the mortgage rates come down you would expect to see sellers that have been sitting on the sidelines may be more inclined to sell.”
And it would increase the buying power of buyers if interest rates came down, he said.
“So any drop in rates would sort of help to unfreeze the market a little bit but at the same time the rate drops tend to go with an increase in home prices as well,” Connolly said.
Michigan’s current housing costs are low compared to other states but the state has an aging housing supply. Nearly half of the homes were built before 1970, and even with 22,000 new housing starts in 2022, the state is well below the national pace of new homes, according to a report from the Growing Michigan Together Council.
The group was created by Gov. Gretchen Whitmer to help address how Michigan can attract new residents and reverse its stagnated population.
“Develop and revitalize housing stock to meet Michigan’s housing demands,” is one of nine suggestions from the group, which also recommended attracting young talented workers, restructuring primary and secondary schools and having more public transit.
“(E)xisting housing—historically, the main supply of housing for middle- and low-income families—is scarce,” the report said, noting that rentals are also difficult to find with the state’s units for rent declining by 40% from 2010 to 2019.
Michigan remains affordable compared to other states
Connolly said research still needs to confirm it, but he suspects renewed interest in Michigan is similar to his own experience: He worked in Denver for years and sold his home there, at a good profit, to move back to the more affordable Michigan where he grew up. But now, he’s unlikely to be able to afford the same house in Denver if he ever wanted to go back, because higher housing prices and interest rates would make the same house nearly unobtainable.
“Housing prices are elevated here in Michigan as well, but it’s still quite affordable compared to the coastal markets and markets in the South and West,” Connolly said.
Some home buyers and sellers may have been spooked by interest rate hikes in the last half of 2023, pushing them off the market for now, said Faith Steller, a RE/MAX Realtor who has been in the local market since 2008.
“For some people a rate hike didn’t matter but some pulled back and some of them are wanting to come back out into the market, thinking rates are coming down a little bit,” Steller said.
Contact Mike Ellis at mellis@lsj.com
The Michigan Department of Health and Human Services is still struggling to meet the vast majority of goals set under a federal consent decree, including having enough foster homes for children in the state and keeping siblings together after they’ve been removed from their homes, according to a biannual review by court monitors.
The monitors also found the state still has issues with properly investigating abuse or neglect in foster care.
The Michigan department has been under federal court oversight as a part of a settlement of a 2006 class-action lawsuit filed on behalf of children whose attorneys argued were mistreated in state care. Children’s Rights, the New York-based advocacy agency that filed the lawsuit, and the state entered into a new agreement in June 2019 that relaxed some oversight measures by amending the requirements the state must meet for creating assessments, service plans and provisions of services.
The latest monitoring report, which covers July to December 2022, found that the state lost foster homes overall in 2022 and struggled to have enough homes for siblings, children with disabilities and older children.
“These significant home losses compromised the placement array for children,” the court monitors wrote in the review. “The monitoring team has discussed with DHHS the need for the agency to develop and implement targeted, systemic strategies to improve the licensure and maintenance of foster homes, including homes for special populations.”
Michigan Department of Health and Human Services spokesperson Lynn Sutfin said the department has been working to recruit new foster families with weekly communications to people who sign up to receive information about fostering and a paid advertising campaign.
“We need foster families across the state to keep these children safe and to care for them until they can be returned to their family if it is safe or find a loving adoptive family,” Sutfin said. “Michigan has implemented a multi-faceted approach to providing homes for children in care via recruitment of new homes and enhancing efforts to retain existing homes.”
State officials also have been focusing on placing children with relatives so they can stay with family, she said. The state has invested in family-finding resources and created staff positions to identify and support relatives, she said.
Sutfin noted that the number of kids in foster care has decreased from 19,000 in 2008 to less than 10,000 now. This is because the Michigan department is doing more to provide services for families so they can keep kids in their homes, Sutfin said.
Still, Michigan has struggled to license more foster homes. In 2022, it fell short of its goal of licensing 965 new non-relative homes, reaching 87.6% of that mark. It licensed 845 homes, but during the year, 1,359 homes were closed for a net loss of 514 homes.
Its goal for 2023 fell to 902 homes, but the state continued losing homes in the first three months of 2023.
While the monitors’ review didn’t include the total number of foster homes, the state had 4,169 licensed foster homes through March 31, 2023, according to Fostering Media Connections, a nonprofit that surveys the states for foster home information.
“In (state fiscal year) 2022, DHHS still had substantial work to do to understand and stem net foster home losses and to heighten its focus on licensing foster homes for the special populations of siblings and adolescents,” court monitors wrote in the most recent report. “Significant home losses compromised the placement array for children and contributed to the separation of siblings and the placement of children in shelters.”
Steps to find more foster parents, homes
State officials have been taking steps to boost the number of foster parents in Michigan.
As part of her latest budget that took effect in October, Gov. Gretchen Whitmer increased payment rates for foster parents 8%, bringing the rate for caregivers of youth up to age 12 to approximately $670 a month and $800 a month for those older than 13. Payment rates also were raised in 2022.
The state also has been working to provide respite for foster parents.
“Right now, close to one-third of foster parents close their licenses every year, a fact that places new stress on a system that already badly needs more loving, caring foster parents,” said department Director Elizabeth Hertel in a statement when the payment increase was announced in August. “Through providing more money to foster parents while also giving them a break, we continue to do everything in our power to make Michigan the safest place in America to raise kids and nurture families.”
Continued challenges
Still, the current system faces challenges, according to court monitors.
The state human services department did not provide evidence that systemic and targeted strategies were meaningfully implemented to improve outcomes, nor did they make good faith efforts to maintain a sufficient number and array of foster homes, according to the December monitoring report.
The state has been working with Adopt US Kids to develop a framework for agencies to address foster parent retention.
The last time the Michigan department met the goal for an appropriate foster home array was in 2017.
The state department also struggled to ensure the safety of children while they were in child caring institutions, according to court monitors. They found evidence of insufficient licensing investigations and corrective action plans that were often delayed, unspecific and did not reduce the risk of harm to children. They noted frequent repeat violations, such as physical intervention and improper restraints causing injuries, recurred despite the corrective action plans.
Other areas state officials struggled with included keeping sibling groups together, investigating maltreatment in care reports, keeping kids in emergency or temporary facilities for longer than 30 days, services being made available to parents and children in a timely manner, allowing kids to have enough visits with their parents and providing services to support older kids achieving permanency, the monitors found.
In the latter half of 2022, 37% of kids who left foster care were reunified with their parents, 41% were adopted, 14% were emancipated and 6% went to a guardianship. The federal reunification goal is 60%.
The state will be released from the consent decree when it completes a list of improvements, such as better handling the maltreatment of kids in foster care, ensuring families and children are provided services in a timely manner, not separating siblings in foster care and not placing children in emergency or temporary facilities more than once per year.
kberg@detroitnews.com