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Grosse Pointe Real Estate Market Improving

Local assessors and Realtors describe an improving Grosse Pointe real estate market.

 

by Samantha Scannell

As the national housing market continues to gain strength, assessors and a prominent broker in the Grosse Pointes are optimistic, though cautious, about the state of the community’s realty.

Standard & Poor’s Case-Shiller index revealed an annual gain of 1.2 percent in the price of single-family homes in July, the New York Times reported, marking the third monthly gain in a row.

This is good news for the market, the Times said, and Mario Como, a Grosse Pointe broker and president-elect of the Grosse Pointe Board of Realtors, said he sees improvement in the local market as well.

“The market is looking forward,” Como said. Como, who has worked in the Pointes, St. Clair Shores and surrounding communities since 1989, said he thinks that the market improvement will continue.

Como said the supply for homes for sale has consistently decreased over the past few years, creating an optimal seller’s market. Since the end of 2011, Como said, home prices in the area have mostly remained stable or gone up.

Wendy Moya, assessor in Grosse Pointe City, said she also sees some gains.

“Right now, it seems like the sale prices are improving,” she said. There are still troubling foreclosures in the community, she said, but those are anomalous. Though she does not anticipate a big change in values over the next year, Moya said that the sales of homes in the City are right in line with city assessments and prices of homes have gone up in many sales.

The assessor in Grosse Pointe Park, Diann Lulis, declined to make predictions about the coming year, but said the decrease in prices in the last year was less than it had been since 2008.

While the numbers are improving, Como said the market still faces some persistent challenges. Variables that are difficult to get around, Como said, include unemployment, which is still in the double-digits in Michigan, and potential buyers’ lingering uncertainty of employment security. For the market to continue to grow, he said, those numbers need to improve as well.

Another challenge Como identified concerns the appraisal process. He estimated that about 25 percent of potential sales hit a snag in this area. Como said appraisers need to find the balance between science and finesse, and they need to understand the nuances of a given local market.

He said the problem comes when an appraiser is too conservative. While the market dictates one price, the appraiser can err on the side of caution and potentially undervalue the home, he said.

Writing , another local broker, described the problem this way: “To make a long story short, even though a buyer and seller agree on a price (thus the true market price of the home) an appraiser has the final say.”

GP For Life October 30, 2012 at 05:32 PM
The appraisal process, when it comes to residential real estate, is kind of a mystery to me. Part of me says that a signed contract between two informed parties would represent the "market" price. The problem with that theory is that a lot of people are actually idiots and thus their best estimation of a fair value is suspect at best. The same problem applies to efficient-market hypothesis; dumb market participants can really cause problems. The other part of me says that the fair value of real estate can be determined by extrapolating historical data and applying it to current conditions. Amazingly, this process can lead to a lot more problems. Any process that relies on historical data with ultimately always misses inflection points. Also, if you're using a purely data-driven model, you don't need appraisers, you need a spreadsheet. Basically, I am inclined to believe people are informed buyers/sellers until I see evidence to the contrary. Unfortunately, today's market the variance is just too large to ignore. I would also point out that residential real estate has fantastic potential for great returns over a longer horizon, the fundamentally illiquid nature of the asset makes it very hard to value accurately.

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