Sunday, September 25, 2005

Sales head down on homes up north

By R.J. King / The Detroit News

Dale G. Young / The Detroit News Only one home has been built - and remains unsold - in the 10-lot Orchard Ridge Estates, near Atwood. Browse listings of vacation homes up north Comment on this story Send this story to a friend Get Home Delivery

ATWOOD -- When Friske Orchards bought a 35-acre parcel in this northern Michigan community, the plan was to carve part of it into a 10-home subdivision with sweeping views of Lake Michigan.

Now, five years later, Orchard Ridge Estates isn't nearly as grand as its name suggests. While eight of the lots have been sold, just one home has been built -- an unsold three-bedroom traditional listed at $325,000.

The state's struggling economy, which already has punctured Metro Detroit home values, is now taking a toll on the once-bustling vacation home market across Michigan's rural north and Thumb. Some families are canceling vacations, while others are looking to unload their weekend getaways.

In tough times, location, location, location may be more important than ever. In large tourist destinations near beaches and ski resorts such as Traverse City and Boyne City, home sales remain fairly strong. But in rural areas, cottages and larger vacation spreads often languish unsold for months and even years. In some parts of northern Michigan, home listings have risen 75 percent in two years.

"We're lucky to be where we are near a resort destination," said Salli Hawkins, a realtor with RE/MAX Resort Properties in Boyne City. "That has helped keep us afloat."

Hawkins said she has had to encourage sellers to lower prices, and many of her clients don't want to buy until the economy improves.

Still, she feels fortunate given the horror stories she's heard from home sellers in the eastern part of the state.

"They keep dropping the price, dropping the price, dropping the price every month and still can't find a buyer sometimes," Hawkins said.

The Traverse City market also has avoided a major downturn. Existing home sales were up slightly in 2004, and the average home price rose 6 percent.

But even in northern Michigan's largest market, signs of a glut are appearing on the horizon. Residential listings jumped 23.2 percent in 2004 over the previous year.

"The existing home market in Traverse City is humming along, but the rural areas have slowed down because people either can't afford a new home or existing homes are priced too high," said Tim Minder, manager of the northwest region for Century 21 Pearson-Cook in Traverse City. "Any home priced above $250,000 tends to sit unsold."

In more rural areas like Antrim, Charlevoix and Emmett counties, the picture is bleaker. Home listings were up 75 percent over the same two-year period with 2,759 residences up for sale last year, according to the Antrim Charlevoix Kalkaska Association of Realtors in Charlevoix.

The real estate figures include homes that may have been listed several times. Data from the Traverse Area Association of Realtors also include homes listed several times in the same period.

Higher-priced homes have been especially hard to move in recent years due to the economy, a slowdown in domestic auto sales and rising unemployment, according to real estate agents.

"A home priced above $250,000 is typically out of the price range for area workers, while second-home buyers are often looking for something less expensive," said Carol Waldowski, associate broker of Real Estate One of East Jordan.

"Homes priced above $400,000 are fairly steady because at that price range, it appeals to a different income bracket."

In the Thumb, homes on the market are multiplying. In Lapeer, Sanilac, Tuscola and Huron counties, listings rose 28.8 percent -- 751 offerings in 2004 compared to 583 in 2003, according to the Lapeer and Upper Thumb Association of Realtors in Lapeer. Those figures don't include multiple listings.

During the same period, the region's average homes prices rose 1.4 percent to $143,870 in 2004.

"Residential real estate has its ups and downs," said Sharon Buckner, executive officer of the Lapeer Realtors group. "People are reading in the newspapers that other states are doing better than us as far as real estate. We have high unemployment, but Michigan always comes back."

Michigan's unemployment rate stood at 6.7 percent in August, one of the highest in the country. It remains well above the national rate of 4.9 percent. The state's manufacturing industry has been especially hard-hit in recent years because of downsizing by domestic automakers and rising foreign competition. The profit-sharing checks that made down payments on second homes possible have evaporated in recent years.

While portions of northern Michigan's home market are struggling, the situation isn't as bleak as in past recessions.

"Back in the early 1980s, there was very limited financing, and we were working with a lot of cash buyers," Waldowski said. "The homes today are moving steady except for that $250,000 price range."

Gary Brent, who has been trying to sell his three-bedroom home in Charlevoix for 14 months, said he has dropped his price twice from the original $279,900. Today, the home built in 1987 is priced at $259,900.

"I feel fortunate because I'm not in a big rush to move, but I would like to sell it eventually," Brent said. "The economy is pretty tough, so I guess it's not the best time to sell."

While some homes listed for sale linger on the market, the price of vacant land in northern Michigan has been rising steadily over the past five years, said David S. Farbman, principal of Charlevoix Properties in East Jordan. In 2000, the average price for vacant land was $2,000 an acre in Charlevoix, Antrim and Kalkaska counties, but today that same land would fetch between $4,500 and $5,000 an acre, he said.

You can reach R.J. King at (313) 222-2504 or rjking@detnews.com.