It’s a well-established narrative — San Jose and San Francisco are experiencing a housing crisis.
But rising prices and low inventory aren’t endemic to the Bay Area. Michigan metropolitan areas, in particular, stood out in April for competition and price growth, according to new data from real estate brokerage Redfin.
“Homes in Grand Rapids are selling as fast as homes in the Bay Area,” said Redfin Chief Economist Nela Richardson, citing its strong economy and high demand. Homes in both Grand Rapids and San Jose spent nine median days on the market.
The median home price in Grand Rapids is $181,447, representing a 10.2% increase from this time last year, according to Zillow data. In San Jose, the median home costs $1.1 million, which is 22.4% higher than last year.
“Grand Rapids and parts of Detroit are both seeing a resurgence. Prices are rising, rates are rising, but wages are not rising — that’s the big concern going forward,” Richardson said in an interview with Yahoo Finance. Michigan’s two largest cities were among the metros with highest year-over-year growth in home sales, up 18.3% in Grand Rapids and 15.5% in Detroit, according to Redfin.
Why Grand Rapids?
Denver was April’s fastest market, with half of all homes going into contract after a median of six days on the market. Seattle came in second, with the average home for sale staying on the market for a median of seven days. San Jose, Grand Rapids and Tacoma, Washington, tied for No. 3, with homes going into contract after a median of nine days on the market.
“The economy is diversifying with new companies moving in and expanding thanks to the affordable cost of doing business and ample workforce. As home prices rise, it can be tough for local buyers to compete with buyers from elsewhere who have reverse sticker shock and loaded pockets from selling a home in San Francisco, Boston or Chicago,” said Kent Selders, Redfin market manager in MIchigan.
Grand Rapids was the fastest-growing large metro economy in 2016, followed by Orlando, Nashville, Charlotte and Salt Lake City, according to analysis from Headline Data.
Michigan’s second-largest city is home to a number of large corporations. Spectrum Health, the largest company in Grand Rapids, employs approximately 25,000 workers. Supermarket chain Meijer, consumer goods brand Amway and pharmaceutical company Perrigo are also headquartered in the city. Between 2014 and 2017, Grand Rapids metro’s 28 venture-backed startups — 50% in the life sciences industry — represented 20% of all startups in Michigan (compared to 25% in Detroit), according to the Michigan Venture Capital Association.
Across the U.S., the typical home for sale in April went into contract after a median of 36 days on the market, six days faster than a year earlier and faster than any month since 2010, when Redfin started tracking the market. Among homes that sold last month, 26.2% sold above their list price, up from 24.9% in April 2017.
“As we enter peak home buying season, new listings will be key in maintaining sales growth and moderating the rapid price increases we’ve seen this year,” noted Richardson.
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.