With signs of balance returning to the market, the US housing market looks
like it’s going to finally return to normalcy. These real estate trends have garnered the attention of many towards different inland markets. One of the hottest cities in the Michigan real estate market, the Grand Rapids housing market, has been receiving a great deal of investor interest.
But why all the buzz surrounding the Grand Rapids real estate market? Well, here are a couple of reasons that might help to explain that.
3 Reasons to Invest in the Grand Rapids Housing Market
What promotes investor demand in certain markets? Usually, it’s the same number of factors that investors are always after. A seller’s market cooling down to a buyer’s market, a burst in a market’s economy, high tourism, and affordability are just a couple. So, focusing back on Michigan’s second-largest city, here are three reasons you should invest in Grand Rapids real estate.
1. Job Growth
According to the Bureau of Labor Statistics, the unemployment rate in Grand Rapids has been trending downward since hitting a peak of 17.1 percent in July 2010. Throughout 2018, it’s hovered at around 4 percent. The presence of the Spectrum Health headquarters in the area contributes to local job growth. In addition, the city is a historic center for manufacturing and boasts thriving furniture, automotive, and aviation manufacturing businesses. This indicates a healthier economy and stability, which is what investors look for.
2. Affordability
Despite local housing affordability concerns, the Grand Rapids housing market is still considered quite affordable on the national scale with a median home value of just over $156,000. Although Grand Rapids home appreciation rates have been some of the highest of any market in the country (41% over the last ten years), prices are still affordable offering potential opportunities for investors who implement more long-term strategies.
3. Hottest Market in America
According to Trulia, Grand Rapids is one of the top 5 housing markets. This is based on low vacancy rates, high job growth, the younger adult population, and more. Realtor.com also listed the Grand Rapids housing market as home to the “hottest zip code in America.” This is based on how quickly homes in zip code 49508 sold and moved off the market. Grand Rapids home values also show how hot this market is. They have gone up 13.1% over the past year, according to Zillow which predicts they will rise another 3.9%.
A bonus reason you should invest in the Grand Rapids housing market is the data. Real estate analytics are showing signs of strong market performance.
Grand Rapids Housing Market Forecast
Let’s get down to some actual numbers to back all of this hype for the Grand Rapids housing market. Using data provided by Mashvisor’s investment property calculator, we will give you a quick summary of how the market is actually performing. Here’s the city-level data on the average performance of Grand Rapids investment properties.
Grand Rapids, MI
- Median Property Price: $277,059
- Price per Square Foot: $209
- Average Days on Market: 242
- Price to Rent Ratio: 21
- Monthly Airbnb Rental Income: 2,372
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 60%
- Monthly Traditional Rental Income: $1,075
- Traditional Cash on Cash Return: 1%
The first thing that stands out is the low median property price of real estate in the Grand Rapids housing market. It is below the national average property price and as appreciation rates slow down in the US housing market, this market will remain a relatively affordable place to invest.
We can also very clearly see that renter demand is high, according to the price to rent ratio, which implies that it’s more affordable for people to rent rather than buy a home.
On the city level, the numbers for Airbnb rentals seem to be better than those for traditional rentals, but this doesn’t necessarily mean Airbnb is the way to go for all Grand Rapids rental properties. To give you some direction on which rental strategy is more successful on a more narrow and definite scale, here’s our neighborhood analysis of the Grand Rapids housing market.
Related: Neighborhood Analysis in Real Estate Investing
Best Neighborhoods- Airbnb Investment Strategy
Here are the best neighborhoods in Grand Rapids for Airbnb rentals, according to key return on investment metrics.
West Grand
- Median Property Price: $128,369
- Price per Square Foot: $99
- Average Days on Market: 61
- Monthly Airbnb Rental Income: $2,380
- Airbnb Cash on Cash Return: 15%
- Airbnb Occupancy Rate: 62%
Oakdale
- Median Property Price: $141,450
- Price per Square Foot: $73
- Average Days on Market: 48
- Monthly Airbnb Rental Income: $3,032
- Airbnb Cash on Cash Return: 13%
- Airbnb Occupancy Rate: 61%
South East End
- Median Property Price: $122,588
- Price per Square Foot: $89
- Average Days on Market: 43
- Monthly Airbnb Rental Income: $2,723
- Airbnb Cash on Cash Return: 11%
- Airbnb Occupancy Rate: 61%
Madison Area
- Median Property Price: $97,437
- Price per Square Foot: $80
- Average Days on Market: 58
- Monthly Airbnb Rental Income: $2,122
- Airbnb Cash on Cash Return: 11%
- Airbnb Occupancy Rate: 58%
There are many more neighborhoods in the Grand Rapids housing market in which Airbnb performs well, but these are the top-performing markets. Notice how all neighborhoods have record low real estate prices. Double-digit cash on cash return rates in all the mentioned neighborhoods is also definitely a plus for any Airbnb Grand Rapids real estate investor.
Related: The Best Places to Buy a Vacation Home in Michigan
There aren’t any strict Airbnb regulations set, but anyone who wishes to rent out a room or property on Airbnb in Grand Rapids must receive a license from the city. Additionally, be sure to check local zoning ordinances. As Airbnb continues to increase in popularity, it’s recommended to keep track of any new laws and regulations being set in your city.
To start your search for Airbnb investments in the Grand Rapids housing market, click here.
Best Neighborhoods- Traditional Investment Strategy
Here are the top-performing neighborhoods in the Grand Rapids housing market for traditional rentals.
Fuller Avenue
- Median Property Price: $146,600
- Price per Square Foot: $98
- Average Days on Market: 92
- Monthly Traditional Rental Income: $1,440
- Traditional Cash on Cash Return: 5%
East Hills
- Median Property Price: $224,800
- Price per Square Foot: $102
- Price to Rent Ratio: 12
- Monthly Traditional Rental Income: $1,553
- Traditional Cash on Cash Return: 4%
South East End
- Median Property Price: $122,588
- Price per Square Foot: $89
- Average Days on Market: 43
- Monthly Traditional Rental Income: $1,063
- Traditional Cash on Cash Return: 3%
To start your search for traditional investments in the Grand Rapids housing market, click here.