A 'new norm': Grand Forks housing market cooling down from high demand
There was a time when a new house on the market was snatched up within hours of being put up for sale. But real estate agents and homeowners say that's not happening anymore.
Many real estate agents in the Grand Forks area recalled the years between 2012 and 2016 as extremely busy. While agents may say this change is normal, for those struggling to sell a home it can be extremely frustrating.
Mike Grossbauer's home was on the market for 15 months before it finally sold.
"Those were honestly the worst 15 months of my life," Grossbauer said. "One mortgage isn't fun, but having two mortgages held over your head?"
Grossbauer sold a home in 2014 and moved into the home he struggled to sell in south Grand Forks. In 2014, his house sold in days. He thought selling his house in 2017 would go just as quickly, so he and his family bought a home in Bismarck, where they moved for his wife's work.
The housing market in Grand Forks has become more of a buyer's market, according to Ruth Ann Halvorson, the 2018 president of the Grand Forks Area Association of Realtors (GFAAR).
A balance between buyers and sellers is preferable, Halvorson said.
"It could be considered 'bad' if one or the other has more power," Halvorson said. "This is definitely not a time to panic though."
Shawn Horn, real estate agent at Crary Real Estate, agreed the change is not out of the ordinary.
"It flips from a buyer's market to a seller's market," Horn said.
Larry Hondl, an agent at Oxford Realty, said he has to explain the shift in the market to people selling their homes. Hondl said those selling their homes need patience.
"A lot of people were used to listing their house and it was gone in week and had two or three offers on it," Hondl said. "I'm not saying that doesn't happen anymore but if it's an average type property, you're probably going to sit on it awhile. We're up to like 140 days now that the average house is taking to sell."
Grossbauer said he and his wife did everything they could to try to make their house sell. He even drove from Bismarck to paint the inside of the garage because his agent suggested it might make the property more appealing.
"I still don't understand why it took so long," Grossbauer said. "It was so frustrating. Month after month we were just hoping something would happen, something would change."
Crary Real Estate agent Jerry Waletzko said that there is just too much inventory on the market. Waletzko believes that baby boomers are affecting the market by moving to warmer climates or to be closer to their children. Older people dying and leaving behind their homes also plays a part in this, Waletzko said.
"And there is angst among Realtors who have listings," Waletzko said. "If you've been around a bit you probably haven't carried this much inventory during the winter. And people trying to sell their homes are feeling angst, too."
More houses built
One cause of this change could be an increase in the number of homes built in the past couple of years, Halvorson said.
Grossbauer said his agent told him Thomsen Homes had built so many homes in the same price range as his and it made selling his home more difficult.
Hondl declined to say which builder, but also said a builder came to town in recent years building lower-priced properties. This has affected local builders, Hondl said. The homes being built by this builder are in the $275,000 to $325,000 range.
According to data from the GFAAR, in 2018 homes in the $275,000 to $325,000 range spent 133 days on the market. In the year before homes in that price range spent 118 days on the market.
"That market is more stagnant than in other price ranges," Hondl said. "Things are going very well for that one builder, but slowed up other builders and others selling homes in that price range."
Thomsen Homes started building in the second half of 2017. Since then, they have sold more than 60 houses and have fewer than 10 houses under construction.
Nate Anderson, listing broker for Thomsen Homes, said he thinks the existing home market and new construction are closely linked, but there are other factors for why the housing market has slowed.
"I think new construction plays a part in the overall housing market, but even in the Fargo-Moorhead market we have seen price softening and no new builder entered the market there," Anderson said. "The costs of home ownership were not achievable for a large portion of population years ago, so through our entrance, we hope that we'll have provided another option to make home ownership a reality for more families."
Coldwell Banker Real estate agent Phil Vanyo said an increase in the number of apartments on the south end of town also could have had an impact.
"This may have led to some of this slowness. People might have been renting homes and now have the option for a brand new apartment building with a gym and a pool," Vanyo said. "I'm not saying we're over building, but we're certainly in a different time than we were a few years ago."
Some say the housing market in Grand Forks has normalized.
Hondl remembers 2016 as a "crazy" year in terms of the volume of houses he sold. He also said he remembers experts saying it wasn't healthy for homes to be selling as quickly as they were.
"It was kind of an anomaly there were so many people looking at the same time," Hondl said.
Vanyo said the current housing market is the "new norm," but not wildly different from the housing market 10 years ago.
"We're kind of flat-lining, not a decrease," Vanyo said.
The winter season is always slower, Vanyo said, and he expects people to look more seriously at houses starting in February.
"It's not a gloom and doom market, but maybe it has been the last couple of months if you're selling and really can't figure out why no one has come to look," Vanyo said.
Overall, the housing market doesn't worry Vanyo. "I'm not as concerned about the housing market as I am about sales tax dollars decreasing."
According to data from the GFAAR, in November 2018, 47 houses were sold in the Grand Forks and East Grand Forks area. More than 300 homes were actively listed at this time.
In the November the year before, 62 houses were sold.
From 2017 to 2018 there was a 4 percent drop in the number of houses sold, from 788 sold in 2017 to 754 sold the next year. John Colter, the association executive for the GFAAR, said he expected the total number of houses sold in 2018 to be lower than 754.
Waletzko, who blogs about local real estate trends, analyzed data from the Multiple Listing Service database for Grand Forks and found that in 2015, 379 new homes came onto the market. The following year, 520 homes came onto the market. In 2017, 550 homes came onto the market. Last year, 579 new homes came onto the market.
"We have record amounts of inventory and just not enough buyers out there," Waletzko said.
In line with how real estate agents remembered the years before 2017, there was a significant increase in houses sold from 2015 to 2016, according to Colter's data. That year, 800 houses were sold, an increase of more than 100 from the year before. The following year, the amount of houses sold dropped.
Some things affecting the housing market are higher interest rates or recent job cuts at UND, which forced many to move, according to agents.
Interest rates were lower in 2016—less than 3 percent. However, Jonathon Betting, a lender with First Class Mortgage in Grand Forks, said interest rates don't typically scare people away.
"If you need to move, you need to move," Betting said.
Waletzko said he thought the combination of more new homes being built and the university hiring fewer people recently had something to do with the record amounts of inventory.
Hondl said he didn't think there was a single factor the change in the housing market could be pinned on.
"Based on how dynamic our economy is, there's not many things that changed drastically to put halt or slow to the buyer side," Hondl said.
From a lender's perspective, Betting said, the number of purchases has been steady since 2015. However, from his end, he's seen people taking a longer time to look at homes. There are more houses on the market now, Betting said, so families have less pressure to decide on a home right away.
"I think they're just looking at more houses, trying to find something that fits their family better," Betting said. "Where as before they were signing just to sign before other people."
Horn said he still sees some homes go in "just a few hours," but it's is not happening as frequently as it was in past years.
"It is puzzling why it's not as active," Horn said. "It should be busier than it is."
Waletzko predicts that data for the fourth quarter of 2018 will show a slow market for sellers. But he thinks this spring things will start to pick up a bit.
While realty professionals say the change in the housing market is confusing, but nothing to worry about, it still causes stress to homeowners trying to sell.
Grossbauer said he and his family had open houses every weekend for the home he was trying to sell. And on the following Mondays, Grossbauer would call his agent and many weekends she would tell him no one came to see the house.
"It was really frustrating. I can't even explain it. It felt like you were getting choked on both ends," Grossbauer said. "When we got the offer it was a great relief there was something finally happening."