As downtown Petoskey and Traverse City vacant lot availability shrinks, developers and realtors are looking up – and in between – to enlarge the $200,000 buyers’ market.
CREATIVE WITH SMALL SPACES
Developing downtown Traverse City condos in the $200,000 sweet spot has become a near-impossibility as vacant land prices have skyrocketed.
But for those thinking outside of the standard plat, development opportunities in this popular price range are there … if you look hard enough.
No one has been as prolific in the past five years at finding places to build than realtors Bob and Tia Rieck and Socks Construction, said Bart Ford, manager at Coldwell Banker Schmidt Realtors in Traverse City, where the Riecks work.
The Riecks and Socks have done numerous developments together, but perhaps nothing is as striking as Ivy Terrace, two modern boxes filled with condos on a narrow strip of land between the parking garage and Eighth St. in Old Town.
The condos are smaller and less expensive than is typical for new downtown condos.
Ford said it takes vision on the part of the real estate agent and the developer to realize that kind of development.
“I mean, those units are awesome,” Ford said. “It just took a creative perspective to be able to pull that off. Not everybody could do that.”
That development also acknowledges the reality that there is very little available in town in the $200,000 range.
“I think that they realize that there is a bigtime demand for stuff that’s in that $200,000 range in town, where people can walk or people can just have one car,” Ford said.
NEXT STOP: AFFORDABLE
A lot of development that’s taking place in Traverse City right now is happening out of reach of ordinary families.
Many probably wouldn’t want condos anyway, but if they did, a lot of the new ones start at $300,000 or a half million or more, real estate professionals say.
That’s something that concerns Kimberly Pontius, executive vice president of the Traverse Area Association of Realtors.
“It’s one of the complaints I’ve gotten from a lot of young professionals when I’ve talked to them,” Pontius said. “They want to live in Traverse City, but they can’t afford to live in Traverse City.”
One recent effort to create more affordable housing in TC is the Depot Neighborhood, developed by Habitat for Humanity and Homestretch.
If the cold breaks in time, the first duplex should be completed by April or May, said William Merry, Homestretch’s executive director.
Homestretch will build 11 units. Habitat plans 10.
Merry doesn’t expect it will be hard to find buyers for the homes.
“I mean, it’s almost downtown Traverse City and it’s close to the bike trail and close to the library,” he said. “It’s an ideal location.”
Not everyone can buy a Depot home, however. The project uses grant funding from the Michigan State Housing Development Authority, so Homestretch buyers cannot have an income more than 80 percent of the area’s median income.
Merry said that means a family of four in Grand Traverse, for example, must make less than $50,150 to qualify.
Habitat buyers face an even stricter maximum income requirement.
“My dream would be to not have to work with the federal and state agencies so we didn’t have to have these affordability requirements in place,” he said. “There’s just no other financing out there for affordable housing right now.”
YOUNG BROKER FOCUSES IN-TOWN
Weston Buchan would eventually like to set himself up as a realtor who exclusively deals in downtown Traverse City properties.
But for now, he’s a bit more flexible. “Right now, in the beginning part of my career, I’ll take any listing anywhere,” he said.
But he does plan to fashion himself as an expert on in-town properties because he sees that’s where his friends (and his friend’s parents) want to live.
Buchan, 25, was named Rookie of the Year for 2013 for Coldwell Banker Schmidt northern Michigan offices. Buchan has found that for his friends, even finding a home to rent in Traverse City seems out of reach.
“If you find a place to rent under $1,000 [per month] in Traverse City, you’ll see it rented that day,” he said. “You’ll have six or seven people call.”
Younger generations like Gen X and Gen Y want to live in town, Buchan said. But lately it seems like people of all ages want to live in town, a walk away from beaches, restaurants and bars.
That’s why houses sell so fast and listings are scarce.
For example, take the centrally located homes between Division St., 14th St., and Railroad Ave. Sales in that sector have increased in each of the last three years, Buchan said. There were 68 sales in 2011, 78 sales in 2012, and 96 last year.
Buchan said he’s learned that since sales happen so fast, he has to be willing to work long hours and always be available to clients.
If someone wants to see a house in town, they can’t wait a day or so. He said he understands he has to get them inside in an hour or so.
OPPORTUNITY IN PETOSKEY?
Petoskey’s downtown is also built out, and prices of old homes close to the center are going up, even if they aren’t in great condition. A red hot market for in-town real estate and a lack of space to build has taken away a lot of what builders or remodelers can do, said agent Lori Jodar of Lori Jodar & Company.
“The issue in downtown Petoskey is that there are no more lots left, so if you want to be in town, you can either buy an existing 150-year-old house, or, [if you go further out of town] maybe you’re into a ‘60s ranch,” Jodar said. Some people have bought houses and remodeled them to flip, but Jodar said she hasn’t been impressed.
“Unfortunately, the ones that I have seen have not been very well done,” she said.
A couple of years ago, there were foreclosures and other bargains on the market that could be picked up and flipped, but that’s not the case today. Anything in town starts at a high price today.
Bill Winslow, managing broker with Coldwell Banker Schmidt in Petoskey, believes the opportunity is there for someone who can figure out a way to split a lot or flip a house in a creative way.
“Surprisingly, I have not seen a lot of in-town development going on, but there’s certainly a lot of opportunity out there,” Winslow said.
Cities with little land left to develop are starting to look skyward.
Towns like Petoskey are going to start thinking more about lifting height restrictions, said William Dickson, a broker at Prudential Preferred Properties in Harbor Springs.
He expects to hear more talk of “air space” rights because of the amount of buildings in Petoskey that could be developed vertically.
“There are so many one- and two-story buildings and there is all of that space above,” he said. “Air space in downtowns is becoming valuable.”