Overvalued Housing Markets: A New Nationwide Epidemic

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In a new report, Fitch Ratings estimates that home prices are 5.5% overvalued nationally. However, Michigan is one of the few states where housing is undervalued.

The demand for housing far exceeds the available inventory nationwide. This trend is due, in part, to homeowners’ reluctance to list homes during the pandemic. Metro areas around the United States are overvalued by more than 10%. Las Vegas (28%) and Dallas-Fort Worth (20.24%) are prime examples. Idaho (30-34%) is the highest overvalued state on the list, with Nevada coming in a close second.

Detroit Demolition and Renovation Begins Soon

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With the passing of November’s Prop N, which approved the sale of $250 million bonds, demolishing and renovating is set to begin (again) in Detroit. The project starts with $175 million in bonds, and the city plans to sell another $75 million next year. 8,000 homes blighted homes will be destroyed, and another 8,000 salvageable homes will be renovated. The seven companies taking part in the project are headquartered in Detroit. Five of those companies are black-owned.

Legal Action Taken Against Former Collier Advisors Who Started New Firm

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Colliers International U.S. states it has commenced legal action against 10 former senior brokers who split from the company to form their own firm, Advantage Commercial Real Estate Services, alleging, among other things breach of fiduciary duty and use of confidential information. Several of the brokers were majority owners in a firm that Colliers acquired in 2016 in an effort to strengthen its presence in West Michigan. The proceedings provide a new slant on what was perceived as an amicable split in January.

Ann Arbor and Developer Work to Save the Trees

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Ann Arbor City Council and developers have debated over a 51-home subdivision for years. The original proposal called for the removal of 200 old growth oak trees, but was unanimously rejected by City Council in 2017. But now, a new alternative called “The Canopy” would preserve most of the old forest fragment at 2857 Packard Road, while erecting a 2-story apartment or condo building loaded with green features.

Belgian Chocolatier Shutters All North American Stores

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The forthcoming flood of retail closures is starting.  Godiva is closing 128 storefronts and cafes across North America by the end of March. Their chocolate will continue to be available online and in partnering retail and grocery stores. With the bulk of profits stemming from tourism, special occasion and impulse buying, the decrease for in-person shopping is to blame for the company’s shift. Chocolate sales have risen by 5% during the pandemic. In-store operations will continue in Europe, the Middle East and Greater China.

Commercial Real Estate Faces Existential Crisis

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When compared to the 20 bankruptcies that were filed per month over the last year, the 11 companies who filed for bankruptcy over the past month could point to a slow down. Cheap money/capital have helped troubled companies stay afloat, slowing the bankruptcy filings.

However, the retail, office, and hotel sectors are particularly vulnerable. The impact of the pandemic is trickling down as the government intervention to prop up the economy starts to slow.

New Midtown Development Details Emerge

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Farmington Hills-based City Club Apartments, LLC, has a $95 million vision for its Midtown development. The Detroit Planning Commission will consider a rezoning request for a 2.3 acre chunk of land at a February 4 hearing. The development will include a 16 story tower with 273 apartments, a complementary building with 77 apartments and 12,500 square feet of street level retail space. A one-story building with 32,000 square feet will house a national general merchandise retailer; retailer specifics are presently unknown. Construction begins this summer on the southeast corner of Woodward and Mack.

Former Real Estate Executive Charged with Wire Fraud

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Viktor Gjonaj, former head of the Troy-based Imperium Group, LLC, has been charged with bilking at least two dozen investors of $26.4 million to fuel his Michigan lottery habit. Gjonaj promised investors that he would buy, develop, and resell real estate for a profit, but did not promise a specific rate of return. Of the 66 real estate deals presented, none came to fruition. Instead, he used the funds to support his $1 million a week Daily 3 and Daily 4 gambling habit. The state’s $5,000 daily limit on lottery terminals, installed in 2018 in response to Gjonaj’s lottery activities, did not slow his habit. Gjonaj’s current location is unknown.

Real Estate Transactions Secure Permanent Trail Easements

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 Michigan’s DNR purchased 67 miles, with a price tag of $985,969, in an effort to secure permanent trail easements and improve existing trail connectivity. The purchase spans Dickinson, Gogebic, Houghton, Iron and Ontonagon counties in the Upper Peninsula. The purchases were funded, in part, by the Michigan Permanent Snowmobile Easement Fund. The bulk of the purchase is for snowmobile trail use, but multi-use trail opportunities may be in the future.

Western Michigan Is A Seller’s Market for Homes

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In the past four months of 2020, the number of homes sold exceeded the number of homes listed, demonstrating the continuing residential real estate boom, and showing that the residential market continues to be very seller-friendly.