No housing bubble recovery for some

GRAND RAPIDS, Mich. (WOOD) - Among 97 West Michigan communities in eight counties examined in a 24 Hour News 8 analysis of average home sale prices, a handful of neighborhoods have seen jumps of 10 percent or more over the past six years, while others are down by more than 50 percent.

The largest percentage drop -- 72 percent -- came in a southwest Grand Rapids neighborhood, from Wealthy Street south to the city limit. It's Josie Zapata's neighborhood.

"I think it's three [nearby houses] ... no one lives in them right now," Zapata said, standing on the porch of the home she bought more than 25 years ago.

The longtime southwest-sider has been able to hold on to her home, but data from the firm RealtyTrac Inc. shows the street where she lives is a hotspot for foreclosures. The mailman can point out the empties -- about one in five homes if you ask a man who lives just down the block on Andre Street.

Those empty homes drive down average sale prices.

Using sales data from the Grand Rapids Association of Realtors, the Greater Kalamazoo Association of Realtors and the West Michigan Lakeshore Association of Realtors, 24 Hour News 8 compiled data for the neighborhoods, comparing average sales prices to those in 2003-04. That was before the housing bubble was at its most bloated point -- and before that bubble burst. You can find all the data we used -- along with a searchable map -- here.

For 12 months ending in March, the average sale price in southwest Grand Rapids -- south of Wealthy Street -- was $19,912, compared to $70,725 over the same 12-month period in 2003 and 2004.

Large price drops were not limited to urban areas, our analysis found.

The second biggest percentage decline was in eastern Montcalm County, where a group of four townships -- Bloomer, Bushnell, Crystal and Evergreen -- saw a 55 percent drop from an average of $99,065 in 2003-04 to $44,717 in 2009-10.

Rounding out the bottom five: the near west side of Grand Rapids with a 53 percent drop, the Edison-Washington Square neighborhood in Kalamazoo with a 51 percent decline and the near southeast side of Grand Rapids, where the average price fell by 50 percent.

A 50-percent drop -- or any drop in average sale price -- does not mean every house in the area has lost that much value. It could mean less expensive houses are selling while others are not. But at least some homes are selling for much less than they did six years ago.

Take a west side home on Straight Avenue purchased last year by investors at the Fulton Group for $22,650. The same home sold for $57,600 in 2004 and $97,000 in 2005.

"Unfortunately, there's a lot of people who have lost their homes and that's why the properties are selling for that," Fulton Group co-owner Josh Smith said. "We couldn't afford to buy these properties and renovate them and improve these neighborhoods if we were paying $100,000. The numbers just simply don't work for it."

The low numbers allow some investors, such as the Fulton Group, to renovate the homes, restoring value to the neighborhood.

But we wanted to know -- what do the areas with the biggest drops have in common?

"A lot of those neighborhoods have lower income to begin with, so they were stretching a little bit to get into the houses or they were in jobs that may have disappeared," said Paul Isely, chair of the economics department at Grand Valley State University.

When job loss leads to foreclosures, banks look to sell the properties quickly. That can drive down sales prices of other homes nearby.

Isely's students at GVSU analyzed sales data and concluded if there are five foreclosed homes within 500 yards of your home, you can expect a 20 percent drop in sales price. If it's 20 foreclosed homes, the drop is nearly 40 percent.

"What's affecting your neighbors certainly affects you. And we're seeing that right now," Isely said.

Zapata is familiar with foreclosure. Her son and his family moved in with her after they lost one of their two incomes. But Zapata is hopeful and optimistic the economy and the housing market will come back.

"I love my neighborhood and I don't think I'd ever move out of here," she said. "I've never had any problems."

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Community boundaries are based on information provided by local real estate groups. The Grand Rapids and Greater Kalamazoo associations break down numbers by neighborhoods and townships, and the West Michigan Lakeshore Association of Realtors uses larger areas.

24 Hour News 8 will post the second portion of this two-part series, which looks at the communities that have seen average sales price increases, at around 10 p.m. Thursday on WXSP and on WOOD at 11.

You can look at the data used for this story -- and search a clickable map -- here.