Real Estate Information Archive

The Rust Belt city of Grand Rapids, Michigan, takes on a green patina -- and finds that it boosts business

On a sunny afternoon in Grand Rapids, a group of earnest, middle-age folks is gathered in a conference room, looking at slides of wind turbines and charts about wasteful energy use. A full-bearded man, who looks as if he's just back from a nature walk, talks about his plans to build a home showcasing the latest in low-impact design. At the front of the room, the speaker asks, pep-rally style, "What's the most effective source of renewable energy today? Conservation!"

But this isn't a meeting of Earth-loving Hippies Reunited. The speaker, Michael Ford, is an executive at Cascade Engineering, a plastics manufacturer that makes ducts for Ford, dashboard silencers for Chrysler, and all manner of doodads for other industries, and he's presenting at the West Michigan Sustainable Business Forum's monthly meeting. The attendees are top managers from major companies in and around Grand Rapids, the region's commercial center and Michigan's second-largest city. "We are in business to make money," Ford reminds them. They're doing it by turning eco-friendly, in the belief that reducing the environmental cost of commerce will raise their profits, boost the regional economy, and burnish Grand Rapids' increasingly credible claim to the title of greenest city in America.

Grand Rapids leads the nation in the number of LEED-certified buildings per capita. In 2005, Mayor George Heartwell pledged that more than 20% of the city's power would come from renewable sources by 2008; it hit that target a year early, and Heartwell upped the target to 100% by 2020. The municipal government's energy use has been cut by more than 10%. The public-transit fleet features hybrid buses. And here, in the heart of the Rust Belt, manufacturers are leading the greenification charge. Office-furniture heavyweights Herman Miller and Steelcase both have LEED-certified buildings in the area, as do industrial firms such as Cascade Engineering.

Peter Wege, Steelcase's retired chairman, is the father of green Grand Rapids. "In 1937, when I started working in the desk plant of my father's metal-office-furniture company, I learned that we recycled steel to cut costs," Wege recalls. "Seven years later, flying an Army plane into Pittsburgh on a sunny day, I became an environmentalist when I had to ask for tower lights because I couldn't see the airport through the black smog. Those two experiences helped make me an economicologist -- a word I coined to define the balance we need between economy and ecology."

Over the years, Wege ordered various eco-friendly moves, introducing the reprocessing of toxic solvents and investing in a baler for recycling packing materials -- a purchase he cites as a proof of economicology because "once the baler was paid for, Steelcase began saving $20,000 a year." Last year, Wege gave $20 million for the construction of the Grand Rapids Art Museum, the world's first LEED-certified art museum.

Wege also popularized the term "triple bottom line" here, listing human welfare and environmental responsibility on par with fiscal profit. Today, that's the most common eco-biz buzzword in Grand Rapids. "Environmental drivers may be the reason companies try sustainable business practices, but eventually business drivers take over," says Dave Rinard, Steelcase's director of global environmental performance. The company's LEED-certified wood-fabrication facility, for example, cost up to 5% more to build than a traditional plant, but it uses about 30% less energy; Steelcase recouped the extra cost in 18 months. It also refined its wood-manufacturing process, replacing harsh solvent-based chemicals with a water-based one. The new finish costs more but proved easier to recover and reuse, and takes just 24 hours to cure wood, compared to 90 days for the toxic solvents. It also makes workers happier. "At the finishing point in most plants, workers wear hazmat suits and respirators," says Steelcase manager Kevin Kuske. "Ours wear shorts and T-shirts."

Like Steelcase, Cascade Engineering sought LEED certification -- its HQ is rated platinum -- and greenification has opened the company's eyes to new lines of business. Its new EcoCart, a curbside trash receptacle made with recycled plastics, has quickly become a hot seller, and the firm has inked a deal with a Scottish company to be the exclusive North American marketer of an innovative wind turbine that includes a plastic propeller produced by Cascade. "Most businesspeople think of instituting sustainability as a zero-sum game," says Cascade founder and CEO Fred Keller. "But it is the right thing to do -- and we think we can make it a good business, too."

In becoming a green center, Grand Rapids is also turning itself into a lab, a training camp, and both an exporter and a magnet of expertise. Keller teaches a sustainable-business course at Cornell University, and it was there that he recruited Michael Ford, one of his MBA students, who has launched two energy-related subsidiaries in the past two years. Integrated Architecture, designer of several of Grand Rapids' LEED-certified buildings, has an expanding list of out-of-state clients drawn by its hometown work. Aquinas College launched the nation's first undergraduate-degree program in sustainable business in 2003, underwritten by a $1 million donation from Steelcase's Wege. "We see ourselves as part of the new knowledge-based economy," says Bill Stough, CEO of Sustainable Research Group, a consultancy with a growing national business. "We're exporting the information we've learned to other parts of the country."

Matthew Tueth, chair of Aquinas's sustainable-business program, goes so far as to call what's happening in Grand Rapids a "movement" that could secure the region's economic future. "You can make lots of money while at the same time having a restorative -- not just a less-bad -- effect on the environment," he says. "This is not a fad. And if it is, we're done as a species."

Thinking about moving to Grand Rapids click here to view available homes

Article taken from Fastcompany.com: View Original at : http://www.fastcompany.com/magazine/129/new-urban-eco-nomics.html?page=0%2C0

 

This Article was taken from MSN Real Estate.

Falling prices make homeownership increasingly realistic in some areas. Just don't expect to make a fast buck.

GAITHERSBURG, MD – Ann Ashburn, President of AmeriDream, Inc., issued the following statement today after President Bush signed into law the housing package. The legislation eliminates charitable downpayment assistance programs funded in part by sellers, effective October 1, 2008. These programs have helped one million families and individuals become homeowners.

“Eliminating charitable down payment assistance will slam the door on over 100,000 teachers, firefighters, working families and others who rely on these programs annually to become homeowners. The decision was based on suspect data that was never independently and publicly verified. In fact, just months ago, two different federal courts threw out a similar policy on the grounds that it was unsupported by either verifiable data or a valid policy rationale. We will continue to fight on behalf of low and moderate income families to preserve charitable downpayment assistance and to help them achieve the American dream of homeownership.

“In the interim, supporters of downpayment assistance should still make their voices heard by visiting www.supporthomeownership.com and telling HUD and Congress to regulate – not eliminate – downpayment assistance. We commend the efforts of our many supporters – families, individuals, churches, mayors, real estate professionals, unions, community groups, and especially members of Congress – to protect the next generation of American homeowners.”

BACKGROUND: Charitable downpayment assistance funded in part with seller participation has allowed homeownership to grow without using taxpayer dollars. To date, more than one million families and individuals have utilized this downpayment assistance, generating nearly $10 billion in home equity for those families. These working families qualify for FHA insured loans in every respect, but are unable to save the needed downpayment. AmeriDream has provided more than 250,000 gifts to aspiring homeowners, approximately 80% of whom were first-time homebuyers. AmeriDream also has helped educate 60,000 homebuyers through homebuyer education courses, helped 1,200 homeowners retain their homes when confronted with mortgage difficulties, and committed over $30 million to affordable housing development in local communities.

According To CNN Money on May 7th, 2008; Grand Rapids, was ranked 8th in nation as the one of the fastest growing real estate markets with a projected appreciation rate of 1.9% by May of 2009, This is in sharp contrast to the other side of MIchigan in which CNN projects that The Farmington HIlls Market which is the only major Market to have negative 5 year appreciation of -7.5%, and is also projected to fall another 5.9% by May of 2009. It's very Difficult for people from other states to seperate the 2 metro markets but Grand Rapids is a positive market and is building into the future and the east side of Michigan  around the Detroit Metroplex is struggling.

Have you ever seen a dog chasing after a car? To a sadist, it might seem very funny.

No matter how fast the dog runs, it will never catch the car. The dog will never slow the car down. And, the dog will never bite a moving tire. What must the dog be thinking?

Today, many sellers are running after the market, the same way dogs chase vehicles.

What are these sellers thinking? Their home is the only castle for sale? Buyers will love the scent of their lilac bushes so much that it will temporarily cause them to forget the competition? Is it possible the smell of fresh baked bread will cause a buyer to pay yesterday's price in today's market?

In my opinion, it is imperative for a seller to price their property 10% below market in order to sell promptly and avoid being left in the long line of expired listings. It may be an election year, but it will be a long wait for the inventory levels to decrease to a balanced market.

There is a Turkish proverb that says, "No matter how long you are traveling down the wrong road, when you figure it out, turn around." Overpricing is a two-edge sword. If a property is receiving little activity, it is overpriced. Or, if a property is receiving adequate activity, but no offers; it is also overpriced. The latter problem is called 'always the bridesmaid, never the bride.'

By suggesting a seller has an overpriced property, the real estate agent runs the risk of being the messenger that gets shot. Courageous agents tell the truth. Cowardly agents hope the overpriced property will generate sign or ad calls while the seller reduces the price and stigmatizes the property with additional days on the market.

Say's law says, "No good or service will remain chronically unsold, as long as prices remain flexible." The next time you see a dog chasing a car, hopefully, it will remind you of the futility of chasing a declining real estate market.

Why Selling Now Makes Sense

Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.

Their reasoning may work in many other parts of the country as well.

"People are finding houses at prices they thought they'd never see again," says David W. O'Neil of Century 21 Spindler & O'Neil Associates in suburban Boston.

O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.

In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.

He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it's a Cape, not a Colonial. These are things Attias calls "unchangeables."

He says it’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home, and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.

Real Estate buyers are usually highly focused on the purchase price of a property. This is a legitimate concern. The purchase price is one of the most important considerations in a real estate transaction. But at the same time home buyers too frequently treat interest rates as a secondary concern. Many buyers will stress over $300 or $400 in negotiations over purchase price. But when told that interest rates dropped half a point, home buyers will often respond with a shrug.

This is frequently because it is easy to understand the difference between paying 200k and 195k for a house. But it's harder to appreciate the difference between an interest rate of 6.5% and 6.0% for a house. But interest rates can have a large influence on mortgage payments. Using a mortgage calculator first let's look at the difference between the mortgage on a 200k and the mortgage on a 195k house assuming a 6.5 percent interest rate.

200k  (6.5%)  Mortgage  $1264.13 per month
195k  (6.5%)  Mortgage  $1232.53 per month

The difference ends up being $31.60 a month.

Now let's look at the difference between an interest rate of 6.5% and 6.0% on a 200k house.

200k  (6.5%)  Mortgage  1264.13 per month
200k  (6.0%)  Mortgage  1199.10 per month

The difference ends up being $65.03 a month or $780.36 a year. A simple half point drop lowered the mortgage payment by 5.4 percent.

Interest rate changes are not that uncommon. We wrote a tool that graphs mortgage rates over time based on the interest rates provided by Freddie Mac. In the middle of 2007 we saw interest rates of 6.7%. At the beginning of 2008, interest rates were down to 5.75%. What is a little more interesting is when we switch the toggle on our tool from the interest rate to the mortgage on a 200k house based on the interest rate for that date http://www.escapesomewhere.com/blogim/mortgage_rates_broker.jpg. From the middle of 2007 to the beginning of 2008, we saw a drop in the monthly mortgage payment on a 200k house drop from $1290 to $1170, a difference of 9.3 percent. This is why when buyers say they are waiting for prices to drop 5%, it might be a good idea to tell them that the actual mortgage they would get on a house has already dropped by more than 5 percent.

In light of all the mortgage issues over the last few years, it highlights why home buyers should shop around for interest rates. All too frequently home buyers will go with the first mortgage person they meet under the assumption that everyone has roughly the same rates and that a half point isn't really that big of a difference. As we have seen above, a half point can make a significant difference in someone's mortgage payment.

In summary, home buyers should still focus on price because it will always be an important part of the real estate transaction. But if home buyers start to look at interest rates more closely, they will end up with more success in their real estate purchases and lower mortgage payments.

The Grand Rapids Association of REALTORS reports that sales of existing homes, including single-family homes, vacation homes, and condominiums, rose to record levels in January of 2008. The Association reported 996 sales in January of 2008 - an 18.9 percent increase over the same period last year, and its strongest January sales report since 2002. This comes on the heels of the Association's report that sales of existing homes in each month of the fourth quarter of 2007 also rose to record levels when compared to 2006. Jim Fase, President of the Grand Rapids Association of REALTORS, said that this notable rise in home sales means we will likely see a faster and more meaningful recovery of the local housing industry, which will help to stimulate overall economic activity. "The average price of an existing single-family home in January was $129,500, a reduction that was anticipated in light of the increased number of sales of homes in January that were at or near foreclosure. Subprime loans and other risky mortgage products have virtually disappeared from the marketplace which means that current sales are more stable and will lead to higher home values later in the year," he said. The adjustment in the average price will also enable more first time homebuyers to purchase a home. The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) reports that Grand Rapids ranks as the fifth most affordable major housing market in the U.S. This is based on a measurement of the percentage of homes sold in the Grand Rapids area that are affordable to families earning this area's median income. "The steady increase in the number of home sales in this area gives us confidence that we may have turned the corner," Fase concludes.