Reputation is key in real estate, something that has made local buyers and sellers anxious, according to Carol Landis, president of Grand Oak Mortgage, which services Flint, Michigan, and the surrounding ares.
"You can live in San Diego and you've heard that Flint has lead in the water," she says. "The issue today is how lenders are addressing this. We can't close a mortgage without a water analysis, that's black and white. But, it can quickly become very gray."
Landis and many others in the real estate and mortgage industry in and around Flint have been challenged by the current infrastructure crisis, which has seen government failure lead to lead leaching through local water pipes. Fears about the public health fallout from the city's water system, and stigmatization as the story has gone national, has created widespread uncertainty in the market. It's left residents looking to sell confused, angry, and feeling stuck, and according to Landis, her colleagues often feel the same way.
Landis says it's important to understand that the issue isn't affecting every home the same way, and many are fine. It's not the water itself that's been contaminated; the issue stems from the way treated water has interacted with certain pipes in the city's distribution system, which means the severity of the issue can vary considerably, even house-to-house on the same block.
But local lenders don't seem to have a fixed standard on evaluating and communicating that information: a local credit union wants third-party water analysis, while some lenders refuse to deal with Flint real estate. Potable water is one of the minimum standards of livability required by government agencies, which back most U.S. home loans, and "there's a total lack of direction from Federal Housing Authority, Fannie Mae and Freddie Mac," on the issue, she says.
According to Debbie McIntosh, a realtor at Century21 who was born in Flint and works all over Genesee County, homes are still selling, but they just need to note results of water testing. She says local realtors have been advised to clearly add "this property is serviced by the city of Flint Water Department" to local listings. Still, there's definitely been trouble buying and selling for the last year, especially those with affected properties.
"I'd say values have gone down at least 30 percent," she says. "It's been difficult for people looking to move out or find nearby rentals. I've had a few in Flint that I haven't been able to move because of water."
Anthony Bird, who owns Riverbank Finance, a Grand Rapids-based lender that has worked in Flint, says the main concern is the unknown. He feels the problems are just starting to surface with mortgages, and feels the next quarterly sales report should provide a stark assessment of the market.
"It's not just the problem of water itself, but the stigma around it," he says. "It potentially reduces value. People who own a house may be underwater, and won't be able to sell for the value of what they own."