The deep freeze marches on! Real estate activity continues to be held back across all areas. The good news is, unlike restaurants and other retail, our “lost” business will come back when the weather clears! The weather makes it tough to analyze where the underlying market is moving. Our web activity continues to match 2013 and sales are not off as much as property showing appointments, so it looks like buyers are still finding a way to purchase properties.
For the five counties in Southeast Michigan (Wayne, Oakland, Washtenaw, Macomb and Livingston), property showing activity has been off 23% compared to the first two months of 2013, while new sale contracts written were off about 9% and new listings were off 15%. With property showings off in January and February, we can expect slower March sales (compared to last year). Continue reading “March 2014 Michigan Real Estate Market Update!”→
For the first quarter of 2013, Michigan is still a leader in the housing recovery but a number of states have caught up, extending the housing recovery across the nation. Throughout the state we are seeing inventory shortages and rising values. Southeast Michigan remains the most active with the lowest inventory and strongest buyer demand. A new term is being used in the industry: the Shadow Demand. Like the Shadow Inventory, which represented the potential bank-owned homes that could go on the market, the Shadow Demand represents the pent-up Buyers who have been holding back for the past 5 years. While the release of the shadow bank inventory has been slow and steady, the Shadow Demand seems to be jumping in all at once.
We expect a shortage of homes for sale throughout 2013 and 2014 with inventories rising and demand slowing down a bit in 2015 as interest rates increase and the Shadow Demand is dissipated. How quickly home inventories will rise depends on two factors: the pace of appreciation, and more importantly, how quickly Sellers realize that home values are improving. For many Sellers, values have risen enough that it makes sense to sell now, especially if you are also buying.
For anyone who has purchased a home in the past four years, particularly investors, it is a great time to test the market. You should be pleasantly surprised on the potential return on your investment. The same holds for those who leased their homes, waiting for the values to rise.
Historically, with low For Sale inventories, home builders fill the gap. So far, local home builders, which traditionally make up the majority of new construction, have had difficulty obtaining financing so they have not been able to supply any inventory relief.
Following the market trends over the past three years, you can see values have been moving off the bottom since the spring of 2011 and gaining speed these last three quarters.
The result is a big increase in Sales Absorption, which is the percent of the available homes being sold each quarter. Considering that about a third of homes for sale are not really saleable because of condition, motivation or price, a 44% rate this past quarter represents a true absorption of closer to 70%, which is the driving force behind the double digit appreciation rates.
The inventory of available homes for sale continues to fall, with the overall Months Supply of Inventory (MSI) for Southeast Michigan down to 2.5 months (from 5 months this time last year). With 82% of all sales occurring among properties on the market less then 90 days, the true MSI for the vast majority of buyers is about 48 days. The number of properties selling at or above asking price has remained stable at about 40%. We feel the number is actually higher, however with appraisal adjustments, many homes that bid over asking price are reduced downward as a result of a lower appraisal. Continue reading “March 2013 Michigan Real Estate Update”→