House in a Hot Market

You’ve probably heard this phrase by now - it’s a hot market.

What was a burgeoning development in 2016 has continued in 2017, and it’s only getting more pronounced. There are fewer homes on the market in every county in Southeast Michigan.

Metro Detroit has seen the largest inventory decline - 35% - since the recession and subsequent increase in house prices: 44%. The only county surpassing it in terms of percent changes is St. Clair County.

Here are the figures by percentages. You can see the changes from 2016:

Detroit

  • Sales, September 2016: 283
  • Sales, September 2017: 359
  • Percent increase/decrease: 26.9 percent
  • Median sale price, September 2016: $22,728
  • Median sale price, September 2017: $32,750
  • Percent increase/decrease: 44.1 percent
  • Average days on market, September 2016: 54
  • Average days on market, September 2017: 49
  • Percent increase/decrease: -9.3 percent
  • On-market listings, September 2016: 2,526
  • On-market listings, September 2017: 1,643
  • Percent increase/decrease: -35 percent

Wayne County

  • Sales, September 2016: 1,824
  • Sales, September 2017: 1,902
  • Percent increase/decrease: 4.3 percent
  • Median sale price, September 2016: $118,000
  • Median sale price, September 2017: $127,600
  • Percent increase/decrease: 8.1 percent
  • Average days on market, September 2016: 35
  • Average days on market, September 2017: 28
  • Percent increase/decrease: -20 percent
  • On-market listings, September 2016: 6,967
  • On-market listings, September 2017: 4,755
  • Percent increase/decrease: -31.7 percent

Macomb County

  • Sales, September 2016: 1,323
  • Sales, September 2017: 1,244
  • Percent increase/decrease: -6 percent
  • Median sale price, September 2016: $149,500
  • Median sale price, September 2017: $162,000
  • Percent increase/decrease: 8.4 percent
  • Average days on market, September 2016: 38
  • Average days on market, September 2017: 26
  • Percent increase/decrease: -31.6 percent
  • On-market listings, September 2016: 3,915
  • On-market listings, September 2017: 2,756
  • Percent increase/decrease: -29.6 percent

Oakland County

  • Sales, September 2016: 1,930
  • Sales, September 2017: 1,851
  • Percent increase/decrease: -4.1 percent
  • Median sale price, September 2016: $215,000
  • Median sale price, September 2017: $229,000
  • Percent increase/decrease: 6.5 percent
  • Average days on market, September 2016: 35
  • Average days on market, September 2017: 27
  • Percent increase/decrease: -22.9 percent
  • On-market listings, September 2016: 6,683
  • On-market listings, September 2017: 4,960
  • Percent increase/decrease: -25.8 percent

Source: Realcomp Ltd. II.

Good News

This is all good news. It’s what we in the business have been waiting for a long time. In addition, it is what you should be happy about if you are - or are hoping to be - a homeowner.

This does pose problems for home buyers, though. If you are frustrated by the lack of inventory, have been searching for a long time, or have lost a number of bidding wars, you are probably not rejoicing at this turn of events.

There are some good strategies out there, but remember this: the current market is a much better position in which to own a house. When you do get a house, your investment will be much better protected.

Strategies for Sellers

If your home looks like an “after” picture and is competitively priced, it could sell in a matter of days or hours, but don’t be fooled. Houses can still sit on the market for months. This happens when sellers believe they don’t have to keep their home maintained or can drive up the asking price too high. It’s not a fool-proof climate for sellers. The “hottest” homes are still the move-in ready ones priced right.

Keep in mind that should you sell quickly, you will be on the other end of the deal trying to compete with other buyers.

Strategies for Buyers

The two things to keep in mind are to be patient and to have flexibility. However, that is easy to say and a lot harder to do.

  • If you have flexibility on your lease end day - or closing on your own house - you have a lot more range of homes from which to choose. If you have the financial means to buy a home before selling your home, are renting, or can stay with family or friends, you have something tangible to offer a seller. Sellers very well may choose an offer with less stress for them (if they can stay for a week or month after closing, for instance) over a higher price.
  • The holiday season may be the best time of year to buy a home in Michigan. Activity generally slows way down during this season, but employers transfer their employees in and out at all times of the year. Sellers who have to get out at this time of year, coupled with a general inactivity in the market, could equal a relatively smooth home buying process. If you are willing to not take a break while others are taking theirs, it might be the way to finally get a house.
  • Everyone, everyone, everyone wants the move-in ready home. The reality is most of them aren’t. If you are determined to get that one, be prepared to get in a bidding war. If you are tired of the bidding wars, think about making a quick offer on a house that is sound and well-maintained but needs a new kitchen or flooring. There are mortgage lenders out there who offer renovation financing as part of a home purchase.
  • There are things other than high offers that are attractive to sellers: strong mortgage approval letters, larger down payments, quick closing, and short inspection periods. Consider whether you can offer them any of those things.

Takeaway

The current mortgage rates make buying still a good decision. Most mortgage payments will end up being lower than monthly rent payments. Patience and flexibility will pay off in the end and you will get the right house.

If you are ready to buy or sell, it is important that you have an experienced real estate professional by your side. Please give us a call. We would be honored to help!

248-348-7200