Michigan housing market

There is no getting around the fact that the number of homes for sale in Michigan this year is way down. According to an Associated Press analysis, here’s the breakdown of comparison between 2016 and 2017 by county for the Metro Detroit area:

  • In Macomb County, average prices increased 5.4 percent, listings dropped 54.8 percent, and days on the market before sale decreased 4 percent.
  • In Oakland County, average prices jumped 9.3 percent, listings fell 39.7 percent, and days on the market are down 14.5 percent.
  • In Wayne County, excluding Detroit, average prices rose 14.7 percent, listings were down 45.1 percent, and days on the market decreased 17.3 percent.

We know these things are happening, and we know it can be difficult at this time to be a home buyer, but what are some of the reasons behind this?

The main reason is, of course, the recession. Mainly, repercussions of the recession that began in 2008.

  • Homeowners lost a lot of equity in their homes during the recession. Homeowners who have been eager to get out of their homes in the past may start to think again now that the market is coming back. Home values are starting to rise again and if homeowners think they can recoup some of their losses, they want to try to keep their homes.
  • The recession saw an increase in homeowners staying put and putting money - and sweat equity - into remodeling. They want to stay put. This is especially true of the older generation of homeowners: baby boomers. Many of them have refinanced or are taking advantage of their low interest rates and are working longer. They aren’t ready to downsize.
  • The market crash led to an almost complete shutdown of new home construction. It’s building back up, but it takes time.
  • Investors and homeowners who bought foreclosed properties in the lowest point of the recession might be waiting to sell until they can get a bigger return on their investments. The market is up, however, they think there’s still room to grow.
  • Homeowners may not trust that it’s real. After all, the recession was a huge deal for everyone. No one knows that better than homeowners in the Detroit metropolitan area. It takes a long time for homeowners to feel trustful again and that’s not an easily quantifiable thing.

Another big factor may be a psychological one. It’s a seller’s market, but sellers will quickly become buyers once they sell their home. Many - if not most - properties will not sit on the market for longer than 30 days. Many of them are selling within hours.

In addition, cash offers and bidding wars are the norm right now. If a potential seller can’t find the perfect home at the perfect price before selling, which is tough in this tight market, they won’t be confident enough to sell. Perhaps the tight buyer’s market is keeping potential sellers from putting their homes on the market.

Takeaway

It’s a crazy seller’s market out there and an even crazier buyer’s market. The recession hit everyone pretty hard, so it’s going to take some time for potential sellers to finally move on to that bigger dream home. 

If you are thinking about buying a new house or selling your current one, it is important to have an experienced real estate agent by your side. Please give us a call today.

248-348-7200