The spring market continues to move well in both May and the first part of June. Overall, for Wayne, Oakland, Livingston and Macomb Counties, new listings entering the market were up over last May (4%), however, new home sales have risen even faster (12%) holding For Sale inventories down by 24% compared to this time last year. The Months Supply of Inventory (MSI) is at about 2 months compared to 3 months last May. With the cost of owning a home up over last year (from increased home values and interest rates) and a good share of the pent-up demand released, there are fewer buyers in the market now than last spring. However, there are even fewer homes for sale, making the market feel just as strong as it did last year. The median home value increased 18% and the average price per square foot 14%. True appreciation was probably under 10%, the rest of the increase was a result of more expensive homes being sold.
This May looked very similar to last May in terms of buyer activity. On average, homes sold within 96% of asking price. The market was a bit faster this year with 55% of homes selling within 30 days and 35% within 10 days versus last year with 48% in 30 days and 23% in 10 days. For both years, about 55% of those that were bought within 30 days sold for list price or higher, with an average of 5% over list price. This year fewer than 10% of properties sold were bank owned, last May it was closer to 15%. For buyers, the majority of well-priced new listings entering the market will have multiple offers and will be bid over asking price. Although overbidding can be scary, we have not yet hit our 2005 peak values yet in SE Michigan, so there is room for aggressive pricing (still keeping within reasonable appraisal ranges). Also, buyers should take a look at the 30% of the properties sitting on the market over 90 days that are not getting much activity. Opportunities are hidden there, but it does take some time to find them.
By price range, there are some differences in market velocity with the lower priced markets suffering from very low inventories and therefore, slower sales compared to the other price ranges.
With the current pace of demand, the market could handle a 25-30% increase in home listings and still keep moving. Over the next 12-18 months, with a steady rise in home values, interest rates and additional homes entering the market, we should see things begin to settle back towards a more balanced market. Inventories will still be low from historical numbers but improving with appreciation under 10% and fewer multiple/over bid transactions.
Regardless of the market, Realtors fulfill a number of important duties. During the recession, one important roll was locating scarce buyers and ensuring their client’s home stood out in the sea of homes for sale. In today’s market, presenting a home to the market is still certainly paramount. In addition, there is the role of matchmaker, reaching out to targeted areas and finding homes that are not currently on the market that fit their buyer’s needs. In many cases, that buyer has a home that they are holding back from the market until they find a home to buy. We take that “under the radar” market information and use it to match up with other similar sellers/buyers to create sales that would normally not occur.
Please keep me in mind for any of your real estate needs. I am happy to help with any market advice you may be seeking!
Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan. He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods. Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce. You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.
