NormsMilfordBlog

I had posted the final numbers for February before leaving on vacation and now have posted the real estate sales in my market areas for the first 10 days of March. Continuing the trend that has been evident since the beginning of the year, the total number of sales in February and the first part of March are down this year, when compared to last. That’s mainly due to the lack of inventory in the market, but also aligning with the national trend of sales being off a bit.

Locally, Average and Median sale prices continue to trend up in my markets, as does the recovery of the Cost per Square Foot stat. The average for sale value vs. SEV continues to run between 2.4 – 2.6 times SEV in non-distressed sales, which continues to show that the assessors have overshot on the downside and the market has reversed and is rising faster than assessed values. Lower than sale price appraisals continue to top the list of concerns of local Realtors.

The recovery locally has been uneven, with 3-4 of the 9 markets that I track doing very well and 2-3 lagging behind. Those laggards also still have the highest foreclosure and short sale rates. New builds continue strong in Lyon Township and have come back in Milford, too. New build costs per Sq Ft are now running between $115 – 135/Sq Ft, depending upon the quality of the builds. You can see all of the stats for March and 2013 Y-T-D by going to my web site www.movetomilford.com and clicking on the choice – What have homes in this area sold for?

The tight market has also made it more difficult for Realtors and appraisers to find “Comps” to use for Comparative Market Analyses (CMA’s) or appraisals. That has also affected Broker Price Opinions (BPO’s) that are used by banks to evaluate short sale and foreclosure offers. I’ve had a tough time doing CMA’s lately and have had to expand out further in distance and time than I would normally like in order to fine any similar home sales to use.

What this all means for buyers and sellers?

Well, it’s a great time to be a seller – the tight inventory and rising prices have resulted inan environment where you will get the most for your house that the current market will bear, without having a lot of competition. You still need to keep your house in good condition. The market has shifted a bit towards favoring the move-in-ready houses, rather than the fixer-uppers. So if you’re getting ready to put your house on the market, work yor way down that to-do list of deferred maintenance items that you’ve been meaning to get to for some time.

For buyers it’s a frustrating market – there is less to choose from and, with more buyers chasing the reduced inventory, it is not unusual to see bidding wars for good houses. In addition, buyers are finding it tougher to get the mortgage that they had supposedly “pre-qualified” for once they have and accepted offer. Stricter underwriting policies mean that buyers need to get the best advice that they can find from their mortgage agent about what to do and not to do during the process. Even the most innocent misstep can put something on your credit report that the underwriters will see and use to disqualify you for that mortgage. If you’re a first time buyer or have not owned a home for at least three years, remember that MSHDA is still offering grants of up to $3,000 for non-military and up to $5,000 for military buyers. That money can be used to cover some of your closing costs and does not have to be repaid.

This may help explain what’s happening in the low end of the market –

“It’s always wise to look ahead, but difficult to look further than you can see.” (Churchill) – from the blog Jack’s Winning Words.

man looking through telescope

There is always a rush at the beginning of each year to try to make predictions about the coming year. I would not attempt to predict the real estate market for the year. Things seemed to be getting better at the end of 2012; however, much of the run-up in home sales values was caused by the extremely tight market (very low inventory of homes for sale). The underlying, true appreciation for homes is running about 3.5-4% annually; which means a long haul to get back to pre-bust values. Most prognosticators are estimating a decade or more to recoup lost value, depending upon how deep the loss was in each area. Locally we had losses running between 30-40% in most areas and a few that got to 50% or better.

At the end of the year I reported that the market was still very mixed, with three of the markets that I track at 50% or better distressed sales in December. Overall the markets in Milford, South Lyon, Green Oak, and Brighton recovered better in 2012 than the rest of the markets that I track – Highland, White Lake, Commerce, West Bloomfield and Hartland. Home values in the better markets were at or above an average of $100/Sq Ft. Homes in the other markets were still in the $80’s and $90’s per Square Foot; however, all markets were improving by the end of 2012.

So, trying to look ahead, one can surmise that it’s still a pretty good time to buy. Mortgage rates are still low and home prices are still very reasonable. Every study that I’ve seen lately about renting vs. buying makes a strong case for buying right now.

As for would-be sellers, all I can tell you is that the market is currently a sellers’ market, because of the low inventory. That means that you’ll get top market value for the house and it will sell fast, if it is in good condition. Sure the values are still depressed, compared to what they were in 2005-6; however, if you are in a positive equity position and have been delaying your plans while waiting for the market to return – it’s back. Unless you bought at the peak of the market and/or financed above 80% of the home’s value at the time; you should be getting near (or above) your breakeven point. You should at least peak out of your bunker and get a new Comparative Market analysis done by a professional Realtor, top see where your home’s value is currently.

It’s certainly too early to make any long-range predictions about the real estate market in 2013. Too many factors play into what happens in the market and many of those factors are unfortunately under the control of our dysfunctional  national and state legislatures. The same bozos in Washington who marched us right up to the edge of the fiscal cliff have a bunch of other legislation on their plates that impact real estate. They ignored most of that at the end of the year and now will have to reenact many critical laws; otherwise the real estate market could be sent reeling back into recession again. We’ll all have to wait to see what (if anything) they do about those expired laws in the new year.

From a recent press release – IRVINE, Calif. – Dec. 13, 2012 — RealtyTrac® (http://www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its U.S. Foreclosure Market Report™ for November 2012, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 180,817 U.S. properties in November, a decrease of 3 percent from October and down 19 percent from November 2011 — marking the 26th consecutive month with an annual decrease in foreclosure activity. The report also shows one in every 728 U.S. housing units with a foreclosure filing during the month. See the entire report by clicking here.

The RealtyTrac report is consistent with what I’ve seen locally in the 9 markets that I track – Milford, Commerce, Highland, White Lake, West Bloomfield, South Lyon, Green Oak, Brighton and Hartland. At the nadir of the recent recession the distressed sales rate in those markets (which includes foreclosures and short sales) was running above 50% in nearly every one. Now there isn’t a single market at that level and a couple (Milford & South Lyon) have been in the single digits for a while now.

Home values have returned, too, with several markets now consistently exceeding $100/ Sq Ft on sales. Milford is now averaging better than $110/ Sq Ft. New home sales are up too, as builders return to the market, especially in South Lyon. Almost all of the markets that I track are nearing that mark.

There are still good deals to be had and the mortgage rate remains at all-time lows, so it is still a good time to buy; however, those who have continued to wait have missed the bottom of the market. For would-be sellers, now is the time to get in. A lack of inventory is driving up prices fast than normal appreciation and homes in good condition are selling fast, sometimes within a week or two.

If you haven’t check lately, at least get a current market analysis done by a good Realtor (fortunately you already know one) to see if you are still under water. Many people don’t realize that the market has already come back enough to bring them back to breakeven or better. If your plans to move have been on hold, now may be the time to dust them off and start getting excited again.