Southeastern Michigan Market Report for May

June 12, 2013

Ed. – The report below is from our broker – Dan Elsea – who sees things from a different vantage point that I do or than any individual agent would. Dan bases his observations onthe data that had come in trhroughthe end of May.

DAn Elsea

Dan Elsea – Broker for Real Estate One

In the last two months we have seen the first sign that the market may be moving towards normal. Even though sales continue at a fast pace, new listings entering the market in May were higher than last May, the first year-over-year increase in nearly two years. Although most all indicators show a market heating up (the Months’ Supply of Inventory (MSI) hit a record low of 1.8 months in Southeast Michigan and three year low of 6.5 in Northwest Michigan), underneath those numbers are some signs that Sellers, who have been waiting for years to sell, have noticed the price jumps and are testing the waters. If this trend continues it will lead to a smoother market with more listings and appreciation rates in sustainable single digits. Increasing interest rates will cool some buyer demand as well. Even with a more normal market it will still lean towards a Sellers’ Market, with Buyers outnumbering Sellers because of the buildup of Gen X and Y’s entering the housing market.

Home values are continuing to rise in Southeast Michigan at double-digit levels and high single-digits in Northwest Michigan. All markets are improving quickly but some are moving faster than others. By price segment, the under $500,000 market is rising the fastest at over 12%, while the over $500,000 market is moving at around 7%. Within specific submarkets the numbers are even higher.

Most all MSI’s are at their low points, ranging from a low of 36 days (Redford) to a high of 3.8 months (Ann Arbor), with most markets under 60 days. In the last two months the most active markets in Southeast Michigan have been Plymouth, Troy, Northville, Redford and Southfield. In the most active segment (under 90 days listing category) for each of those markets, the Months’ Supply of Inventory has actually been zero (i.e. at the current sales pace all listings under 90 days will sell). Washtenaw County is the only market where the MSI is higher compared to last year as a result of both a slowing sales pace and an increased pace of new listings. However, Washtenaw was the first market to move into hyper activity, so it is not surprising it might be the first to settle back to a more normal pace as more Sellers react to the improving market.

Ed. – This report is good for buyers who might now be starting to see more homes to choose from in the market. For seller’s it’s not really bad news; however, it does portend a shift back to more normal sales scenarios and away from the wild, multiple-offer situation that we’ve recently experienced in the market. Sellers also need to refocus back on the basics of keeping the house ready to show and not getting too greedy with buyers.


Video Market Update from our Broker

May 21, 2013

Our fearless leader and the head broker for Real Estate One – Dan Elsea – has started doing a video market update and I thought I’d share that with all of my readers. It basically adds some nice graphics and some explanation from a different source to what I’ve been sharing with you all along. This update covers data throught he end of April and goingitno May.  Enjoy…

https://www.youtube.com/watch?v=YUiIL1BKDUI


Real Estate Market – Looking back at April…looking forward to May

May 15, 2013

As of the end of April, the local MLS reported these stats –

Highlights and Analysis:

  • · The median sale price for All MLS sales increased to $97,165 – up by 35%report with chart
  • · All MLS sales were up by 6.8% for April compared to April 2012. Even with a 21.7% decrease in Inventory!
  • · Of the 5,799 sales closed in April 8% (472) were identified as short sales.
  • · Of the 5,799 sales closed in April 44% (2,522) were identified as CASH sales

Synopsis of Inventory:

  • · Average Days On-Market decreased by 14 days, from 87 to 73.
  • · The on-market inventory declined by 22%, from 26,896 to 21,054.
  • · Approx. 14% of the on-market inventory is comprised of short sales.
  • · Approx. 13% of the on-market inventory is comprised of foreclosures.

man with questionWhat does that mean for you? Well, if you’ve been waiting to see if the market would recover before listing your house, you’ve waited long enough; the market has recovered and taken off, due mainly to the low inventory. You can take advantage of that situation to sell quicker and for more than you would if we were in a more balanced market with normal inventory. Call me today to get an updated Market Analysis for your home to see if you can (and should) sell now.

If you’re a buyer – DARN, you missed the bottom and now will have to pay a bit more. Buyers may also be a bit frustrated by the lack of homes to choose from; however, the ones on the market today are generally in better condition than those at the same price points a year or so ago. The thing you need to be aware of is the need to be ready to act, and act decisively, should you find a home that you like. You will not have days or weeks to make up your mind. Multiple-offer situations and bidding wars are the order of the day now.

Buyers have to be ready to jump and you’ll have to bid at or maybe even above asking price to get a really good home. That also means you need to be all pre-approved for a mortgage, if you are going to use one. There’s no time to say you like a house and then go try to get pre-approved – that house will be gone by the time you get through the pre-approval process. It is also better in the current market to use a Conventional mortgage rather than an FHA or VA mortgage, if you can swing it. The rates are generally running lower on conventional mortgages right now and the sellers don’t have to worry about the FHA/VA appraisal/inspection.

Buyers should also note that foreclosures and short sales have shrunk as a percentage of listings and sales, so you may need a plan “B” if that’s what you were looking to buy. There are still some out there and the fixer-uppers are still around, but while they used to be more than 50% of the market, they are now less than 20% in most area Townships.

 

Go to my Web site – www.movetomilford.com to see all of the sold homes statistics for this area for April and year-to-date, along with historical data going back 4-5 years. I’ve already posted the sold homes data there for  first 2 weeks of May, too.


The time is now! The lid is off! Get out of your jar!

April 17, 2013

I read a blog recently that was based upon a story about an experiment that was done some time ago with fleas in a glass jar. When the fleas were initially put in the jar a lid was screwed on the jar to prevent them from getting out. At first the fleas would still climb up the jar walls and try to jump out. They would bang their heads on the jar lid and fall back down into the jar. After a few days the fleas stopped trying to get out because they had become conditioned that trying lead to a bump on the head and a fall. The lid was then removed fro the jar and none of the fleas tried to get out because they had been conditioned that trying that lead most certainly to failure and a sore head.

The real estate market has undergone similar conditioning that is keeping would-be sellers bottled up. The “lid” that was on our market – low property values caused by the recession – has been removed and yet too few have even tried to get out of the jar and put their homes on the market. Property values certainly aren’t all the way back to where they were at the peak of the bubble that burst and led to the recession; however, they are also not mired at the low point of the recession. Values have come back over 10% year-over-year in many areas and the low inventory in the market right now has led to bidding wars over the few homes that are available. Even appraisals have started coming back to support the price increases.

The point here is to shout out as loud as I can that THE LID IS OFF! TRY AGAIN! You may still bang your head on a market price that is too low to allow you to sell. People who bought at the peak or who took all their equity out at the peak are likely still underwater; however, most owners are probably better off that they know. You won’t know if you don’t have a current market analysis done by a real estate professional. Having a Realtor® give you an updated Comparative Market Analysis doesn’t usually cost you anything. It is quite likely that the recent uptick in the market will allow you to again consider listing your current home, so that you can get on with retirement or job-relocation plans. Call me and let me see what you house is worth on today’s market.


New builds decline nationally, but doing OK in Michigan

March 27, 2013

From a press release by the National Association of Home Builders –

WASHINGTON, March 26 – Sales of newly built, single-family homes declined 4.6 percent to a seasonally adjusted annual rate of 411,000 units in February from a strong pace of 431,000 units in the previous month, according to newly released figures from HUD and the U.S. Census Department. Despite the slight decline, this is the second highest monthly total since April 2010 when the federal home buyer tax credit expired.

new construction“New-home sales have been running at a fairly steady pace the last few months, with February adjusting for the strong  sales we saw in January,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “While the February pace  is encouraging, housing’s recovery is being significantly constrained by overly tight mortgage lending conditions, and policymaker discussions about changes to the mortgage interest deduction could cast a shadow on future housing demand.”

“The February decline is a readjustment to the unusually high numbers that we saw in January, and we are still in line with our forecast for 2013,” said NAHB Chief Economist David Crowe. “This is the kind of modest but steady growth we are expecting to see throughout the year as the economy and job market continue to improve, but constraints on borrower credit, higher building material prices and a limited supply of labor and buildable lots hold back a more robust recovery.”

Regionally, new-home sales activity was mixed in February, with the Midwest posting a gain of 13.7 percent, while the Northeast, South and West showed declines of 13.3 percent, 9.7 percent and 2.1, respectively.

The inventory of new homes increased to 152,000 units in February, which is a 4.4-month supply at the current sales pace. Although this is an increase over the previous month, it is still well below normal inventory trends.

We have certainly seen the strong recovery of new home building in this area, driven mainly by the very tight inventory of resale homes. Builders are selling new homes as fast as they can get them up pretty much in all price ranges. There are still many developments that went belly-up during “The Great Recession” which have not yet restarted. Some of them are likely still bogged down in litigation and some of that is caused by the fact that so many builders got out of the business or lost all of their workers. Combine that with the tight credit market that many smaller builders face and it’s tough to re-launch a building company these days.

With the advent of warmer weather, we should see more used homes come on the market, house for salewhich will help re-balance the market a bit. Right now we are in a seller’s market, with multiple bids and biding wards not uncommon for really nice houses. Homes values have improved about 8% (year-over-year) so far this year. At the low end of the market, cash is king once again, with most sales under $150,000 going to cash buyers. Those investors are buying them up to rent out, if they are in decent shape; or to flip, if they need repairs.

Once the credit industry gets tired of shooting itself in its own foot by making borrowing so difficult things should improve quickly, too. There is just a lot of pent-up demand in the market right now, leading to frustrated buyers who either can’t find what they want or can’t bid enough for homes due to the difficult mortgage situation. Would-be renters are also having great difficulty finding places to lease. So many displaced people are in credit rebuilding mode after losing a house that there is little lease inventory available right now for middle-class income families. It is almost impossible to find good homes to lease for under $1,000/mo.

My advice for buyers is to be patient and be prepared. You must be ready to make a buying decision and you must be ready with your mortgage pre-approval. You may also have to put more money into the deal than you had hoped, especially if you hit a conservative appraiser who can’t see the value of the property like you do. The market is moving in a positive direction again, in terms of appreciation; so, the risk of the property’s value dropping after you buy is greatly reduced.


Real Estate Index Shows Rise of .3% in January

March 17, 2013

The latest FNC Residential Price Index® (RPI) indicates that U.S. property values continued to recover through January—the 11th consecutive month of rising prices. Despite the uneven pace of price gains across different geographical markets, there are clear signs that the housing recovery is increasingly widespread. (Editor’s Note: these national statistics always trail the market by about 2 months, but they do point to trends that likely have continued.)

A limited housing supply and declining foreclosure sales are contributing to the recovery of underlying property values. The average list-to-sale price ratio increased to 93.5 in January, compared to 90.3 during the same period a year ago; in other words, the average asking price discount dropped to 6.5% from 9.7%. Foreclosures, as a percentage of total home sales, were 20.2% in January, down from 26.9% a year ago.

Based on recorded sales of non-distressed properties (existing and new homes) in the 100 largest metropolitan areas, the FNC 100-MSA composite index shows that January home prices rose 0.3% from the previous month and were up 5.7% on a year-over-year basis from the same period in 2012.1 The 30-MSA and 10-MSA composite indices show similar trends of rising prices, with the 10-MSA composite accelerating more rapidly at 0.8% month-over-month and 7.2% year-over-year.

FNC’s RPI is the mortgage industry’s first hedonic price index built on a comprehensive database that blends public records of residential sales prices with real-time appraisals of property and neighborhood attributes.2 As a gauge of underlying home values, the RPI excludes sales of foreclosed homes, which are frequently sold with large price discounts, reflecting poor property conditions.

What about our local market? I’ve certainly seen the rise in home sale prices and the impact of the lack of inventory locally. It’s really frustrating that I’ve got buyers who are ready, willing and able to buy a new home and we can’t find anything for them. As for would-be sellers who have been sitting on the sidelines awaiting a recovery – HELLO! The recovery has occurred and you should take a look at what you house is worth today.

Sure we haven’t made back the entire 30-40% that home values lost from their 2006-7 peaks values; but unless you bought or refinanced at that peak, you are probably OK in terms of what you can get for your house. At least find out. Ask me to do a Comparative Market Analysis for you. The analysis free and may free you up to get on with your life plans by making the move that you’ve been delaying.


Local real estate market report

March 11, 2013

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.

report with chartLocally, 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 inhome repairsan 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 credit reportwhat 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.


What’s happening on the low end of the real estate market

March 10, 2013

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

Press Release: February 26, 2013  – Strong Homebuyer Traffic, Rising Home Prices Fail to Lift Market for Damaged REO, New HousingPulse Survey Finds
WASHINGTON, DC (February 26) – Strong homebuyer traffic and limited housing inventory continued to push overall home prices upward in January. But the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey results also reveal a growing divergence between prices for non-distressed properties and prices for damaged real-estate owned or REO. (Ed. – I am definitely seeing this trend in the markets that I cover.)
While HousingPulse data shows that home prices overall, based on a three-month moving average, are at the highest level – $236,100 – seen in nearly three years and have been climbing since last spring, those average numbers don’t tell the complete story when it comes to home price trends. (Ed. – See the sold homes data at www.movetomilford.com for the average and median sale prices in the nine markets that I cover.)
Yes, home prices are on the rise for non-distressed properties, which accounted for 65.0 percent of total home purchase transactions tracked by HousingPulse in January. In fact, average home prices for non-distressed properties were up a healthy 5.1 percent on a year-over-year basis – rising from $264,700 in January of 2012 to $278,200 in January of 2013. (Ed. – Again, these are national averages. See my local data for the averages here.)
But no, home prices for REO properties in need of repair – the type banks look to unload after a foreclosure – have not been rising along with prices for non-distressed properties. They have been moving in the opposite direction.
According to HousingPulse results, the average price for a damaged REO property sold in January was just $88,100. That was not only 17.1 percent below the average damaged REO price recorded a year ago – $106,300 – but also the lowest level ever recorded by HousingPulse in its four-year history.
One reason for the decline in home prices for damaged REO is the fact that both current and first-time homebuyers have reduce their interest in this type of property for the better part of the past year. HousingPulse results for January show current homeowners with a record low 15.0 percent share of the damaged REO purchase market, while first-time homebuyers had a near-record low share of 19.6 percent. (Ed. – I have definitely seen this locally. More first time buyers are passing on fixer-uppers and going for move-in ready homes.)
Meanwhile, investors, lured by low prices and the growing opportunities for flipping, have significantly increased the purchase share of damaged REO properties in recent months. During January, investors accounted for 65.4 percent of damaged REO home purchases, according to HousingPulse numbers. That was up from 58.1 percent a year earlier and the highest level recorded in the survey’s four-year history. (Ed. – In this area we are also seeing cash rule the lower end of the market. Basically anything under $150,000 is going for cash and many have multiple cash bids.)
The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns. For more information on the survey, contact John Campbell at Campbell Surveys at (202) 363-2069 or jcampbell@housingpulse.com.
Ed. – So now you know for sure that it wasn’t your imagination. The market at the low end has shifted mainly to investors with cash offers. And the prices at that end have actually declined for damaged houses, rather than rise with the overall market.

Looking ahead in 2013…

January 2, 2013

“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

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.

 


Foreclosures are down and the market is up – do something now!

December 17, 2012

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.