May continued the same core trends as the prior six months with increasing sales and falling inventories for under $100,000 and the opposite for the above $100,000. In fact, in some areas of Southeast Michigan, homes in the <$75K range are competing in a seller’s market with fewer than 3 months of inventory remaining. The pace of showings and units sales did slow, which is to be expected given the reduction in homes available. This means buyers are in heated competitions for the remaining inventory that is priced aggressively and should approach any opportunity understanding that they may have to pay well over asking price to win the bid. Our percentage of bank owned and lease sales declined as well in May, reflecting the reduction of bank owned listings in the market. All indications are that it is a temporary shift as banks continue to work through their loan modification efforts to reduce their foreclosures loads. During this anomaly, it may be best for purchasers to go after properties that have had market seasoning and still be overpriced. There is likely to be no other competition for those properties with the lender primed to accept a low offer. Michigan’s new law allowing homeowners an additional 90 days to negotiate a loan restructure will go into effect August 1st, which will help to reduce and spread out the foreclosure inventory even more. Sellers should price right now to sell! Homes are likely to be further devalued once the secondary wave of foreclosures hit the market this fall. Here’s more great news thanks to the efforts of the Michigan Home Builders Association. HUD has finally issued a Mortgagee Letter that states that condo project approval in no longer required for Site Condos. All lenders and appraisers are under new federal guidelines, making it more difficult to address low or incorrect appraisals. This should make appraisals more reflective of the true market, and keep the influence of other parties involved in check. In many cases it may be wise for our Sellers to consider appraisals when the home is first put on the market to get an up front feel for any potential value issues. For Fence Sitting Buyers who recall high school algebra formulas, this is an important one to keep in mind: Tax Credits + rising interest rates > falling prices. In other words, the value gain receive by taking advantage of both the expiring Tax Credits and low interest rates will exceed any gain from waiting for prices to fall. Should prices decline further, which is a forgone conclusion, a purchaser is much better off making a move now than chancing a hike in inflation and a residual increase in interest rates. There is guessing the timing of the bottom. When you’re sure of its location, it has come and gone!
If you are considering a purchase at this time, but are concerned with job security, there is a new program available. The Home Mortgage Protection Program will offer mortgage payment protection should a buyer lose their job, similar to what many auto companies are offering. Only the seller pays a fee to offer the protection on their property. It is of no cost to the purchaser. It adds a tremendous advantage for a seller by increasing the number of potential buyers who will only feel secure in purchasing at this economic juncture with additional assurances. The Mortgage Protection Program is only offered through one company at present. If you are interested in more information, please contact me.
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