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Friday, May 28, 2010

April 2010 Real Estate Market Report

The combined effects of tax credits, Homestead deadlines, great interest rates and throw in a dash of great prices caused a feeding frenzy in April. The net effect has been to move our Months Supply of For Sale Inventory (MSI) down to the lowest levels in the past six years (under 5 months) pushing the overall market to neutral. This is a temporary effect from the tax credits, we can expect the market to move back to a Buyer's market as the year progresses, but still remain very close to neutral for the balance of the year.

It is nearly impossible to predict what effect this will have on the balance of the year. There are a number of positive signs (buyers tired of waiting, low rates and prices, low inventories, improving economy) but an equal number of negative (foreclosure bulge, increasing rates, no more federal subsidies). Which will dominate or will they work to cancel each other out is anybodies guess. Government intervention has had a significant impact on the improved market numbers. As we move into the second half of the year with fewer artificial supports you will see the sales pace slow and corresponding home inventories rise. To give you a feel of just how active the market has been year to date, it matched the activity and inventory levels of our peak year of 2005 (with prices off 45%+)!

Our for sale inventories are under 30,000 properties for Southeast Michigan compared to over 60,000 in 2008. With inventories at that level, we are in a good position to weather any slowing during the balance of 2010.

For Sellers, price will still be king, since although the decline in home values has slowed considerably, most homes currently for sale are priced significantly higher than the market. By way of example, homes sold without requiring price reductions sold on average at 95% of asking price vs. 88% for all others and sold in 63 days vs. 96 days for all others. Buyers have become very good at finding the best opportunities and are even willing to set a bidding war for them.

Thursday, May 27, 2010

Important tips to sell a house in this market

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Tuesday, May 4, 2010

March 2010 Real Estate Market Update & 1st Quarter Analysis

Dan Elsea
2010 1ST Quarter Market Update
From Dan Elsea, President - Brokerage Services
Real Estate One Family of Companies
March Market Update

Business has heated up in the past 45 days. The market activity certainly reflects the tax credit activity (up 40-50% from last year - but the first quarter of last year was really slow, so the comparison is relative). We had initially projected a modest level of activity since we felt about 75% of those who were going to take advantage did last year, but it appears we were light on that number and further, the move up credit, although still modest in comparison, does also seem to be stronger that we had anticipated. It looks like we may have had another 40% or so left to roll into this year.

A view of the Months Supply of Inventory (MSI) for the first quarter of 2010 shows the differences in the pace of sales within pricing segments. MSI represents the number of months it would take to sell the For Sale (or available) inventory at the current sales pace. A Buyers Market is a MSI of over 6 months; a Neutral Market is a MSI of 3-6 months; a Sellers Market is a MSI under 3 months.

We are seeing the first signs of pricing stability in the under $100,000 market and even in some segments of the under $200,000 market. For our five county market the under $100,000 the MSI is at 3.2 months, a neutral market. For $100-200,000 the MSI is 6.3 months, just above neutral and for over $200,000, 10.4 months, still a strong Buyer's Market.

We are anticipating a roller-coaster year, furious activity the first six months with a slow down in the second half. But keep in mind the hot first half is being compared to a really slow 2009' and the second half of 2010' is being compared to a really strong 2009'. So the stats will show a market looking much worse after June than it really is. None the less, it will be slower, since the core economy has not picked up enough to make up for the loss of tax credits and the possibility of rising rates. All that said, the web traffic increases we are seeing show that just as there is a shadow inventory of bank owned homes hanging over the market, there is also a shadow inventory of buyers just waiting for some consistent good economic news to jump into the market.

The Annualized Home Sales Rate graph gives you a relative feel for the strength of the market, by showing the seasonally adjusted annualized rate of sales for the five counties. You can see that the annual sales pace has been on the rise since the summer of last year. Most signs are good; however the value appreciation light is still not green, so sellers need to remain aggressive with pricing.

Here are our numbers for March and The Annualized Home Sales Rate Graph.

March Market Report