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.
Friday, May 28, 2010
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