So far this year we have had a classic economic struggle of Good vs. Evil. The Good Side *Values are stable to rising (even Case-Shiller shows metro Detroit values are up!) *We are creating jobs in Michigan *Consumer Confidence moved up a bit *Strong pent up buyer and seller demand *Record low combination of prices and interest rates The Evil Side *Lack of saleable home inventories *Larger percentage of homes with little to no equity *Slow job growth *Stock market volatility To date, good has won out over evil, but the market did pause a bit in the last 45 days, with the pace of buyer demand sliding (but still ahead of last year at this time). There are a couple of potential causes. The stock market/European "noise" has been distracting (3rd quarter 401K statements came out in Oct, which may have scared some), but the main cause may be that we simply do not have enough saleable homes. If you don't have enough logs for the fire, it will eventually die down. We could be in for a strange stair- step real estate recovery cycle: sales rise, depleting inventories, then fall from fewer homes to sell which causes values to rise (fewer listings=feeding frenzy), which brings more homes back into the market (more sellers can now sell), and the cycle starts over again. It is a scenario that occurs with every recovery but exaggerated today because lower home equity levels are keeping a lid on inventories. Price per square foot has continued to rise compared to last year, with available homes for sale up slightly as well (mainly over $250,000). The available home levels feel lower, because it has actually fallen over the past 90 days (as it did last year as well). The seasonal shifts make it difficult to judge the true market momentum without comparing to the same time last year. Pending home sales are at a faster pace than last year as well, causing the Months Supply of Inventory to decrease over the past 90 days, which is putting positive pressure on values. Our best leading market indicators are open house visitors, website visits, and the number of showings on our listings. As you can see from the chart, compared to the same time last year, all three have positive trends, with the showing count giving some mixed signals (confirming the October slowing).
If you would like expert advise and representation in your next move, please contact me.
Suzanne O'Brien
(313) 516-6644
suzanneo@realestateone.com
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