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Wednesday, July 24, 2013

Michigan Real Estate Monthly Market Report - July 2013

Michigan Real Estate Monthly Market Report - July 2013 Buyer demand in June continued at a strong pace in terms of new purchase contracts written (pending sales). June also continued the trend of more sellers putting their homes on the market, which should “in theory” relieve some of the significant inventory shortages. We say “in theory” because although new listings did rise, so did buyer demand, quickly absorbing the additional homes. In spite of more homes coming on the market, the available inventory continues to fall, reaching a new low for Southeast Michigan of 2.1 months (1.5 months for homes on the market less than 90 days). As we have shown over the last few months, the rate of growth for both new sales and listings continue their upward movement resulting in fewer days on market. Enlarged View: Annual Appreciation Graph It is not surprising that the home value trend continues to accelerate, as well. Enlarged View: Price per Square Foot Graph
Interest rates were the biggest news in the past 30 days, rising in anticipation of the federal government rolling back their support of low mortgage rates. Showing appointments slowed a bit in June, which might indicate a reaction to the rising rates. So how high will rates move? Since jumbo mortgage loans (loans over $417,000) do not have a federal subsidy, they are the best gage of where interest rates should move. Right now both conventional and jumbo rates are nearly identical, meaning they have moved to their true market level and we can expect them to remain stable in the short run. However, as the economy continues to improve, rates will rise. What is the “cost” of waiting in the current market? For buyers the math is pretty easy. If values go up 10% and interest rates rise 1%, their buying power is reduced by 20% (i.e mortgage payments increase 20%), which is of course why so many buyers are attempting to buy now. For Sellers, that 1% rise in rates will negate a 10% increase in value. Therefore, over the next few years rising rates will offset some of the rising appreciation, reducing buyer demand and limiting the amount of wild cash offers given to sellers. Buyers should be aware that in more and more cases, sellers are requiring the buyer to commit to covering some or all of the short fall if the appraisal comes in lower than the agreed purchase price. Prices have not yet reached their 2005 peak levels so overbidding is still a safe bet to get the home you really want, even if the appraisal comes in lower. Appraisers have a very difficult time catching up with a rising market, since they rely on historical sales data to determine the value of a property. If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime. Thank you, Suzanne O'Brien Your Expert Advisor P: 313-516-6644

Saturday, April 27, 2013

Michigan Monthly Real Estate Market Update – April 2013

Michigan Monthly Real Estate Market Update – April 2013 For the first quarter of 2013, Michigan is still a leader in the housing recovery but a number of states have caught up, extending the housing recovery across the nation. Throughout the state we are seeing inventory shortages and rising values. Southeast Michigan remains the most active with the lowest inventory and strongest buyer demand. A new term is being used in the industry: the Shadow Demand. Like the Shadow Inventory which represented the potential bank-owned homes that could go on the market, the Shadow Demand represents the pent-up Buyers who have been holding back for the past 5 years. While the release of the shadow bank inventory has been slow and steady, the Shadow Demand seems to be jumping in all at once. We expect a shortage of homes for sale throughout 2013 and 2014 with inventories rising and demand slowing down a bit in 2015 as interest rates increase and the Shadow Demand is dissipated. How quickly home inventories will raise depends on two factors: the pace of appreciation, and more importantly, how quickly Sellers realize that home values are improving. For many Sellers, values have risen enough that it makes sense to sell now, particularly if you are also buying. For anyone who has purchased a home in the past four years, particularly investors, it is a great time to test the market. You should be pleasantly surprised on the potential return on your investment. The same holds for those who leased their homes, waiting for the values to rise. Historically, with low For Sale inventories, home builders fill the gap. So far, local home builders, which traditionally make up the majority of new construction, have had difficulty obtaining financing so they have not been able to supply any inventory relief. Following the market trends over the past three years, you can see values have been moving off the bottom since the spring of 2011 and gaining speed these last three quarters. Charts: Average Cost per Square Feet The next two charts show both the decline in the number of new home listings entering the market as well as the increase in the number of homes being placed under contract. It is interesting to note the declining bank-owned share of the market. Charts: Home Listings Entering the Market & Home Listings Placed Under Contract The result is a big increase in Sales Absorption, which is the percent of the available homes being sold each quarter. Considering that about a third of homes for sale are not really saleable because of condition, motivation or price, a 44% rate this past quarter represents a true absorption of closer to 70%, which is the driving force behind the double digit appreciation rates. Chart: Sales Absorption As a company we continue to gain a bigger piece of the pie, and most importantly, we are gaining market share in the number of new listings taken. We are working hard to reach out to you, our clients, and show you the opportunities in this market. It is important to note in this improving market that a decline in the number of sales reflects the shortage of inventory, not a market slowdown. If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime. Thank you, Suzanne O'Brien Your Expert Advisor P: 313-516-6644

Thursday, April 4, 2013

Recent Real Estate News & Trends

Recent Real Estate News & Trends January Home Prices Rise 0.3 Percent 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... more >> Eye on the Economy: Low Inventories Driving Permit Growth While recent economic reports suggest that home building took a pause at the beginning of 2013, leading indicators point to more growth for housing in the months ahead.Per data from the Census... more >> Setting up a Home Office that Fuels Productivity One of the biggest mistakes businesspeople make is assuming that working from home will automatically result in a higher level of productivity. Unless you carefully construct your home office...
If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime. Thank you, Suzanne O'Brien Your Expert Advisor P: 313-516-6644 more >> 5 Hot California-Born Food Trends for 2013 Grab your fork and knife. Amateur and professional foodies alike highly anticipate the newest food trends, and 2013 will not disappoint. Throughout the country, restaurants and home cooks are... more >> Movie: First Impressions Make the Sale Movie Title: First Impressions Make the SaleDescription: These helpful hints for curb appeal will help make that great first impression! ...

Saturday, March 9, 2013

Southeast Michigan Real Estate Annual Market Trend Report - 2012-2013

Southeast Michigan Real Estate Annual Market Trend Report - 2012-2013 Whether you are thinking of moving or just curious about what is happening in your local real estate market, this report has it all. It is your opportunity to have an inside view of local housing trends, forecasting, and market statistics compiled by the largest real estate company in Michigan. As you review this report, there are a few things that we would like you to remember about our company. We are a family owned company, in our third generation of leadership, headquartered in the heart of Southeast Michigan. When you invest in our services, our people, you support Michigan workers. In addition to home selling, we offer one-stop shopping through John Adams Mortgage, Capital Title, Insurance One and Relocation America - all Michigan based companies. And most importantly, we get results, by selling more homes in our state than any other real estate company. Please feel free to send this information along to your friends, neighbors, and anyone who would appreciate having local market information. And if you need help with anything housing related, you may call or email at anytime. Annual Market Trend Report 2012-2013 If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime. Thank you, Suzanne O'Brien Your Expert Advisor P: 313-516-6644

Friday, February 15, 2013

Michigan Real Estate Market Update February 2013

Michigan Real Estate Market Update February 2013 January started at full speed. The activity level matched the spring markets of 2010 and 2011. The result, of course, is an even tighter listing market, since homes are selling faster than new ones are coming on the market. Good things happen with values when demand exceeds supply. Throw in a record low supply, add a touch of Buyers with record buying power and we can expect to see big value jumps. Certainly any one who has purchased a home in the last four years, particularly investors, should consider testing the market. Multiple offers are not guaranteed for every Seller and values have not yet returned to 2005 peak levels, but there is enough demand in all price ranges that Sellers can be confident there is little likelihood a property can be underpriced. If it is, it will quickly be bid up to market value. There is, however, still the danger of overpricing. If you look where the activity is concentrated, 40% of properties have been on the market over 90 days. Most all of these properties are overpriced and attracting only 15% of interested buyers. This chart shows how the key supply and demand factors are influencing values. The purple line is value per square foot, which shows an accelerating growth rate. This is a direct result of both the accelerating decline in inventory (blue line) and accelerating increase in home sales (red line). Also adding fuel to the fire is a deceleration in new homes coming on the market (green line). It is interesting to see how far we have moved in the market. The following charts trace the 4th quarter activity at key dates in our market transition. 2004 was that last strong real estate year and one of the peak value years. 2008 was the peak in terms of homes for sale, causing values to start to decline. 2011 was the bottom in terms of home values. Last year showed the value rise off the bottom When comparing December 2004 with December 2012, you can see we are at an inventory low point. The number of sales is exceeding what was a strong year in 2004 when comparing 4th quarter activity in each year shown. In 2004, both our economy and real estate were peaking. In 2013, we are moving up off a strong growth year, so we can expect good things for real estate. It is not surprising our January numbers were very strong as well, even compared to a strong January last year. When a market changes direction, the statistics can occasionally give off confusing signals. The decline in buyer activity and showing appointments is a result of the large reduction in available homes for sale, rather than a decline in buyer demand. If there are not many houses to view, we have fewer showings, open house and web property visitors. Based on the buyer activity when a new home is listed, there is no doubt buyer interest is growing.

Friday, January 18, 2013

Michigan Monthly Market Report - January 2013

Michigan Monthly Market Report - January 2013 December ended the year with strong momentum (our strongest month of the year seasonally adjusted), carrying about 20% more buyer interest into 2013 than we had going into 2012. Buyer demand will build as those who were forced to sell and rent are now coming back into the market to buy, along with stronger economic growth. An offset to that increase will be additional inventory as prices rise to meet the target home values many Sellers have been waiting for, as well as more investors begin to put their homes on the market. In spite of an increase in homes for sale, we can expect an inventory shortage throughout 2013. Buyers will have to be more creative and will need to make some compromises in their home searches. Ideally, you want to buy a home that will be the easiest to sell; updated, homogeneous design to the area, good schools, not too remote, etc. However, that is the same advice everyone is given, so those homes sell fast and they do sell for a premium. Nonetheless, if you can find one, buy it! With today’s prices, that premium still makes sense. That does not mean you should shy away from the less than perfect homes. In fact, that is where the best bargains lay, in those homes that need some work or are not in the perfect location. You will sell them for less than the "perfect" house, but you also may be able to buy them for a larger discount, so you may actually come out ahead from an investment standpoint. The market statistics chart below tells the story of how far the market has moved since the end of 2011, with large double-digit positive changes in most categories. Market Stats: Dec 2011' vs. Dec 2012' - Southeast Michigan Market Area
If you'd like more information on the market, like to list your property, or want information on any property with any broker, you may call or email at anytime. Thank you, Suzanne O'Brien Your Expert Advisor P: 313-516-6644