2016 was a great year for single family home sales in Southeast Michigan. Many factors including location, price range and condition affect the value of individual properties, but in general the number of homes sold in 2016 was up by four percent and the average sales price was up by five percent compared to 2015.
With over 17 thousand single family homes sold at an average price of $275k, Oakland County led with $4.8 billion in 2016 sales volume as reported through local multi list systems. While more homes were sold in Wayne County, its dollar volume tallied $2.6 billion. Macomb County came in third with $2.1 billion in sales.
While some would like to see values rise a little faster, the more conservative growth we have seen over the past several years provides market stability.
In the Tri-County (Oakland, Wayne and Macomb) areas, appreciation rates have generally been flat for the luxury home markets compared to middle and lower price segments.
2017 Southeast Michigan Forecast
We are using Dynamic Maps below to illustrate Metro Detroit market history
and to make a forecast for 2017. Red indicates declining and green
indicates increasing values. Gray is neutral. For comparison, we took
a snapshot of a rapidly declining market (from 2009) and provided a
shot of where we were with the recovery in 2013. We see both dark
green and bright red in 2013.
December 2016 shows a more stable gray market with lots of light
green and still a little red. We are in a fairly stable growth market
with fewer extremes.
Weiss’s 2017 Dynamic Map (above) shows more and brighter green,
indicating a prediction of stronger performance. Weiss’s model
breaks markets into four price tiers (equal sized quartiles). For Metro
Detroit, the table below identifies those tiers as: Tier I <$86k; Tier II $86k-$156k; Tier III
$156k-$247k; and Tier IV > $247k. Weiss’s model shows 2016
appreciation rates between 2.5% and 4.1%. For 2017, Weiss’s
models are predicting appreciation rates of between 3.6% and 5.4%.
Again, Tier II is expected to be the strongest with higher-end markets
predicted to see lower rates of appreciation.
Each of Weiss’s Tiers are comprised of one quarter of the total sales
or predicted sales. Grouping this way may hide the unique details of
more specific price segments-especially on upper-end markets. For
example, while the Weiss reports predict 3.6% value increases for
Detroit Metro homes priced above $247,000, we are expecting little
growth or even declining values for most homes priced above $500k.
Potential Rising Interest Rates have provided and will continue to
provide urgency for buyers and sellers. Buyers can afford more
home with lower rates and at a given price, more buyers can afford a
seller’s home. Lower interest rates provide a benefit for everyone
involved in a transaction.