January ’17 Market Report

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 Forecast

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.

 

December ’16 Market Report

Seasonal Inventory Dropping Faster than Sales Activity

Despite working with lower inventories, this year’s November sales activity was up over last year’s in the 5-county Southeast Michigan market (Wayne, Oakland, Macomb, St. Clair and Livingston).

While there is fluctuation by area and price range, overall, values are up. Median sale price was up 12 percent and mean sale price per square foot was up 10 percent over November 2015. With interest rates finally ticking up, buyers should be making their moves sooner rather than later. Because most buyers finance, the amount of their monthly payment is typically more relevant to affordability than even the sales price. The ability for buyers to finance at today’s lower interest rates provides a window of opportunity for both buyers and sellers. Buyers get to lock in with a lower payment for the life of their loan. Sellers get to sell for a higher price. Recent financial predictions and actions taken by the Federal Reserve indicate that this low interest rate window is shrinking.

Should We Buy/Sell this Winter?

Many factors other than season or weather impact when people need to move. The life events that often dictate the timing of a move aren’t dependent on seasons. Births, deaths, marriages, divorces, new employment, corporate transfers and other events happen throughout the year.

Reasons to BUY this winter, rather than waiting include:

  • Predictions of Interest Rate Increases—as interest rates increase, affordability decreases.
  • Price Increases—average sales price rose in nearly all Southeast Michigan markets at rates that exceeded average income increases. Prices will likely continue to rise. The combination of rising interest rates and prices may adversely affect future affordability. Buying sooner may be a better choice.
  • Personal Motivations/Needs—People who are considering moving, usually have reasons for wanting to move. Once they make up their mind to do something (changing jobs or moving), acting on the decision is usually a more productive use of their time than waiting. Getting to where they want to be sooner will put them a step ahead with moving on with their lives.

Reasons to SELL this winter, rather than waiting include:

  • Predictions of Interest Rate Increases—as interest rates increase, fewer buyers will be able to afford your home at a given price. Higher interest rates will also affect the seller’s ability to buy/afford their replacement home.
  • Supply/Demand—while sales activity frequently drops off through Winter months, there are also far fewer available homes for motivated Winter buyers—both buyers who are new to the market and buyers who didn’t find what they were looking for due to previous low inventories. Many available listings are left over from the prior season and may be tired or over-priced. Through November, inventory levels dropped off more than sales activity. It’s a great time to put a sharp home on the market.
  • Personal Motivations/Needs—Like buyers, people who are thinking of selling have their reasons. There are typically costs involved in holding onto a home that no longer fits or is no longer needed. Sellers should consider their individual circumstances in deciding if moving forward with their sale and their lives sooner is better than waiting.

People often put themselves at a disadvantage by postponing a move without considering the pros and cons and making an informed decision. Real estate agents who understand both trending market conditions and client motivations are in position to counsel good decisions.

November ’16 Market Report

This month’s market update features the City of Detroit, as the city’s continued re-development has positive implications for both local and State housing markets.

Spotlight On Detroit

Over the past few years, all the talk about and focus on Detroit has been exciting. Everyone is cheering for our city and so many want to participate in Detroit’s comeback. We are still in the early stages of residential reconstruction but the shortage of quality residential inventory continues to restrict progress. Investors have initially focused on commercial development. The idea was that the first step in rebuilding the city was to start with the economic base. Businesses have been returning to the city with a concentration on Downtown and adjacent areas. This has created a significant new demand for residential development—especially in core areas around Downtown and Midtown. Many of Detroit’s residential properties experienced over 40 years of neglect. It will take time to restore properties that are financially worth keeping and to redevelop new properties.

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There are currently more than 1000 new apartments under construction in Detroit. Many are just coming online and will probably start out as rentals with the intent to eventually convert them to condos. In the meantime, we are in the business of selling homes and there just isn’t enough quality inventory in the core neighborhoods to meet demand. Millennials are looking to establish urban roots and many empty nester Baby Boomers are looking to trade in their homes for urban condos and lofts. People want to leave the car in the garage in favor of public transportation, walking and cycling to where they work and play. Detroit currently has 1,615 available single family homes ($85 million) and 99 condos ($21 million). Since October of 2015 Realcomp MLS shows 3,175 Detroit single family home sales with an average sale price of $43,900 and 99 condo/loft sales with an average price of $200,269.

Some Core Detroit Neighborhoods:

Downtown is surrounded by the Lodge Fwy on the west, I-75 on the north, I-375 on the east and the Detroit River to the south. Downtown is primarily commercial and its condo/lofts account for most of its residential property with 32 condo sales with an average sale price of about $300k since October 2015. 

Midtown is north of Downtown, with roughly Warren (just south of Wayne State) as its north boundary, John R on the east, I-75 to the south and the Lodge Freeway on the west. Midtown had 70 condo/loft sales and only one single family home sale since October 2015, and the average sale price for a Midtown loft was $336k.

Boston Edison is made up of four east-west streets between Woodward and Linwood. Boston Blvd on the north and Edison on the south. Fifty-four single family homes were sold with an average sale price of $149k since October 2015.

The Riverfront area east of Downtown was a little slower to rebound as buyers were more focused on areas with a higher concentration of walkable restaurants and activities. The riverfront neighborhoods with their proximity to the River Walk and Belle Isle have more recently become popular. They will quickly fill in with new restaurants and shops. Neighborhoods along the river have great potential to skyrocket in value as you can build restaurants along the riverfront areas, you can’t add a riverfront to other neighborhoods.

The following table shows sales activity for a few other Detroit specialty neighborhoods.

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Quick Southeast Michigan October 2016 Activity Summary

Despite seasonal inventory levels dropping, the number of new pending sales remained level from September into October—across all price ranges.

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The average sale price in October of 2016 ($210k) is ten percent higher than in October of 2015 but the overall number of new pending sales dropped almost eight percent. Comparing values (all price ranges combined) from October closings to sales last October, median closed price ($169k) is up nine percent, average sale price ($210k) is up 10.5 percent and closed dollar per square foot rose eight percent from $113 to $122.With less than four months of available inventory in the $250k to $500k price range and less than three months of the supply in the “under $250k price range, homes in both of those price ranges continue to move. But for homes priced above $500k, supply levels nearly triple to over 10 months of available inventory. Sellers in the higher end markets face tighter competition and higher buyer expectations. Sharp preparation and pricing are key to successful selling in all price ranges—more so with upper end sales.

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October ’16 Market Report

Predicting the Next Housing Bubble

The 2008 recession took most by surprise. In hindsight, understanding the phases that make up a typical real estate market cycle should give us insight to where our market will move in the future. In his article How to Use Real Estate Trends to Predict the Next Housing Bubble, Teo Nicolais, a Denver real estate entrepreneur and teacher of a real estate investment strategy course at Harvard Extension School, describes four phases that make up market cycles. These market cycles have been recurring in the US at roughly 18-year intervals since 1800 and follow four phases/quadrants.

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Phase I —Recovery is marked by a jump in demand. In an effort to promote investment, interest rates are artificially held low by the government. Consumer confidence recovers, even if household incomes remain flat, spurring demand that had been held up during the recession.

Phase II —Expansion begins when the cheap buildings have been bought up by both investors and homeowners, reducing inventories and causing both rents and home values to jump. Increasing equities created by increasing values allow more sellers to sell and builders to build new housing (both owner occupied and rentals). Often toward the end of this phase, investors and builders begin to over build, speculating on buildings and land to meet the jump in demand. While anticipating further rent and value growth, buyers often overpay, chasing the fast moving market and developing properties ahead of demand.

Phase III —Hypersupply is the result of the over development. Both vacancy rates and unsold real estate inventory rise. (Nicolais calls this “the first indication of trouble”). In this phase, the rate of rent and property value growth begins to decelerate as supply catches up with demand. Many of those long-term development projects from Phase II are caught in the middle of construction.

Phase IV —Recession is marked by occupancy levels falling below long term averages and the Feds trying to fight off inflation by increasing interest rates. Development stops and home sellers begin discounting prices to adjust to the falling demand.

Where are we in our current cycle?

We are early in Phase II, the expansion phase of this cycle. The cheap properties have been bought up. Rents and values are rising. Real estate inventories and interest rates remain low and new construction activity is back up. If we use the 18 year point of reference, the next housing recession would be due around 2024. This, of course, is dependent on a number of other domestic and international economic factors.

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Should there be a recession in the next 8 to 10 years, the housing portion of the economy should outperform the rest, since housing will go into any slowdown with a good balance of supply and demand. In the meantime, be aware of the markers in the various phases— speculation driving up prices, over supply with vacancies and unsold homes. You could say that some of those markers exist today, particularly with prices being driven up in some ultra-hot markets. However, even in the hottest markets, we are just now moving past the 2006 peak values, and with historically low inventories, we are clearly in the beginning stages of the recovery phase for most price ranges.  We are keeping an eye on the upper-end markets above $500,000 to see if the current slow-down is a temporary adjustment to a recovering market or a longer term slowing market trend.

Quick Southeast Michigan 3rd Quarter Summary

While there is variation within market areas and price ranges, overall, inventory levels are down and dropping in most areas and price ranges— with more in the lower and mid-price levels, and less in higher price ranges.

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Sales activity is down in the under-$250k range, in large part due to the lack of available inventory as many of the bargain priced homes that were available in the past few years are gone. With about a four month supply of inventory, the $250-$500k market is balanced. Values, as indicated by closed dollar per square foot, are up about five percent since last year—modest/healthy growth. With 10+ months of inventory, dropping sales rates and declining values, higher-end markets tend to favor buyers. Despite high levels of available inventory, high-end buyers are still having trouble finding the “perfect” homes they are looking for… and they are looking for perfect homes with everything done.

While 2016 has been a great year for real estate, most markets appear to be slowing down and flattening to a more balanced pace of activity and growth. Upper-end markets have slowed the most. While the market is still relatively strong, much of the inventory could use a little polish to capture the interest of buyers who are ready to move when they see the right home.  The extremely low interest rates shouldn’t be taken for granted. At some point we’ll be hearing, “Remember when you could get a mortgage with an under four percent rate?” Being aware of market opportunities helps us make/counsel good decisions.

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September ’16 Market Report

screen-shot-2016-09-22-at-4-40-28-pmComparing August to July, inventory of available homes dropped as the market has moved past its peak season. The number of August new pending sales (which will be our September and October closings) was up. Closed dollar per square foot fell off slightly in the under-$500k markets, but was up for homes with closed prices above $500k.

Dropping inventories combined with increasing new pending sales naturally led to a reduction in Months Supply of Inventory… on paper. That assumes that there will continue to be the same number of active buyers. A more likely explanation is that as summer was drawing to an end, there was an extra rush of new pending sales as buyers who have been looking through the summer finally pulled the trigger so that they can get settled in before the weather turns.

In Michigan, we have four distinct seasons that impact our real estate cycles. Looking at the Monthly Closed Sales chart (below) for the past two years of Southeast Michigan sales, we can see distinct and inverse cycles of closed sales and days on market. screen-shot-2016-09-22-at-4-40-45-pm

The timing of the cycles will vary depending on various economic factors, but the cycles are fairly consistent with the number of closed units dropping off and market times increasing during winter months.

Sellers who want to avoid being on the wrong side of the curve would do well to sharpen their detailing and pricing to compete for the limited number of buyers.

Fall and winter buyers may have fewer homes to pick from, but sellers may be more flexible in their negotiations. Smart buyers and their agents will utilize that advantage.

TRID’s Impact on Transaction Time

So that we can plan and advise our clients regarding timing when they are writing or considering offers, it may help to review the impact TRID has had on the time it takes to get from an accepted offer through the closing.

Last year at this time there were significant concerns regarding projected closing delays that would be caused by the implementation of the newly required consumer protection regulations that added steps and potential delays to the closing process.

The TILLA-RESPA Integrated Disclosure rule (TRID) went into effect in October 2015. TRID was enacted by the Consumer Financial Protection Board with the intent of ensuring buyers had ample time (a minimum of 3 days) to review their numbers in closing documents prior to closing the sale. If there were changes to the numbers, the required time of three days would reset. With that consumer benefit came an increased potential for delays that buyers and sellers could not waive. Those delays could throw off the scheduling of other buyer/seller activities (i.e. movers, or the closing of properties that sellers were purchasing).

According to the National Association of REALTORS®, from August 2015 to August 2016, the time required to get from acceptance of an offer to closing increased by 4 days. Nationally, only 21 percent of closings happen within 30 days of the acceptance of an offer, 35 percent happen in the 30-45 day window and 44 percent take 46 days or more to close.

We looked to see how pending date to closing numbers looked locally. There has been little difference when comparing samples of August 2015 closing times to recent August transaction times. It appears local agents, lenders and title companies have worked well to minimize delays. By planning and responding quickly to requests for information, few local buyers and sellers have been impacted by TRID delays.

August 16′ Market Report

This summer continues to be good for real estate sales throughout the county and for local Southeast Michigan real estate, in particular. In discussing the 2016 summer market, Jonathan Smoke, realtor.com’s chief economist said, The best spring in a decade has transitioned into the hottest summer in a decade”, and went on to name two Southeast Michigan markets, Detroit (ranked 13th) and Ann Arbor (ranked 20th), on realtor.com’s July’s Hottest Markets List. Smoke attributes the strong summer performance to a combination of tight inventory, pent up demand and low interest rates. For a link to the realtor.com article written by Cicely Wedgeworth, go to: http://www.realtor.com/news/hottest-real-estate-markets-july-2016/

Inventory levels remained fairly stable going from June to July, but were down over 40 percent in the less-than-$250k market compared to July 2015 andimage003 also down 20 percent in the $250-500k price range. There was no real change in the over-$500k range.

Due in large part to seasonality, July versus June new pending sales were down across all price ranges. They dropped 16 percent in the $250-500k range and 14 percent for homes priced over-$500k. Expect to see some bouncing and late summer activity spurts, but the market is slowing.

Compared to June, July sold dollar per square foot was up 1.4 percent in the $250-500k market but it dropped in both entry and high-end price segments. Months Supply of Invento
ry is also building in all price ranges. It will continue to do so as new listings enter the market faster than pending sales remove them.

Heading into Fall 2016, expect to see the market slow as a result of both seasonality and the fact that the recovery run we’ve been experiencing the past several years is settling back into a more normal market. Higher price ranges will feel more of a market slowdown.

Sellers who want to get the best return on the sale of their properties should pay attention to the details. Buyers want move-in ready homes and they are willing to pay more for them. Sellers should be aware of market movement in their area and price range. If competitive listings are moving and theirs isn’t, they may need adjustments in detailing or price, sometimes both.

Buyers who aren’t finding what they are looking for (or had one get away in a competitive bid situation) may want to bump up their price range a little as they move into the post-prime market. Sellers with overpriced or under detailed listings often become more flexible as they move closer to year end. Great rewards are available for buyers who keep abreast of the trends so that they are ready to make quick decisions when opportunities present themselves.

July ’16 Market Report

The summer of 16′ has followed the same trends as the winter and spring, with inventories remaining tight across all markets under $500,000, particularly in the $100,000-$250,000 segments. Sales are up in most markets above $100,000, as are new listings entering the market, which might start to give some relief to buyers frustrated with their home search.  About one third of homes sold were on the market for 10 days or less, while the majority of homes (50%) remained for 30 days or less. Thus, it is clear that properties priced well, and in the best condition, are still selling in days or weeks, as opposed to months. For the under $250,000 price points about 50% are selling for equal to or above asking price. For the $250,000-$500,000 markets, about 30% are selling at or above asking price, and for the over $500,000 homes, it’s about 25%.  The vast majority of those sales at or above asking price are occurring within the first 30 days across all price ranges.

While overall 2nd Quarter market activity was up slightly in most markets and down slightly in a few, values as measured in “Price per Square Foot” ($/SF) were up in all Southeast Michigan markets, (several by 30%) compared to the 2nd Quarter of 2015.

Oakland County

The number of Oakland County homes sold in June 2016 was up 14% over May 2016 and was about the same as last June. June values (as indicated by closed $/SF) were 24% higher than they were a year ago.

In comparing the 2nd Quarter of 2016 to the 2nd Quarter of 2015, units were up slightly and values were up 22%. There are less than 2 months of available inventory in all price ranges under four hundred thousand (400k). Going up in price, the $400k-$600k market has 3 months of inventory, the $600k-$1 million market has 6 moths, and the over $1 million market has 11 months.  In the 2nd Quarter of 2016 $/SF in the over $1 million market increased 39%, from $234/SF to $342/SF over the same period last year.

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June ’16 Market Report

Many consumers are questioning, “Where are we in our housing recovery? At the middle? End? Or are we even heading towards another bubble?” Let’s take the “bubble” question first.  The potential bubble is rooted in the strength of the overall economy and housing leverage (mortgage balances getting ahead of home values). The indicators we watch for in terms of core economic factors can be evaluated based on the following questions: “Are jobs and household income growing?” For Michigan, “Are auto sales still strong?” “Is consumer confidence and spending still strong?” “Are there international or other factors that could slow the general economy?”  The answers to all of those questions are “yes” at the moment, save the international or “other” factors, which present as a wild card for the US, and the rest of the world as well (the silver lining in Brexit is even lower interest rates).

Michigan is still one of the top states in terms of economic activity and there are few current economic factors that could cause a housing slowdown for the next 12-18 months (just international issues and the Presidential election).  The chart below from Comerica shows that Michigan economic activity continues to move in the right direction.

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So that leaves the questions: “Where are we in the overall housing recovery?” and “What does the current housing leverage look like?”  Mortgage delinquencies continue to fall and have returned to pre-recession levels and mortgage underwriting remains tough, so homeowners are not getting themselves in trouble with mortgages or home equity loans they can’t manage. Housing has out-performed the rest of the economy for much of the recovery but it is logical that once the pent-up activity that was held back during the recession has been released, housing activity will settle back to match the rest of the economy, which has experienced slow but steady growth.  We expected to start to see that slowing trend in 2016, but so far the strong spring market has shown us that there is still some pent-up activity yet to be released. The upper-end price ranges have begun to settle back down, but the rest of the markets are still strong.

The Housing Affordability Index is a good tool to judge what stage we are at in the recovery.  An Index number of 100 shows that the median family can afford the median home. An index of 80, like much of California, means the median family could not afford to purchase their own home. In Michigan our Affordability Index has traditionally be around 130, so Michiganders could comfortably afford their home with some room to spare.  With the recession the index jumped to over 200, which is why, once consumers gained confidence, with a combination of low prices and interest rates, the housing market exploded.  The index for Michigan is still over 180, which shows there is excess buying power for buyers and therefore, still some room left in our recovery.  When the index moves closer to the historical numbers of 130-140, then housing will settle back to a balanced market.

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It is not likely that either rates will rise to 5.5% or values jump by 10% in the next 12-18 months, so there is still some pent up demand to be released, but we are getting to the backside of the recovery.

So enjoy one more spring/summer rush! Buyers be patient but ready to jump (overbidding is still not overpaying in most markets). For Sellers, particularly in the upper-end, be ready to adjust to slower buyer activity as listing inventories out-pace buyer growth.

May ’16 Market Report

Homeowners in SE Michigan have more jobs, money, and equity in their homes than they have had in 10 years, and many who had been financially locked into homes which no longer suited their needs, are now free to move.

Southeast Michigan is diversifying and stabilizing its economy with growth in construction, hospitality, financial and other professional business services. According to the U.S. Bureau of Labor Statistics, job growth in the Detroit area has been outpacing the national average at 2.2%, with Ann Arbor’s new job opportunities growing even faster at 4%.

 Housing Supply: In all SE Michigan markets and throughout most of the country there is a shortage of available homes. The effects of the past recession continue to impact supply, in that many homes were physically damaged or lost through deferred maintenance and for years nobody was building new ones.  Today, inventory levels which typically build during the spring remain tight and in almost every market inventories are lower than they were at this time last year. The number of New Pending homes has been keeping pace with or exceeding the number of New Listings coming onto the market.

Demand: The number of Homes Pending priced over $100,000 is up in every market as is the average closed price per square foot. In his May 12th presentation at the annual NAR conferences in Washington D.C., Chief Economist Lawrence Yun indicated that while the US population continues to rise, the average household size has dropped from 3.7 in 2007 to 1.5 in 2016. We need more single and multi-family homes for all the extra households. Yun also indicated that homeowners are gaining equity as values rise in relation to mortgage debt. Total mortgage debt throughout the US has dropped to less than 50% of total residential home value. The higher levels of equity provide new freedom to many homeowners, who previously were financially locked into homes that no longer matched their needs. Combine all that with the availability of below-4% mortgage rates (lower than any time since 1970)… we need more houses!

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Today with more income, more savings, more equity in the homes they are selling, increasing populations and decreasing household sizes, buyers continue racing to get their offers in on the clean, new listings. Tired properties hang around a little longer. Today’s retail buyers are not looking to do the kind of work that they were willing to do ten years ago. Detailed homes are selling fast and to acquire them, some buyers are even willing and have the ability to waive “subject to appraisal”.

Overall, housing demand in Southeast Michigan remains strong and sales continue to exceed last year’s pace.  The market under $250,000 is especially brisk with falling inventories,  the $250-500,000 range is more stable as inventory growth is matching sales growth, and the over $500,000 market is slower, relatively speaking, with inventories rising faster than sales.

April ’16 Market Report

March finished with a nice flourish of activity with pending sales (new contracts written in March) up across all price points compared to last March. The pace of new listings entering the market was still slower than last year for properties under $250,000, putting continued pressure on already scarce For Sale inventories. Clean, well-priced homes are going fast, with 25% of homes selling in 10 days or less and 55% in 30 days or less.

The $250,000-$500,000 markets saw a slight 4.5% rise in inventory but a huge 31% rise in activity. Although sales activity in the over $500,000 luxury home market increased by 4% over the first quarter of last year, the 11% rise in listing inventory made the market feel slower to many high-end sellers.

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Local supply and demand drives value changes as the statistics in the above chart reflect. Supply and demand can vary dramatically within the different price ranges and markets, affecting appreciation accordingly. First Quarter 2016 value per square foot jumped the most (9% over 1st Quarter 2015) in the Under $150,000 price range, where the inventories are the tightest (15% lower than 2015). For $150,000-$250,000, again with low inventories, values jumped almost 3%.  In the $250,000-$500,000 markets, with inventories rising, values rose just under 2%, and for the over $500,000 markets, with inventories rising over 11%, values were flat.

Buyers:

In all price segments, there is a shortage of nicely detailed and updated homes. Again, the great ones go fast and often with multiple offers. Buyers need to be diligent in monitoring new homes as they hit the market, patient in waiting until the right home appears, and ready to jump when it does. The best homes often sell in hours instead of days. To win the race to the deal, buyers need to monitor new listings constantly, and be prepared to write with earnest money deposits and approval letters.

We are often asked how far values have come back from the peak point of 2005/6 in Southeast Michigan.  Using Case-Shiller data we can estimate about how far we have moved over the past 10 years.  Case-Shiller shows we are back to early 2001 values, but since they tend to run 6-8 months behind in their date, we are really closer to late 2001-early 2002, which puts us back to about 85% of peak values.  There are many markets that are back to peak and some lagging behind, but on average, 85% is a good number to use.  It is also interesting to note that we are now back in line with the long-term value trends (the orange dotted line) if values had followed their long-term trend, instead of the roller-coaster ride we all took.

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Demand for Detailed Homes:

Prior to the recession, buyers freely used home equity loans to update kitchens, baths and do other home improvement projects. The recession pulled the plug on the availability of home equity loans for most homeowners. Buyers have fewer freshly updated and decorated homes to choose from. Since most buyers aren’t in a position to qualify for an equity loan when they first buy, the easiest way to finance updated kitchens and baths is to buy a home that already has them. Buyers want it easy and are willing to pay a premium to get that detailed home.

Last year Southeast Michigan broke records for both sold units and sold dollar volume. We are off to an even better start in 2016 with both units and volume. That kind of activity combined with low inventory is a perfect recipe for value growth.

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