As we head into the 4th quarter, YTD single family sales are almost even (-1%) in the SE and NW Michigan markets and down 8% in Washtenaw County. YTD average sale price is up 8% for SE, up 4% for Washtenaw and up 19% and 5% for NW waterfront and non-waterfront homes.
Demand remains strong across all price ranges with showing frequency up compared to previous years. New listings have been running about level MOM and down slightly YOY for the past 4 months. The availability of listing has helped us catch up on sales.
As the arrival of new listings slows over the next few months the best listings will continue to sell quickly. Inventory quality and prices will fade as inventory gets “picked over”. The drop in average price will be caused by declining quality and not declining values.
Understanding the charts at the top of each page of this report helps us forecast the market more effectively, enabling us to make better-informed decisions.
Barring extreme and unusual events that might disrupt it, local real estate markets generally follow repeating annual cycles. Patterns of monthly sales activity and price fluctuations from previous years tend to repeat, providing insight into what we can expect in the months ahead.
Demand has exceeded supply since 2019—even before COVID-19. The pandemic further disrupted the market, as demand grew significantly faster than the available housing stock, particularly in the entry-level price ranges.
The best move-in-ready listings sell quickly and often at prices above the market average. Given the sustained demand for well-kept, quality homes, supply is the primary driver of sales and prices. When both the quantity and quality of inventory rise, sales and values increase. Conversely, when the number of new listings and their quality diminishes, both sales and prices tend to decline.
In recent years, the third and fourth-quarter decline in sales and prices, as shown in the chart above, has primarily resulted from a shortage of quality inventory. The drop in average price and price per square foot is not due to declining property values but rather reflects that year-end inventory tends to be more picked-over.
We will continue to see high demand and quick, over- asking-price sales for the best listings. However, as the flow of these listings slows in the third and fourth quarters, there will be fewer “A-list” properties to create bidding wars, and a greater proportion of sales will involve more average or below-average listings.
