Pearson Group Real Estate

Michigan Real Estate Report

A new month reveals that the market continues to improve. Pending sales were up and there continues to be a significant number of sales with multiple offers. It is the best time in the last six years for sellers to test the market: values are up over last year and many sellers will be surprised at how far up the market has moved.

The overall 90-day trend for our leading indicators has been either positive or neutral. Pending home sales are steady, home values are stable, and available inventory is down. In all cases, residential real estate values have improved since the same time last year. As the lower quality homes carrying a discounted value are sold or removed from the market, appraisals values and appreciation rates will begin to rise enough to draw more sellers into the market, increasing the pace of recovery.

The Months Supply of Inventory (the time it takes to sell off the current home inventories) is at its lowest point for bank-owned properties in the past two years (3.1 months) as well as the lowest point for non-bank in 22 months (6.1 months). The market remains divided between the 30% of homes that sell quickly and the 70% that sit on the market for months.
For the typical home in almost any market, if there is not strong market activity and multiple potential offer interest in the first 30 days on the market, the home is not priced correctly to fit its condition and features. Currently, if a home has been on the market for over 90 days without a price adjustment, there is a less than 25% chance it will sell. A home on the market for over 180 days has less than 3% chance of selling without a price adjustment.

In order to push up the pace of appreciation, the older, less saleable inventory needs to be either sold or removed from the market. This less-than-perfect inventory is the key to market recovery. It’s also a great opportunity. With rental rates strong, there has never been a better time to invest in single-family rentals. Annual returns can exceed 10%, leaving room for rehabbing and renting. These historically high returns work for a buyer who fixes up to live in the property or to hold it as an investment. For those who need help with the fix-up costs, a common challenge for many, the FHA 203K program is ideal.

This update is brought to you from our President of Brokerage services, Dan Elsea.  Real Estate One is the largest Independent owned real estate company in the state of Michigan.  “The Pearson Group” licensed with Real Estate One since 1988 works with buyers and sellers in Southeastern Michigan and Northeastern Michigan. 


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