Filed under: Uncategorized | Tags: clarkston MI real estate, Clarkston MI Realtor, michigan real estate update
The market is showing the same good news we have been seeing all year. The current housing recovery is riding on three core factors: low home prices, historic low interest rates and increased consumer confidence (i.e. a stabilizing Michigan economy). There has been a slight slowing in the pace of growth, which can be attributed to a combination of the time of year and decreasing consumer confidence. Of the three core factors, the economy/consumer confidence is the fuel for growth. We have had low prices and rates for over three years but it wasn’t until consumers became more confident of their economic stability last fall that the market took off. The ideal recovery follows stable economic growth, interest rates below 6.0% and quickly rising home values. The odds are that’s where we’re headed. Quickly rising values are necessary to generate the home inventories needed to meet buyer demand. If the economy falters and/or rates rise too far, that will take the excess buying power away, which will delay the housing recovery.
In all markets and price ranges, June showed the strongest indicators over the past two years; a low in the Months Supply of Inventory (4.1 months), a low point in the number of homes available for sale, a peak in sales for properties on the market less than 90 days, and a high point in median home values. It was, for SE Michigan, also a high point for the percentage of homes for sale that have been on the market for over 90 days, which shows the continued growing gap between homes priced right for the market and those that are not (85% of all buyers continue to chase 33% of the available homes).
Moving more overpriced homes to market pricing is the quickest way to satisfy buyer demand. On average, homes on the market in excess of 90 days are overpriced by 15%. The percentage varies a bit between markets and price ranges (NW Michigan 13%) so most homes that have not had an offer in 90 days in most any market (including NW Michigan) will require a significant price reduction to attract buyer interest. For example, if the true market value is $95,000, it will attract attention if priced between $95,000 and $100,000, above that, crickets start to chirp. The average over 90-day listing would be at $115,000, so they would need to drop to $100,000 to begin to see the activity they need.
The best advice we can give sellers is to give the market a try. Home values are rising and homeowners may be surprised by what the market has to offer as it continues to improve. With inventory low, now is the time to make well-priced properties stand out from the crowd.
Lastly, our First to Know products continue to get great feedback for keeping abreast of the market (via e-mail, mobile, text or voice), so if you are not signed up, give it a try!
If you’d like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.
Thank you,
The Pearson Group
Kay Pearson and Robin Cutler
Serving Oakland County and Northeastern Michigan
Filed under: Uncategorized | Tags: clarkston MI realtors, Clarkston Real Estate, michigan real, michigan real estate update
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.
Pearson Group Real Estate 