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Thursday, July 17, 2008

Mid-year review...

Some comments on the market from our President of Brokerage, Dan Elsea.
For the first six months of the year, the number of homes sold is a mixed bag with lower value markets gaining over last year with Northwest Michigan showing the steepest decline. However, in all markets home values are still declining and we can expect that trend to continue through the end of next year as well. On average the rate of value decline is running around 1% per month.

The Northwest Michigan/Traverse City market is showing a steeper sale unit decline which should begin to narrow next year. Because of a stronger base economy their recovery will be faster so the entire state should wind up at the same spot by the end of 2009. It is interesting to note that although the market is slowing in Northern Michigan, so far home values there have shown the most stability.

How will the auto changes and specifically the GM change our market? With over 60,000 homes currently available for sale in Southeast Michigan, the 2,400 or so reductions will not have a major impact except in markets with high GM employment. In the short run the buyer pool may contract until the employees of GM and their suppliers know who is going and staying. What this means to Seller’s is they may need to be more aggressive in pricing if they want to generate a sale by the end of the year.

What is the best overall advice for Sellers for the balance of the year? It is the same as the first half. Focus on being one of the top 5 best priced homes in your competitive range. We will not be moving out of a buyer’s market for at least 24 months so price aggressively enough to more than match the market value declines. Distressed sales are your value benchmark (you don’t have to match the value of the poor conditioned foreclosure down the street, but you do need to move toward it). On average the spread between the foreclosure and non-foreclosure sales prices are running about 20%, but that does vary quite a bit depending of the condition of the homes.

For Buyers, move now! Every indicator says interest rates are going to rise over the next 12 months. Any gain by waiting for the price to drop will be lost in higher interest rates.

So, basically the market is still declining in our area. Here. like other hard hit parts of the country, there is some evidence that the rate of decline has slowed and we may be nearing the bottom (or maybe that's just wishful (wistful) thinking). Maybe, if we can get past the GM, Ford and Chrysler are all going to go bankrupt messages, we'll see some improvement locally. I have certainly seen more people out looking lately, because I've been with many of them. And. I've seen more houses sell lately (I had a couple in July), so things are at least picking up in my little corner of the market.

And finally, on the front page of this mornings Oakland Press was the headline "Home Sales May Rise", a story based upon pending home sales for June being up 23% over last year. Of course the same article did mention that actual sales in June were down in Livingston County by 14.4 percent. down 2.7% in Oakland Count and 2.4% in Macomb County. Detroit had a sales increase of 54.9% and Wayne County an increase of 31.4%, with investors snapping up foreclosed houses for pennies on the dollar. But, hope springs eternal and the article focused upon pending sales, which were up in Macomb County (10.8%) and Livingston County (10.8%), too.

We have one more strong quarter to go before we head towards the holiday season and them into the winter months. I certainly hope that things continue to improve, which is the message of this campaign season , isn't it? Many folks are counting on things getting better as soon as we have a new President. That's just about guaranteed, no matter who wins.

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