Looking for bright spots amidst the gloom…

Two reports released recently indicate bright spots in Michigan's real estate market, but industry experts say we've got a way to go before things are normal.

Sales are up nearly 28% compared with last October in metro Detroit, and Michigan foreclosure filings are down 15% from a year ago, but still up by nearly 8% from last month. Residential and condo sales in metro Detroit rose 27.7% in October to 5,687 from 4,452 in October 2007, according to Realcomp, a Farmington Hills-based multiple listing service. Realcomp's figures come from closed sales reported by its Realtor members. Sales continued to boom in foreclosure-laden Detroit, which saw a 42.2% jump in sales to 1,126 properties from 792 in October 2007.

Realcomp noted that sales are on a positive trend for the 10th straight month in metro Detroit, but Richard Dugas, CEO of Pulte Homes Inc. of Bloomfield Hills, cautioned against too much optimism. "The sales velocity is up, but a huge percentage of the resale number is foreclosed sales," Dugas said. "It is optimistic to say a sales jump so driven by foreclosures is a signal of the bottom. A huge amount of resale inventory that is not foreclosures is not selling."

More than 44% of October sales in metro Detroit were of foreclosed properties. There is a 10.7-month supply of homes on the market at the current sales pace. A three- to six-month supply is considered normal. Locally, we are running right at 45% of sale being foreclosed properties, down from the peak, which was well over 50% for a while. Our Milford office has had its best sales months ever for three straight months, in terms of units sold; even thought he dollar volume is down.

Michigan ranked seventh nationwide in October for foreclosure filings with a total of 11,393 or one from every 396 households, according to RealtyTrac Inc, an Irvine, Calif.-based foreclosure Web site. That compares with a national rate of one foreclosure for every 452 households. The filings include 5,223 notices of default, 434 notices of sale and 5,736 bank repossessions, RealtyTrac said. RealtyTrac said national foreclosure activity is up 25% from October 2007 and up 5% from September.

Another thing that mars the positive home sales picture is that prices are still on a downward spiral. In October, the median price of homes sold was $70,000, a 40% drop from the $117,000 median sales price in October 2007, according to Realcomp data. In the local market that I track weekly the pace of decline seems to have dramatically slowed, but the median price is still declining each week. You can see this at my Web site – http://www.themilfordteam.com/ – and click on Real Estate Statistics. There is a Year-To-Date Market Statistics chart that I have been keeping since January that shows a week-by-week look at the market that I track, which is comprised of Milford, Highland, Commerce, White lake and West Bloomfield Townships. I‘ve also kept a detailed record of what has sold locally, on a monthly basis and there is data going back over a year for that report.

Of course the second shoe waiting to drop for us locally is what will happen in the automotive industry. There are just no scenarios that don’t contain lots more layoffs, plant closings and other bad financial news. Our market will be impacted greatly by whatever happens there, with more foreclosures sure to follow every round. of plant closings and layoffs. Hopefully we can get everything that’s going to happen in that industry behind us soon, so that we can figure out where we are and come up with a plan to recover. In that regard, hope springs eternal.