Observations from the local market data...

Earlier this week I updated the local market data that I track on home sales in the Milford market area. I define that as Milford (Township and Village), Highland Twp, Commerce Twp, White Lake Twp, The City of South Lyon and Lyon Twp and The City of Brighton and Brighton Twp. This was my first update that covered September sales, due to the mid-week switch between months (last week I just included the sales for August 30 & 31 to close out that month).

Anyway, the sales data for September and for the Year-to-Date in those markets is now posted at available through my main real estate Web sites - http://www.themilfordteam.com/, http://www.movetomilford.com/ and http://www.mihomebuyer.com/. One thing that I have noticed over the last few weeks is not really apparent if one just looks at the data. There are lots and lots of homes being sold fore less than the seller owes, but which are not short-sales. They are sales for which the owners/sellers are getting less than what they owe to the banks, but I'm noticing that many sellers are just eating the loss themselves. I've actually had a couple of listings that sold like that myself.

These sales are a classic case of owners not wishing to impact their credit standing by going through a short-sale. Short-sales, like foreclosures or bankruptcies do have an impact on the seller's credit. The severity of that impact is almost totally up to the bank involved and how they report the sale to the credit agencies. In a short-sale the bank agrees to take less for those that they were owed on it and the debt obligation is extinguished at that time; however, they do not have to (and most don't) report it as a debt that was satisfied. It was not paid off. Some banks even reserve the right to come after the shortfall later through collection actions or legal actions. It's the fear of those post short-sale actions and the potential damage of the report to the credit agencies that scares many homeowners into eating the losses themselves.

I suspect that every credit counseling agency would advise those owners not to strip money out of retirement savings or out of the kids college funds, but many do just that. Others may tap into mom and dad for a loan to pay the difference. Most do not have good enough credit to find unsecured lines of credit that they can tap for this purpose.

Another thing that I've noticed over the last couple of months is that homes in the $200 - $400K range (and even above) are starting to sell again - not like they used to, but still it's encouraging to see how many are selling this summer, even if about a third are short-sales.

Over the last 2-3 months there has also been fewer sales in the low-end $20-100K range, primarily I think because there has been little inventory since the tax credit was ended. Perhaps they were mostly sold off during the tax credit selling frenzy.

In our area I'm also seeing the sold price to SEV ratio creep back up towards the 2.0 mark that would indicate that the assessed values are getting closer to the market's perception of the real values. a home's SEV (State Equalized Value) is a unique Michigan value number, used for tax purposes and meant to represent 1/2 of the assessed value. In the good time (you remember them don't you) homes would sell for between 2.0 and 2.2 times the SEV. The township assessors couldn't keep up with the appreciation that was going on back then. For the last couple of years the assessors haven't been able to keep up with the decline in values and homes have been selling for between 1.4 to 1.6 times the SEV. Lately we are back up to about 1.8 times SEV, which means the assessed values and the market values are getting closer.

If you look at all of the charts that are available on my sites you'll also see that inventory is down, as is the median sold prices in most markets that I track. Right now inventory is so low that it is actually a good time to put a house on the market in most price bands. There just won't be much competition. It's still a good time to be a buyer, but you just won't have as much choice in most price bands as you might have had in the past.