Ed. - The report below is from our broker - Dan Elsea - who sees things from a different vantage point that I do or than any individual agent would.
In the last two months we have seen the first sign that the market may be moving towards normal. Even though sales continue at a fast pace, new listings entering the market in May were higher than last May, the first year-over-year increase in nearly two years. Although most all indicators show a market heating up (the Months’ Supply of Inventory (MSI) hit a record low of 1.8 months in Southeast Michigan and three year low of 6.5 in Northwest Michigan), underneath those numbers are some signs that Sellers, who have been waiting for years to sell, have noticed the price jumps and are testing the waters.
If this trend continues it will lead to a smoother market with more listings and appreciation rates in sustainable single digits. Increasing interest rates will cool some buyer demand as well. Even with a more normal market it will still lean towards a Sellers’ Market, with Buyers outnumbering Sellers because of the buildup of Gen X and Y’s entering the housing market.
Home values are continuing to rise in Southeast Michigan at double-digit levels and high single-digits in Northwest Michigan. All markets are improving quickly but some are moving faster than others. By price segment, the under $500,000 market is rising the fastest at over 12%, while the over $500,000 market is moving at around 7%. Within specific submarkets the numbers are even higher.
Most all MSI’s are at their low points, ranging from a low of 36 days (Redford) to a high of 3.8 months (Ann Arbor), with most markets under 60 days. In the last two months the most active markets in Southeast Michigan have been Plymouth, Troy, Northville, Redford and Southfield. In the most active segment (under 90 days listing category) for each of those markets, the Months’ Supply of Inventory has actually been zero (i.e. at the current sales pace all listings under 90 days will sell). Washtenaw County is the only market where the MSI is higher compared to last year as a result of both a slowing sales pace and an increased pace of new listings. However, Washtenaw was the first market to move into hyper activity, so it is not surprising it might be the first to settle back to a more normal pace as more Sellers react to the improving market.
Ed. – This report is good for buyers who might now be starting to see more homes to choose from in the market. For seller’s it’s not really bad news; however, it does portend a shift back to more normal sales scenarios and away from the wild, multiple-offer situation that we’ve recently experienced in the market. Sellers also need to refocus back on the basics of keeping the house ready to show and not getting too greedy with buyers.