The first Quarter of 2017 saw a very “tight” real estate market, with the lowest inventory EVER across the country and in this part of Michigan. Buyers are frustrated by the lack of choice and the fact that the low inventory has caused the values of the houses that are for sale to rise rapidly. It was and remains a Seller Market. Below are some of the statistics from the first quarter of this year along with come comments from the 1St Quarter Market Summary that Real Estate One recently issued.
Inventory Down 26%
1.6 Months Supply
YTD Units Down 14%
Avg $/SF Up 12%
Market Times Down 25%
$209k Avg Sale Price Up 13%
Supply/Demand Favors Today’s Seller: There is a significant shortage of available quality listings combined with a
large number of carryover buyers who didn’t find what they were looking for last year. This has created a strong early
market with little inventory.
Values and Interest Rates are Both Expected to Increase in 2017: Buying today allows a buyer to secure more home
and pay less interest over the life of the loan. As the year progresses, both of these current buyer advantages will
1st Qtr 2017 vs. 1st Qtr 2016
• 2163 Sold Units — Down 12%
• $108/SF — Up 9%
• 29 DOM— Down 51%
• 1481 Available Units — Down 37%
To read the entire report - http://www.realestateone.com/pdfs/monthly/april2017.pdf
What should you do if you are a Seller? First of all, don’t get greedy. Seek the advice of a Realtor to help you set the price for your home that will bring the greatest value for the house, without scaring off would-be buyers. Second, have a plan for what you will do if the house sells quickly (because it will). Don’t wait until it sells to start planning and looking for where you will go next.
Buyers should be ready to make an offer if they find something that they like. You will not have time to start the mortgage pre-approval effort after you find the house that you want. Don’t play low-ball games; that won’t work in this market. Be prepared for multiple offer situations and know your limits. Be flexible in what you are looking for and be ready to make some compromises. Know your priorities and stick to them.
There are many theories as to why we are in this tight market. The simple truths are that fewer people are selling and moving on than was expected and there are fewer new homes being built than are needed. The so-called Baby Boomer generation was expected to sell off their homes and downsize in retirement, but many have chosen to “age in place.” The people who might normally be moving up from their starter homes into a mid-market home have stayed in place due to fears about the weak economic recovery and continuing job concerns. Many new home builders exited the market during the Great Recession and chose not to get back in when the recovery began. There was also a huge exodus of construction workers which has resulted in a labor shortage in many markets. The end result of all of this is a market in which supply is not keeping up with demand and values of any homes that come on the market are rising. Eventually this will work itself out, but it may take several years.
We do expect some easing in the market in the late spring and would-be home sellers bring more houses to market in the warmer months. Of course that is also the time when more buyers come out looking, so things are expected to remain “tighter” than normal through the remainder of the year. Mortgage rates will probably go up a bit during the year, but they are really no longer the gating factor in the market.