HOUSING REPORT SOUTHEAST MICHIGAN DECEMBER 2018

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Duane Heath
5 years ago
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1 SOUTHEAST MICHIGAN DECEMBER 218

2 DECEMBER 218 Southeast Michigan Don t Delay Prices and Interest Rates Rising A shortage of affordable listings combined with rising interest rates will continue to give mid and entry-level buyers a heavy one-two punch that will worsen as the market moves through 219. While the shortage of lower priced inventory affects only buyers, rising rates affect buyers and sellers equally sellers at a price a buyer can afford. Those planning to move this coming year would be wise to consider acting sooner rather than waiting. Since 211, rising prices have been pushing what were entry and mid-level homes up into higher price ranges faster than incomes of entry and mid-level buyers have risen. At the same time, builders and developers who had taken a beating during the recession focused on building upper-end properties because the bigger projects were more profitable. The combination of rising prices and a lack of lowerend development has created a shortage of affordable entry-level homes while the upper-end markets have been expanding. In the Southeast Michigan region, there were 3, fewer closed sales priced under $25k this year compared to last, while the number of over-$25k sales increased by 6. Prices in the middle and entry-level markets will continue to rise. As they do, quality homes priced under $25k will become even harder to find. In the last 15 months, interest rates have increased from 3.5% to roughly 5%. In that short time, the principal and interest payment on a $2k home would have increased from $898 to $1,74 ($176/ month). That s a 2% increase in cost based on just a 1.5% increase in interest. Rates continue to be remarkably low when viewed from a historic perspective, but they are more likely to rise than drop in the foreseeable future. Forecasts have them at 5.5% in the later months of 219. While rate increases will adversely affect both buyers and sellers in all price ranges, as time passes it will become increasingly harder to find affordable move-inready homes priced under $25k. Buyers and sellers planning to make a move this year should get an early start. This is especially relevant for buyers in lower and medium price ranges. Affordability Affordability Affordability Affordability Affordability Affordability will continue to shink over time.

3 DECEMBER 218 Southeast Michigan 11,761-6% from last month 3,87-15% from last month 45,629-5% from last year $227K +5% from last year $133 +6% from last year Closed Single-Family Home Sales 6, $16 5, $14 4, $12 3, $1 2, 1, $8 $6 YTD Closed Volume: $1.4 Billion even with last year Available inventory has been falling off as year-end approaches, but it is 14% higher than this time last year. New November pendings dropped 15% from the prior month and were down slightly compared to a year ago. Likewise, November closed sales were down 16% from both the prior month and from November of last year. YTD sales have been down 5%, but with average sale prices being up that same amount, closed volume is even with last year. Looking ahead into 219, expect sales to continue to drop with prices leveling out and upper price ranges in many markets declining as rising interest rates chill buyers. All % % 3. 1% $1k - 15k 423 1% % 2.7 2% $15k - 25k 221-9% % 1.9 5% $25k - 5k % % 3.7 5% $5k % 21-14% 8.6 4% All % $133 6% $1k - 15k % $79 4% $15k - 25k % $13 4% $25k - 5k % $148 4% $5k % $23 2%

4 3,943-8% from last month 1,126-2% from last month 14,965-7% from last year $311K +6% from last year $159 +6% from last year DECEMBER 218 Oakland County 2, 1,5 1, 5 $22 $18 $14 $1 $6 As year-end approaches, available inventory, new pendings and closed sales are all falling off typical for the season. Average sale price is also dropping a little as inventory gets picked-over and proportionally fewer prime listings remain in the mix. YTD closed sales are down 7% but average price is up 6% compared to last year. Rising interest rates will continue to reduce affordability and restrict both sales and values. Upper-end markets are generally affected first. Both buyers and sellers who are planning to move in the near future would be wise to act sooner as opposed to later. All % % % $1k - 2k 789-3% 42-13% % $2k - 4k % % % $4k - 8k 123-1% 19-17% 6.3 9% $8k % 35-34% % All % $159 6% $1k - 2k % $117 5% $2k - 4k % $15 5% $4k - 8k % $173 3% $8k % $28 4%

5 DECEMBER 218 Birmingham 166-1% from last month 3-16% from last month 411-6% from last year $647K +8% from last year $285 +7% from last year $32 $28 $24 $2 Both available inventory and November new pendings continue to drop as the year-end approaches. YTD sales are down 6%, but both average sale price and closed price per square foot are up 8% and 7% respectively. As prices have risen over the past 8 years, it has grown harder each year to find homes in lower and mid-level price ranges, which for Birmingham is under $8k. In most markets, sales and values in the upper price ranges have been flattening and tailing off. The upper-end in Birmingham continues to perform well. All 166-1% 3-17% 5.5 8% $1k - 4k 19 12% 6-5% % $4k - 8k 55-14% 16 23% 3.4-3% $8k - 1.4m 5-6% 2-75% % $1.4m % 6 1% % All 411-6% $285 7% $1k - 4k % $238 7% $4k - 8k 18-5% $248 2% $8k - 1.4m 67-19% $281 1% $1.4m % $41 6%

6 2,131-7% from last month 789-2% from last month 9,876-6% from last year $199K +6% from last year $122 +6% from last year DECEMBER 218 Macomb County 1,6 1,2 8 4 $14 $12 $1 $8 $6 Since peaking in October, available inventory has been declining but remains 1% higher than this time last year. November new pendings fell 2% compared to the prior month and were down slightly from a year ago. YTD sales are down 6%, but both average price and price per square foot remain up 6%. Expect a slight dip in price-related averages over the next few months. The dip will have little to do with values. There are simply fewer prime listings left in the mix of what will be closing over the next few months. With so many carry-over buyers still looking, it s a good time to sell a move-in-ready home. All % 789-2% % $1-125k 461 2% % % $ k % % 1.6 2% $225-4k 66-8% % % $4k % 4-11% 1.4 3% All % $122 6% $1-125k % $75 4% $ k 417-5% $122 5% $225-4k 274 3% $133 4% $4k % $153 3%

7 4,559-2% from last month 1,447-14% from last month 16,247-2% from last year $165K +5% from last year $111 +7% from last year 2, 1,6 1,2 8 4 DECEMBER 218 Wayne County $13 $12 $11 $1 $9 $8 After peaking in late October, inventory has just started its seasonal decline. It is 18% higher than this time last year. November new pending sales were down 14% from the prior month and 8% from a year ago. YTD sales are down slightly from last year but both average sale price and price per square foot have been up 5% and 7% respectively. Wayne County is winding up a great sales year. With closed sales volume up 3% compared to even record high sales last year. In the long run, the market is showing signs of leveling. Despite increasing numbers of high-end sales, values of those properties are flattening out. All % % % $1-1k % 615-3% 3.5 4% $1-2k % 52-22% % $2-4k 76-6% % % $4k % 84 12% 5.7-2% All % $111 7% $1-1k % $48 3% $1-2k % $111 5% $2-4k % $137 4% $4k % $17 %

8 1,783 +1% from last month 386-9% from last month 3,269 +9% from last year $63K +12% from last year $47 +16% from last year DECEMBER 218 Detroit $6 $5 $4 $3 $2 $1 Detroit inventory has been holding steady with just below 1,8 units for the past 3 months. It s up 11% compared to the same time last year. New pendings have dropped off slightly in November, but closed sales were even with the prior month. YTD sales are up 9% and both average sales price and price per square foot remain up 12% and 16% respectively. Forty percent of Detroit single family homes have sold for under $3k. 85% for under $1k. There continues to be more demand than supply of move-in-quality homes. Detroit s MLS-reported the single-family YTD closed volume of $25M is up 22%. All % 386-9% 4.6 1% $5-3k 559 2% 14 13% 4. -9% $3-1k 981 1% 18-2% % $1-2k 136-6% 45-12% 3. 6% $2k+ 17-5% 21-9% 5.1 4% All % $47 16% $5-3k 135-1% $18 4% $3-1k % $41 9% $1-2k % $75 13% $2k % $18 1%

9 DECEMBER 218 Detroit Condos/Lofts 19 +3% from last month 3-19% from last month % from last year $262K +18% from last year $21 +3% from last year $26 $22 $18 $14 $1 $6 While seasonal inventory levels throughout Southeast Michigan have been dropping, Detroit condo/loft inventory continues to rise 3% higher than last month and 35% higher than this time last year. While the number of upper-end sales continues to rapidly rise, those values have been flattening out. Even with the newer high-end (over $4k) developments, average price per square foot for these properties rose just 1% in the past year. The new developments have created upper-end competition that is impacting resale sellers. All 19 3% 3-19% % $1-1k 34-3% 7 75% % $1-2k 22 1% 5-29% % $2-4k 77 1% 13 % 5.9 1% $4k+ 57-3% 5-62% % All % $21 3% $1-1k 59-23% $74 88% $1-2k 81 17% $139 8% $2-4k % $225 5% $4k+ 59 9% $34 1%

10 DECEMBER 218 Grosse Pointe % from last month 48-25% from last month 761-7% from last year $362K +2% from last year $161 +3% from last year $2 $18 $16 $14 $12 $1 Grosse Pointe inventory remains even with last month and is 2 units (11%) higher than the same time last year. After strong October sales, November new pendings and closed sales both dropped 25% and 17% respectively. Following a strong 217 performance with a 12% increase in average sale price (twice the regional average), Grosse Pointe s 218 prices were flatter than surrounding markets that hadn t jumped as high the prior year. Moving forward, Grosse Pointe will continue to attract buyers who are interested in its community offerings and/or its proximity to Detroit. All 194 2% 48-25% 4. 36% $1-2k 17 55% 1-41% % $2-35k 75 % 17-37% % $35-7k 6-15% 18-1% 3.3-6% $7k % All 761-7% $161 3% $1-2k % $123 1% $2-35k 337 4% $148 % $35-7k % $167 6% $7k % $24-1%

11 828-2% from last month % from last month 3,871-3% from last year $142K +8% from last year $14 +1% from last year DECEMBER 218 Downriver $12 $11 $1 $9 $8 $7 $6 December 1st inventory dropped slightly from the prior month. November new pendings and closed sales both fell off significantly by 17% and 26%. YTD sales are almost even with last year while values have continued to rise. Average sale price is up 8% and price per square foot up 1%. Overall, closed sale volume is up 5% compared to last year. Rising interest rates will continue to challenge both buyers and sellers. They take a bite out of the amount a buyer can afford to pay. With predictions of continued rising rates, it makes sense for both buyers and sellers to consider moving sooner as opposed to waiting. All 828-2% % % $1-75k 128 1% 63-9% 2. 1% $75-125k 242 % 12-14% 2. 17% $125-25k 293-3% % % $25k % 26-1% 6.3 5% All % $14 1% $1-75k % $55 1% $75-125k % $91 6% $125-25k % $114 7% $25k % $129 4%

12 622-12% from last month 173-3% from last month 2,477-9% from last year $297K +8% from last year $152 +7% from last year DECEMBER 218 Livingston County $18 $16 $14 $12 $1 $8 Year-end inventory continues to decline but it s still 14% higher than last year at this time. November new pending sales dropped 3% compared to the prior month, but were off by just 5% from a year ago. YTD sales are down 9%, but both average sale price and price per square foot are up 7%. Those increasing values have been evenly distributed throughout all price ranges. Look for sales to drop off through the balance of the year and into January. Don t be concerned to see average price and price per square foot fall off a little over the next few months. It s not a sign of declining values as much as a sign that there s a need for fresh new move-in-ready listings that sell for premium prices. All % 35 41% % $1-2k 72-14% 79 2%.9-28% $2-3k 19-5% % % $3-5k % 1 37% % $5k % % % All % $152 7% $1-2k 47-32% $122 5% $2-3k 171-8% $143 6% $3-5k 774 3% $156 5% $5k % $199 6%

13 56-11% from last month % from last month 2,64-1% from last year $179K +1% from last year $19 +9% from last year DECEMBER 218 St. Clair County $12 $11 $1 $9 $8 Inventory dropped 11% in the past month and is just short of where it was at the same time last year. November new pending sales dropped 26% from the prior month and closed sales dropped 13%. Expect sales and average prices to drop over the next few months until more fresh new listings begin to arrive and push those averages back up. YTD sales are almost even with last year s big numbers. Both average price and price per square foot are up 9%. Livingston County s total closed sale volume of $369M is $3M higher than last year s record numbers. Rising interest rates are the most immediate threat to both buyers and sellers. With forecasts of continued rate hikes, acting sooner may more sense than waiting to make a move. All 56-11% % % $1-1k 9 % 38-27% % $1-2k 155-1% 74-21% % $2-4k 22-13% 46-23% % $4k % -1% - - All 264-1% $19 9% $1-1k 45-25% $54 7% $1-2k 945 3% $1 3% $2-4k % $13 6% $4k % $169 3%

HOUSING REPORT SOUTHEAST MICHIGAN FEBRUARY 2018

HOUSING REPORT SOUTHEAST MICHIGAN FEBRUARY 2018 SOUTHEAST MICHIGAN FEBRUARY 218 Southeast Michigan Importance of an Early Start in 218 Demand for quality homes remains strong, and the January average sale price was 7% above that of a year ago. Closed