Real Estate Update - April 2018
Experts predict this spring will be a tough one for first-time homebuyers due to continuing low-inventory in the entry to middle-level home sectors, leaving little room for negotiations.
Baby Boomers are living in the same places longer and Millennials are reaching the point in their life where they have to make the decision of continuing to rent or becoming a homeowner. As rent prices rise, it is becoming increasingly affordable to take on a home mortgage and many renters are finding they are able to take on a mortgage for the same, or at times, a cheaper monthly payment than they are currently renting at. Since rent prices are on the rise and mortgage rates are slowly increasing as well, right now is a great time for renters to become homeowners. With motivated buyers on the market and low inventory now is a great opportunity for sellers to get multiple offers on their home.
However, the limited inventory of new entry-level homes has led to tougher competition for existing, mid-priced homes on the market. These properties also are now in increasingly short supply, partly because many baby boomers are reluctant to sell the family house.
"Real estate has always been a supply and demand equation. Today we are seeing prices increasing, in part, due to the high demand and short supply of homes available in the entry-level and mid-priced range. Many potential sellers are unaware of how their home's price has likely rebounded, if not exceeded, from recession levels," said John North, CEO Coldwell Banker Weir Manuel. "Having an agent who is a trusted advisor on the buy side today has never been more important. Along with guiding buyers through the mortgage pre-approval process, helping establish a want and need analysis as well as budget parameters, these agents are well connected and oftentimes aware of which homes will soon come on the market. They can then work closely with their buyer clients to have them in a position to respond quickly to new offerings that meet their needs."
The median sales price of homes in Southeastern Michigan rose 8.6% from $174,400 to $189,425. During the same monthly periods, home sales fell 4.7% to 2,642 last month as compared to 2,773 a year ago. In turn, the region had a 1.8-month supply of homes on the market, down from 2.6 months a year ago. According to Realcomp data, further detail of median sales price by county shows increases in Wayne (28.4%), Oakland (5.8%), and Macomb (9.4%), while Livingston showed a decrease of 3.5%. Metro Detroit’s housing market shows a 30% decrease in inventory year-over-year in March, matched by a 4.6% rise in median sales price.
Moving forward, we should continue to look for a persistent amount of low inventory and strong demand regarding sales prices and rising interest rates. These factors will provide an incentive for both buyers and sellers to make early moves during this year’s spring housing market.
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