Real Estate Update | May 2018

Well, the first quarter of Michigan’s 2018 real estate market is in the books and it’s safe to say that it looked a lot like the first quarter of 2017. The real estate market continues to move at a fast pace with low inventory and high demand remaining a common theme as sale prices increase.

The scarcity of new entry-level homes in Southeast Michigan has led to tougher competition for existing, mid-priced homes on the market. These starter homes are now in increasingly short supply, partly because builders around Southeast Michigan are finding it difficult to make a profit on entry-level homes because of higher materials costs and shortages in skilled construction labor. These dynamics have compelled many builders to focus on houses with bigger profit margins, often those priced above $400,000. However, homes in Shelby and Macomb Township are among the hottest on the market. Sterling Heights is another popular area for resettlement, as it offers everything from starter homes to dream homes. Areas such as Eastpointe, Roseville and St. Clair Shores are all good locations for first-time buyers as well.

Oakland County is off to its third best start to a year since 2006 with 583 residential building permits issued this year and 204 issued in April, according to a report compiled by the Home Builders Association of Southeastern Michigan in Farmington Hills. The median number of days on the market for Oakland County homes dropped to 22 days, slightly lower than its 23 day measure last year. Oakland County’s median sale prices rose from $229,900 to $240,000, accounting for a 4% increase. The highest sale prices for homes in Oakland County are located in Bloomfield Hills, where the median sales price is $860,000. These homes are staying on the market an average of 106 days. The lowest sale prices for homes in Oakland County are located in Southfield, where the median sales price is $145,000. These homes are staying on the market an average 14 days. In Washtenaw County inventory, pendings and closed sales were all up compared to last month. New spring listings have been lifting inventory levels, but they are still lower than a year ago. Narrowing down to just Ann Arbor, there were only 20 available listings priced under $400K to begin April and as a result, entry and mid-level homes faced the biggest inventory and supply shortages.

Each month, realtor.com ranks the top metro areas across the United States where homes sell the fastest. This month, two Michigan cities have landed a spot on Realtor.com's "Hottest Real Estate Markets in the U.S."! Detroit moved up 13 spots and is now ranked #16. Ann Arbor moved up 10 spots and is now ranked #10. Realtor.com’s hottest markets receive 1.6 to 2.7 times the number of views per listing compared to the national average. These metro areas are seeing homes move off the market 17 to 40 days quicker than the rest of the United States.

Although homes are being built, there are still not enough homes for sale to make average selling prices drop. As long as inventory remains low and demand remains high, the selling price will increase or remain high.

 

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