With temperatures warming up in southeastern Michigan and the peak of home buying season arriving, home buyers should brace for a steady rise in housing demand as well as average sales price. This pressure among buyers trying to find the right house amongst declining inventory is prompting a lot of competition.
Throughout southeastern Michigan, inventory is higher at price points of more than $650,000, but options in the $100,000-$300,000 range are harder to come across. Realcomp said in its February market recap that rising prices and rates will force buyers to choose between a high payment or a lower-priced home.
Year-over-year, the number of February house and condo sales in southeast Michigan were down 7.3% and listings were down 13.2%. More homes are expected to hit the market as the warmer month’s approach, when the sellers can take advantage of a larger buying base.
Nationally home prices grew 6.2% in 2017, which is the largest annual growth since 2013. For southeastern Michigan, median sales prices went up 12.5%, which reflects the high level of demand. In the city of Detroit alone, median sales prices increased 28.2% to $32,052.
Another factor on the minds of real estate professionals is the tax reform bill signed into law in December. Many are worrying that the law reduces tax benefits of owning a home and could hurt certain housing markets. However, due to changes reflected in the final version of the bill, prices overall are expected to grow more slowly this year, only 1-3%, according to the National Association of Realtors. In some high-cost, high-tax markets though, prices could decline, due to the plan’s state and local tax and mortgage interest restrictions
Overall, the biggest housing issue faced in the state today, is the lack of inventory, as we have a historically low number of listings actively for sale on the market. Furthermore, Michigan is showing healthy, sustainable growth since the economic recession.
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