Good News For Michigan's Housing Market

We're seeing it more and more. In the newspapers, local news broadcasts, hearing it on the radio.  As an example, today's Detroit Free Press has an article titled, "Michigan home prices rose 9% in January vs. 2014."  And here in Livingston County, we've been outperforming most other SE Michigan geographical areas.  What does it all mean, though?

Well, first, things are looking up.  But temper that with some reality.  The same article notes that our home prices are still 17.3% off their peak from 2005.  Yes, we have more new construction, and at least here in Livingston County, it's still a seller's market if your home is under $350,000 in value.  But what does that mean, exactly?

In the real estate industry, we consider the supply of homes under 6 months inventory to be a seller's market, over a buyer's market. Six months is a 'balanced' market. We get those figures by taking the average number of sales over the last 12 months and dividing it into the current inventory.  If 600 homes have sold in the last 12 months, 600/12 = 50 per month.  Let's say the inventory is 300 homes.  300 homes on market/50 sales per month average = a 6 month supply, or a balanced market.  We can break this down by price ranges, municipal areas and the like. 

Even if you're area and price range are in a seller's market status, that doesn't mean you can go crazy with the price.  Generally speaking, if you overprice by as little as 3% it will affect the number of showings you get.  Just 5% over priced may be the difference between a few showings and no showings.  How does that happen? 

Education.  Buyers are constantly looking at homes on the internet.  All of the listings come from the local MLS, but different sites (called portals by some) have better search features or education articles.  Buyers have an almost intuitive feel for when a property is overpriced because they've been looking at every 3 bedroom, 2 bath ranch between 1600-2000 sq ft in the area they like for months. Try asking $250,000 for a home that others sell for $220,000 and you'll be waiting for a while. 

So, yes, things are improving and the news is mostly good in comparison to where we've been.  But you still need a competent professional to assist you with your sale or purchase.  Remember that a real estate transaction is one of the biggest you will make in your life. Trust a full-time real estate professional.

image courtesy of ddpavumba/freedigitalphotos.net