Real estate broker Mario Como stand in front of a home for sale in Grosse Pointe Farms. (Jose Juarez / Special to The Detroit News)
Spring officially arrived this week and that means another test for the post-meltdown housing market, which is sending more mixed signals than the extended wintry weather.
Home prices are up, but not enough to turn more homeowners into sellers. Sales are down, but buyers still face stiff competition for attractive properties. And then there's the big question for most of the region: How long will the dwindling inventory of homes last?
If you are seller of a well-maintained property, spring looks promising. The median sales price of homes and condominiums in Livingston, Macomb, Oakland and Wayne counties has jumped $22,000 in the past year, to $80,000, according to Realcomp II Ltd., the Farmington Hills-based multiple listing service. In a range of areas and a variety of price ranges, properties in good condition often are getting quick and multiple offers, according to real estate agents.
Brittani Jones, whose home is in Detroit's stylish East English Village, has gotten several offers on her property and there's a steady stream of lookers.
"We are pleased with the interest," Jones said, because it means the sales price is competitive. Also competitive is the market for homebuyers, who are aggressively bidding on good properties.
Potential buyer De-Antai Box came to look at Jones's house Thursday.
The 27-year-old Farmington Hills resident is like many young people who want to move back to Detroit. But it is tougher to find the right place than he thought. "I've been outbid on three different homes" in the past few months, he said. "It can be really challenging to find something that's in good shape in the right neighborhood. I do think if I find something that I like, I should act," quickly, he said.
"A seller can call a moving company shortly after they call their Realtor," said Mario Como, owner/broker of Realty Executives Select in St. Clair Shores. His firm handles residential real estate in the Grosse Pointes, Macomb and Oakland counties.
Prices also are climbing in downtown Detroit's condominium market, said Sabra Sanzotta, owner/broker at The Loft Warehouse in Detroit. "We believe the Book Cadillac effect has helped the rise in prices, because despite it being the most luxury property in Detroit, it also steadily sells with one to five sales per month," Sanzotta said.
She was referring to The Residences at the Westin Book Cadillac, the landmark building that was renovated into a Westin hotel and upscale condominiums.
A two-bedroom, 1,412-square-foot condo there is under contract for $344,900. Another luxury unit testing the waters this spring is a 2,700-square-foot condo at the River Place, with sweeping waterfront views, for $450,000.
Homes for sale shrinking
But no matter the location, the price hikes are partially due to a mounting problem: The number of homes for sale is shrinking.
In February, the inventory in Metro Detroit — which covers most of southeastern Michigan — sank to a low not seen since April 2002, according to Realcomp. Just 14,544 homes and condos were listed, a 24.8 percent drop compared with the same period a year ago, down by 993 units from January.
That shortage already is starting to put some cracks in the foundation of the rebounding housing market.
In Grosse Pointe Woods, 48 houses are for sale to start the spring, which is traditionally the beginning of the most active period for home and condo sales. That inventory is half the number of properties on the market compared to last year, Como said. "Inventory is just evaporating. Throughout my area is less than a two months supply," he said.
Half of area homeowners owe at least 25 percent or more on their mortgages than their home is now worth, according to RealyTrac, a real estate information firm that tracks foreclosures. That translates to about 131,000 properties, according to First American CoreLogic, a real estate data firm in Santa Ana, Calif. It's one of the highest rates in the nation, according to various data.
That means many homeowners are reluctant to put their properties on the market, because they don't want to take a financial bath, and end up paying the difference to their mortgage holders or requesting a complicated short sale.
Median sales prices affected
The falling inventory already is dragging down the volume of sales, and the dwindling number of attractive properties is holding down the overall median sales price, data shows. In February, the median sales price of $80,000, while a 37.9 percent improvement from February 2012, was flat from January, according to Realcomp. The number of sales last month also fell, compared with January and February 2012.
The decline is a reversal from the recession years of 2008 and 2009, when sales of houses and condominiums rose because of the federal government's first-time homebuyer tax credit and investors snapping up cheap foreclosed properties.
But the rest of the market — homebuilders and the ability of current homeowners to sell their properties — is lagging. Most things in the real estate market seem to be operating at 40 percent to half of what it used to be since the 2008 crash.
Home prices in Detroit finished the year with an increase of nearly 14 percent over 2011, far ahead of the average price improvement nationally, which was 7.3 percent for the year, according to Standard & Poor's/Case-Shiller 20-city home price index released. Prices in Metro Detroit still remain nearly 40 percent below their peak in March 2006.
Homebuilders will remain at half-speed. About 5,100 single family homes are expected to be constructed in southeastern Michigan this year, which is a 40 percent increase from 2012, according to a forecast by the Home Builders Association of Southeastern Michigan. But the pace will remain at half the level of activity of the past four decades. The 40-year average is about 10,000 new home permits a year in Metro Detroit. Last year's total was 3,644, the highest annual total since 2006.
"The big challenge for the spring is getting more inventory for the summer and the rest of the year," Como said.