Detroit area housing market among nation’s hottest
An earlier version of this story misidentified the Ferndale firm acquired by Campbell Soup. It is Garden Fresh.
Sue Shoha is moving up, Abby Leet and Will Hubbard are moving in and home sales in Metro Detroit are taking off.
For the second month in row, the National Association of Realtors is citing Metro Detroit and Ann Arbor as two of the 10 hottest real estate markets in the country. In May, Metro Detroit ranked 10th while Ann Arbor was ninth, and in June both moved up a notch.
Real estate brokers say sales have been heating up since last year, as the economy and consumer confidence improved, and home prices steadily increased as foreclosures dwindled. Would-be homebuyers who have been sitting out the aftermath of the great recession, and its wobbly recovery, have finally decided it’s safe to buy, and home values are up to the point that homeowners can sell for more than they owe.
“The market has been extremely active for the first half of the year and sales are up because our inventory is so low,” says Jan Hays, an Oakland County real estate agent with Max Broock Realtors of Birmingham. “The last seven houses I’ve sold in Sylvan Lake sold in less than five days. One sold in 24 hours to the first person who walked in the door.”
On Friday, Hays was showing a Sylvan Lake waterfront home to Shoha, a 52-year-old dentist who just opened a practice in Bloomfield Hills and is looking to move up with her husband and three children. “This is our ‘up north’ cottage without the drive,” Shoha joked.
Later that afternoon in Berkley, Hubbard, 27, and his fiancee, Leet, 25, finished the final walk-through and closed on their first home, after having viewed more than 50 properties since March.
“Since everybody in our age range wants to rent we felt it was a pretty decent time to be buying,” says Hubbard, who works in finance. “It was tough. We lost an offer to an all-cash buyer, and one to someone who bid the same price but with an FHA mortgage.”
But while sales are up, the number of new homes being listed is barely budging, creating a big jump in prices. Real estate agents say it’s common now to see multiple offers on properties, often going over the asking price.
In June, sales in Metro Detroit increased 13.3 percent, while the median sale prices increased 9.3 percent, according to Realcomp II Ltd., the multiple-listing service covering southeast Michigan. For the entire listing area, covering Wayne, Oakland, Macomb, St. Clair, Livingston and Lapeer counties, sales were up 14.1 percent, but the number of listings in the region grew by less than 2 percent. That combined to push the median sale price up by 10.3 percent — a 10-year high.
In Detroit proper (including Highland Park, Hamtramck and Harper Woods), sales fell 8.2 percent, but prices were still up, gaining 31.8 percent.
In Ann Arbor, single-family homes listed for sale were up less than 1 percent, compared with June 2014, while sales were up 28.3 percent. The median sales price, however, dipped 3.7 percent, but is up 5.5 percent this year. The median price on condominiums was up 13.8 percent for the month.
Ann Arbor prices are back above the peak levels set in 2005 during the housing bubble, sales agents say. For southeast Michigan, the Realcomp median sales price in June of $160,000 is almost back to the record high, which was slightly less than $165,000.
“It’s very hot. It’s definitely a sellers’ market right now,” said Craig Joeright, an agent with Howard Hanna Realty Services in Birmingham. “If it goes on the market and it’s something that’s move-in ready, you’re getting multiple offers over the asking price. In the last two months I closed about 20 homes. June and July have been crazy.”
The Michigan numbers mirror national statistics. Wednesday, the National Association of Realtors announced that existing-home sales in the U.S.hit an eight-year high during June, at a seasonally adjusted annual rate of 4.84 million, while the median sales price hit a new record of $237,700.
“I put a house on the market Tuesday, and by Wednesday I had three offers all over the list price of $225,000,” says Tracey Roy, president of the Ann Arbor Area Board of Realtors, and an agent at Charles Reinhart Realtors. “There’s not enough inventory for the amount of buyers, especially priced at $300,000 and under.”
Nonetheless, buyers from higher-priced markets aren’t balking at prices in Ann Arbor.
“I just had someone in from an area where homes are really expensive, and they’re mesmerized by what they can get for the dollar,” Roy says.
Some buyers in Ann Arbor are young people getting jobs and buying a first home, as well as transfers to the University of Michigan or the medical or tech companies headquartered in the area, notes Matt Miller, an agent also with Charles Reinhart Realtors and president-elect of the Board of Realtors. He adds that older baby boomers looking to downsize are also looking to sell, but running into roadblocks when looking for condos or smaller ranch homes.
“I’ve seen a little bit of a clog in the market from baby boomers nearing or at retirement who are looking to downsize, without a whole lot of options available,” Miller said. “It’s keeping those people from putting their homes on the market and creates some of this cycle of low inventory.”
In Metro Detroit, homeowners buying because they’ve been transferred to work in the market are also boosting demand, says Patrick Carolan, an agent with Coldwell Banker Weir Manuel in Birmingham.
“We’re still seeing a lot of transferring from larger global companies, and companies transferring people from state to state,” Carolan said. “Recently we had Campbell Soup take over Garden Fresh in Ferndale and that’s brought in some transferees in the corporate arena, along with transfers from GM, Chrysler and Ford, as well.”
Another factor driving sales, real estate agents say, are people who lost homes in foreclosure and have rebuilt their credit. Also motivating first-time buyers and homeowners looking to move up are rising mortgage rates. According to mortgage insurer Freddie Mac, the average June interest rate on a 30-year, fixed-rate mortgage was 3.98 percent, after dropping as low as 3.35 during 2012. The Federal Reserve Board has indicated it will start gradually raising rates, possibly as early as September.
Says Jan Hays of Broock Realtors: “We’re finding that a lot of people who can make the move up are doing so now because interest rates are still favorable.”