The real estate boom that has gone bust in recent months has made a valiant effort over the past month to regain some footing, however the housing market in Michigan’s Great Southwest is still no match for the peak years of that boom.
According to the latest report from Alan Jeffries, the association executive for the Southwestern Michigan Association of Realtors, “The housing market in March picked up steam compared to the first two months of the year,” however, he adds, “At the close of the first quarter of 2023, the numbers show that the market’s previous sales frenzy and across-the-board record-setting sales and selling prices have settled to pre-peak years activity.”
Looking at the numbers, Jeffries tells us that in the month just ended, March of 2023, the number of houses sold fell to 236 from the 244 that had been sold a year ago in March of 2022, for a 3-percent decrease. Rounding out the quarter, at the end of the first quarter in 2023, at total of 545 houses were sold, as compared to 622 in the same quarter ending March of 2022, for a 12-percent decline in sales.
On the upswing, the inventory of houses for sale gained 15-percent from a year ago, with 612 homes on the market now as compared to the 530 reported previously, bringing the current inventory for sale up to a 3.2-month level of inventory available for buyers, as compared to the 2.2 months of inventory available in the month of March a year ago in 2022. Despite that upswing, the current inventory remains historically low for the market area. Looking back at previous years, the market had a 4.9-months supply of houses for sale in March of 2020, and going back further in the year-over-year comparison, in March of 2010, there were 2,969 houses for sale for a 14.7-months supply of houses for buyers at that time.
The average selling price last month, (March of 2023) was $321,345 as compared to $313,205 a year ago in March of 2022, for a 3-percent increase. At the end of the first quarter, however, the average year to date selling price by March of 2023 had slipped 4-percent from the same quarter in 2022, to an average of $299,667 as compared to an average year ago price in that quarter of $312,013.
The median selling price in March of 2023, at $233,500, set the only record as the highest price in the year-over-year comparison that dates back year-to-date, as the median selling price decreased by $1,000 to $219,000 as compared to $220,000. The median price is the price at which 50% of the homes sold were above that price and 50% were below.
The drop in sales also lowered the monthly total dollar volume, although by just 1-percent in March of 2023 to $75,837,608 as compared to last year’s total of $76,422,149. The year-to-date total dollar volume for the first quarter dropped 16-percent by the end of the quarter to $163,318,594 as compared to last year’s first quarter sales which totaled $194,072,341.
The number of bank-owned or foreclosed homes as a percentage of all transactions was 3-percent last month, up from 2-percent in February and the same as in January of 2023. The previous lowest percentage was also 3-percent in March of 2021, while the highest percentage in a month of March was the 60-percent rate set back in 2009.
The Freddie Mac mortgage rate in March was 6.32, down from 6.50 in February for a 30-year conventional mortgage. A year ago, the rate was 4.67.
The data provided by Jeffries reflects home sales across Allegan, Berrien, Cass, and the westerly 2/3rds of Van Buren Counties and he cautions, “It should not be used to determine the market value of any individual property,” adding, “If you want to know the market value of your property, please contact your local Realtor.”
As is his custom, Jeffries also offers advice to those in the market to buy or sell a home in the region:
When Selling a Home…
As you file your tax returns for 2022, be careful not to make any of these eight common tax mistakes, especially when it comes to the property tax deduction or the mortgage interest deduction:
#1 Deducting the Wrong Year for Property Taxes
You take a tax deduction for property tax in the year you (or the holder of your escrow account) actually paid them. Tip: Taking this deduction requires you to itemize.
#2 Confusing Escrow Amount for Actual Taxes Paid
If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed.
#3 Deducting Points Paid to Refinance
In many cases, if you itemize, you can deduct the points you paid your lender to secure your mortgage for the year you bought your home. However, if you pay points in connection with a refinance, you must deduct the points over the life of your new loan.
#4 Misjudging the Home Office Tax Deduction
There are two ways to calculate the home office deduction. One is more complicated and has to be partially recaptured if you turn a profit when you sell your home and can pique the IRS’ interest in your return. But it also can give you a larger deduction than the simpler method.
#5 Failing to Repay the First-Time Homebuyer Tax Credit
If you used the original homebuyer tax credit in 2008, you must repay 1/15th of the credit over 15 years.
#6 Failing to Track Home-Related Expenditures
Common tax mistakes are often made by omission: not keeping records. File or scan and store home office and home improvement receipts and other home-related documents as you go.
#7 Forgetting to Report Trackable Capital Gains
If you sold your main home last year, don’t forget to report capital gains on any profit above the excluded amounts. You can typically exclude up to $250,000 of any profits from your income (or up to $500,000 if you’re married filing jointly).
#8 Claiming Too Much for the Mortgage Interest Deduction
If you’re eligible to itemize, the MID loan limit is $750,000. For loans taken out before Dec. 16, 2017, the limit was $1 million. Make sure your loan is grandfathered before claiming the old limit.
Interest paid on home equity loans and second mortgages is deductible, but only if the proceeds of loans were used to buy, build, or improve the home that secures the loan. You can’t deduct interest on home equity loans that were used for things like student loans or cars.
When Buying a Home…
So, you are planning to tour houses for sale. But are you really ready to be a serious buyer? It’s a seller’s market still with a very low inventory of houses for sale. Before you open a door at the seller’s house, you should visit a lender to get pre-approved for a mortgage. This step lets you know how much mortgage you will qualify so you won’t waste time looking at homes you can’t afford.
Do you know what kind of home you want? Make a list of what features in a house are important to you and narrow down the location that would best fit your lifestyle. Next, you need a Realtor to help you narrow down the existing listings to what meets your needs and to help you get the intel on new listings as they hit the market. Taking these steps will save you time and help you find the right home with less stress.
To view properties that are for sale in the local area, go to www.swmar.com, and click on “Search.” The Southwestern Michigan Association of Realtors, Inc. is a professional trade association for real estate professionals who are members of the National Association of Realtors, and ancillary service providers for the real estate industry in Allegan, Berrien, Cass, and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at this link: http://www.swmar.com.
