The housing market in Michigan’s Great Southwest was on a record tear for more than four straight years from 2016 until 2020, as the local market experienced what local Realtor’s Association Executive Alan Jeffries characterizes as “A rush of peak sales and selling prices.” Things were truly heady. In fact, by the end of 2020 he says, “The market had celebrated four straight years of peak prices and sales.” Then, along came the COVID pandemic, and by the time the state’s shutdown had ended in April of 2021 homebuyers had swept up the available inventory. As a result, by the start of 2022, the local inventory had shrunk to a historically low level of just 1.9-months supply, and the year ended with a small rise to a 3.3-months supply.
Jeffries tells us that in December of 2022, the number of houses sold was down fully 44-percent as compared to December of 2021 with just 167 homes sold, as compared to 296 in the previous year. At 167, the number of sales dropped back to the level before all of those great peak years. As a result, overall year-to-date sales in 2022 fell 16-percent from the record-setting number of sales in 2021, with 3,262 homes sold through the year, as compared to the 3,889 homes sold a year earlier.
The average selling price in December of 2022 at $299,574 was 21-percent lower than the average selling price of $377,156 in December on year earlier which had been the previous highest selling price in the year-over-year comparison.
Nevertheless, the year-to-date average selling price of $338,495 was up 4-percent over 2021’s average of $325,972 and set a new record in the year-over-year comparison.
The median selling price for December of 2022 was $219,000, which tumbled 11-percent below the $245,000 median selling price for December of 2021.
Despite that drop in December, the year-to-date median selling price of $245,000 was an 8-percent increase over the median of $226,100 set in 2021 and set a new record in the year-over-year comparison.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Another factor, beyond inventory in the year just ended was the onset of rising mortgage rates. Jeffries tells us, “Mortgage rates rose from 3.55 in January to the point that by the end of the year they stood at 6.42,” and adds, “The number of houses sold each month in 2022 was lower than the same month in 2021. Conversely, the average and median selling prices each month in 2022 were higher than the same month in 2021, with the exceptions in July and December.”
Additional market highlights for the region cited by Jeffries include the number of houses sold each year, which has stayed above 3,000 for the last ten years. Additionally, since 2015, the average selling price in Southwest Michigan has increased by 61-percent, down from the 63-percent increase seen in 2021.
The yearly total dollar volume in 2022 decreased by 13-percent to $1,104,172,661 as compared to the $1,267,707,045 figure achieved in 2021.
Jeffries notes, “The dark cloud over the market has been the dwindling inventory of houses for sale,” noting, “At the end of 2022, the market showed signs of growth with 662 houses for sale across Allegan, Berrien, Cass, and the westerly 2/3rds of Van Buren Counties, which was up 29-percent from that at the end of 2021 when the number of houses for sale was 514. The December 2021 level of 514 was the lowest in the year-over-year comparison.”
At 662 houses, the market ended the year with just a 3.3-months supply of homes for sale compared to 2.0 months in December of 2021 and 3.7 months in November. By way of comparison, back in 2010, there were 3,160 houses on the market — or a 15.8-months supply. The number of listings for sale includes homes across Allegan, Berrien, Cass, and the westerly 2/3rds of Van Buren counties.
There were two bank-owned or foreclosed homes as part of all transactions in December, which was 1-percent of all deals made. For six months, the rate stood at 1-percent in 2022. The highest rate was 3-percent back in February. The previous lowest percentage was 0-percent for three months, and the percentage was 2-percent for two months of the year.
Nationally in December, the Freddie Mac mortgage rate was 6.42, up from 3.11 in December of 2021 and down from 6.49 in November of 2022 for a 30-year conventional mortgage.
Looking forward, Jeffries contends that 2023 may be the year of change, suggesting, “It looks like the market in 2023 will continue correcting itself as to prices. Real estate sales may continue to dip through 2023 depending on interest rates and inventory.” He adds, “The real estate market is going through the denial stage right now in regard to interest rates but should adjust to the acceptance stage in the first half of 2023, however, low inventory will continue to be an issue until new housing units can be built or property owners decide to start selling.” Jeffries is Association Executive for the Southwestern Michigan Association of Realtors, Inc., headquartered on Lake Shore Drive in St. Joseph.
The numbers reported for local sales include residential property in Allegan, Berrien, Cass, and the westerly 2/3rds of Van Buren Counties. They should not be used to determine the market value of any individual property. Jeffries says, “If you want to know the market value of your property, please contact your local Realtor.”
Jeffries also continues to offer regular advice to those in the market on both sides of the equation:
When Selling a Home…
Putting your house on the market is an exciting and emotional time. Your Realtor becomes your trusted advisor and guardian to protect your interests from the moment you sign the listing and the ‘For Sale’ sign goes up in the yard until you close and transfer ownership of your home.
Your Realtor will develop a strategy for marketing your home to potential buyers by using the Multiple Listing System to reach over 5,000 Realtors in 22 counties and using other resources to reach as many potential buyers as possible.
Your Realtor will stand by you to negotiate offers and then become a business manager overseeing all the important steps needed to get to a successful, timely closing. Your home is a big investment. Trust a Realtor to always act in your best interest.
When Buying a Home…
Owning a home has many advantages, and reducing the amount of tax dollars that you pay each year is one of the best. If you are renting, this is the time of year to look at what tax advantages you might have had if you were a homeowner. Your first tax deduction starts when you sign for your mortgage. The next time you file your taxes, you can deduct the mortgage interest you paid at closing as well as some of the closing costs, such as points and loan origination fees, as itemized deductions.
Second, you can deduct property taxes paid at closing and for every year thereafter. Then every year, you can deduct the amount of interest you pay on your mortgage. If you work from home and have a home office, you may be eligible to deduct the prorated costs of your mortgage, insurance, and other expenses related to that space. Factoring the tax savings may help you reduce your overall housing cost. Contact a Realtor to learn more about the tax advantage and other advantages you can reap by owning a home.
To view properties that are for sale in the local area, you can 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 http://www.swmar.com.
