What a difference a year has made in the local housing market of Michigan’s Great Southwest. A year ago in August, the sales pace was torrid, setting a record, but with falling prices. This year, in August, the market dropped by 7-percent, but prices have soared to new record levels. That’s what tight inventories and high demand will do for you according to Alan Jeffries who serves as Association Executive for the Southwestern Michigan Association of Realtors, Inc.
Jeffries says, “Last year in August the Southwest Michigan housing market set the record for the number of houses sold in the year-over-year comparison with 418, but the average and median selling prices dropped after fairly steady increases during the months leading up to that time.” This year in August Jeffries says, “The number of houses sold dropped 7-percent from August 2017 (387 vs. 418), and the average and median selling prices increased.”
Simply saying “increased” is likely an understatement, as Jeffries goes on to say, “The August 2018 average and median selling prices and total dollar volume and the year-to-date prices and volume all set the highest record since 2006 in the year-over-year comparison.”
The average selling price leaped 21-percent in August 2018 ($238,886 vs. $196,723), while the year-to-date average selling price rose 9-percent ($228,285 vs. $209,539).
The median selling price increased 7-percent in August 2018 ($170,000 vs.$159,500), while the year-to-date median selling price was up 5-percent ($160,850 vs.$153,500). The median price is the price at which 50% of the homes sold were above that price and 50% were below.
The increase in selling prices boosted the total dollar volume up 12-percent over August 2017 ($92,449,229 vs. $82,230,523). Year-to-date, total dollar volume increased 6-percent ($541,493,551 vs. $511,696,026).
Inventory of houses for sale decreased 4-percent from a year ago (1,949 vs. 2,036). At the end of August there was 6.4-months supply of houses for sale; down from 6.6-months supply at the end of August 2017. By way of comparison, in August 2010 the inventory of houses for sale was 3,757 or 17.8-months supply.
The number of bank-owned or foreclosed homes as a percentage of all transactions in August rose to 6-percent from 4-percent in July which had been the lowest percentage for the year. The highest percentage ever in the month of August was 36-percent set back in 2009.
Locally, the mortgage rate decreased to 4.652 from 4.681 in July. Last year in August, the rate was 3.975. Nationally, the Freddie Mac mortgage rate in August was 4.52 down slightly from 4.54 in July for a 30-year conventional mortgage.
According to the National Association of Realtors, existing-home sales remained steady in August after four straight months of decline, while sales gains in the Northeast and Midwest canceled out downturns in the South and West.
Total existing-home sales in America, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, did not change from July and remained at a seasonally adjusted rate of 5.34 million in August. Sales are now down 1.5-percent from a year ago (5.42 million in August 2017).
Lawrence Yun is Chief Economist for the National Association of Realtors. He says the decline in existing home sales appears to have hit a plateau with robust regional sales, noting, “Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum.” He adds, “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”
The national median existing-home price for all housing types in August was $264,800, up 4.6-percent from August 2017 ($253,100). August’s price increase marks the 78th straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest rose 2.4-percent to an annual rate of 1.28 million in August, but are still down 0.8-percent from a year ago. The median price in the Midwest was $208,500, up 3.4-percent from last year.
First-time buyers were 31-percent of sales in August, down from last month (32-percent) but the same as a year ago. NAR’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34-percent.
All-cash sales were 20-percent of transactions in August, unchanged from July and a year ago. Individual investors, who account for many cash sales, purchased 13-percent of homes in August, unchanged from July and down from 15-percent a year ago.
Nationally, the total housing inventory at the end of August also remained unchanged from July at 1.92 million existing homes available for sale, and is up from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace, consistent from last month and up from 4.1 months a year ago.
The National Association of Realtors Yun says, “While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand.” He contends, “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory – especially moderately priced, entry-level homes – would propel sales.”
On the money front, Yun reports, “Rising interest rates along with high home prices and lack of inventory continues to push entry-level and first-time home buyers out of the market.” He tells us, “Realtors continue to report that the demand is there – that current renters want to become homeowners – but there simply are not enough properties available in their price range.”
Elizabeth Mendenhall, a 6th generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty is President of the National Association of Realtors. She says, “Realtors across the country report that their clients waver about the decision to list their home; they are excited by the prospect of receiving many offers, they are concerned that they will not be able to find a new home to purchase.” She adds, “Unfortunately this fluctuating view is contributing to the short supply of homes. Buyers hoping to find an entry level home in this market should work with a Realtor and be prepared to move quickly as listings sell quickly.”
The numbers reported for local sales include residential property in Berrien, Cass and the westerly 2/3rds of Van Buren counties and should not be used to determine the market value of any individual property. If you want to know the market value of your property, you are encouraged to contact your local Realtor.
The Southwestern Michigan Association of Realtors, Inc. is a professional trade association for real estate licensees who are members of the National Association of Realtors and ancillary service providers for the real estate industry in Berrien, Cass and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at www.swmar.com.
