A marginal increase in housing inventory still isn’t enough to revive the once record pace of home sales in Michigan’s Great Southwest, but the selling prices continue to climb. That’s the essence of the latest report on the local housing market from the Southwestern Michigan Association of Realtors for the month of May.
Association Executive Alan Jeffries tells us, “Since March, the momentum in number of houses sold has picked up while the increase in the housing inventory has been very marginal,” and adds, “The low inventory has kept the number of houses sold down 6-percent year-to-date.”
After two years of a record breaking pace in the number of home sales, 2018 sales have now fallen to fourth place in the year-over-year comparison back to 2006. Jeffries says, “In just the month of May 2018, the number of houses sold fell 4-percent below May 2017 (328 vs. 341).”
While the pace of sales continues to fade in the year-over-year mash up, pricing has done anything but turn south. Jeffries tells us, “Selling prices have continued to climb. From April to May this year, the average selling price increased 20-percent ($256,923 vs. $213,923) and the median selling price increased 44-percent ($163,000 vs. $154.950).”
Comparing to May 2017, the average selling price was up 15-percent in May 2018 ($256,923 vs. $224,204), while year-to-date, the average selling price was up 9-percent ($223,910 vs. $205,177). Both the May and year-to-date average selling price set records for the highest average selling prices in the year-over-year comparison since 2006.
There was only a $2,000 difference in the median selling price in May 2018 from May 2017 ($163,000 vs. $165,000), but the year-to-date median selling price at $154,250 was up 6-percent from May 2017 ($145,000) and set a record in the year-over-year comparison.
The median price is the price at which 50-percent of the homes sold were above that price and 50-percent were below.
Another bright spots is that the higher selling prices pushed the total dollar volume up 10-percent in May 2018 when compared to May 2017 ($84,270,858 vs. $76,453,730). Year-to-date, total dollar volume increased 3-percent ($274,962,131 vs. $267,962,250). The May and year-to-date total dollar volume have become the highest volume numbers set since 2006.
For the first time in a while, inventory of houses for sale increased slightly to a 5.6-months supply from the 4.9-months supply seen in April. The inventory at the end of May was 1,704 compared to 1,501 houses at the end of April. In May a year ago, the inventory was 1,956 houses for sale. The result is a 13-percent drop in inventory from last year to May 2018. In May 2010 the inventory of houses for sale was 3,602.
The number of bank-owned or foreclosed homes as a percentage of all transactions in May dropped back to 7-percent from 8-percent in April. The percentage was also 7-percent in March. The previous lowest percentage in May was 6-percent, just last year. The highest percentage in May was 34-percent in 2009 and 2011.
Locally, the mortgage rate increased to 4.75 from 4.602 in April. Last year in May, the rate was 4.129. Nationally, the Freddie Mac mortgage rate in May was 4.56 down slightly from 4.58 in April for a 30-year conventional mortgage.
According to the National Association of Realtors, existing-home sales fell back for the second straight month in May, as only the Northeast region saw an uptick in activity.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 0.4-percent to a seasonally adjusted annual rate of 5.43 million in May from the downwardly revised 5.45 million in April. With last month’s decline, sales are now 3.0-percent below a year ago and have fallen year-over-year for three straight months.
Lawrence Yun is Chief Economist for the National Association of Realtors. He contends that a solid economy and job market should be generating a much stronger sales pace than what has been seen so far this year, noting, “Closings were down in a majority of the country last month and declined on an annual basis in each major region.” He adds, “Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market.”
The median existing-home price for all housing types in May was $264,800, an all-time high and up 4.9-percent from May 2017 ($252,500). May’s price increase marks the 75th straight month of year-over-year gains.
Yun points out, “Inventory coming onto the market during this year’s spring buying season – as evidenced again by last month’s weak reading – was not even close to being enough to satisfy demand.” He argues, “That’s why home prices keep outpacing incomes and listings are going under contract in less than a month – and much faster – in many parts of the country.”
Regionally, existing-home sales in the Midwest declined 2.3-percent to an annual rate of 1.26 million in May and are now 2.3-percent below a year ago. The median price in the Midwest was $209,900, up 4.2-percent from a year ago.
First-time buyers were 31-percent of sales in May, which is down from 33-percent both last month and a year ago. NAR’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34-percent.
Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri is President of the National Association of Realtors. She tells us, “Realtors in many parts of the country say their seller clients are dealing with a seesaw of emotions when deciding to put their home on the market.” The CEO of RE/MAX Boone Realty adds, “While they’re thrilled that they will immediately find multiple buyers interested in their listing, many fear they’ll have extreme difficulty finding another home to buy. Some have even decided to hold off until inventory conditions start improving, which is actually only exacerbating supply shortages.”
All-cash sales were 21-percent of transactions in May, which is unchanged from April and down from 22-percent a year ago. Individual investors, who account for many cash sales, purchased 15-percent of homes in May, unchanged from last month and down from 16-percent a year ago.
Nationally, the total housing inventory at the end of May climbed 2.8-percent to 1.85 million existing homes available for sale but is still 6.1-percent lower than a year ago (1.97 million) and has fallen year-over-year for 36 consecutive months. Unsold inventory is at a 4.1-month supply at the current sales pace (It was 4.2 months a year ago).
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.
