STATE OF THE REAL ESTATE MARKET MARCH 2015
STATE OF THE REAL ESTATE MARKET MARCH 2015
Both January and February moved as expected, jumping up in most categories compared to last year. Buyer demand going into 2015 is stronger than last year, however, the large jump in newly written contracts (Pending Sales) is a bit deceiving. A good portion of that jump is simply the difference between a more (relatively) normal winter this year vs. a tough one last year that depressed sales. We will get a better feel for the true buyer demand later into spring and early summer. The good news for buyers is new listings entering the market are at least equal to or above this time last year, giving buyers some additional choices in the market. That may bring some buyers who have been sitting on the fence back into the spring market. With the current pace of sales, we can expect a spring similar to last year, with homes selling quickly but with probably 20-30% fewer multiple offer situations as a result of a rise in inventories, particularly in properties over $250,000.
In the under $250,000 range listing inventories are down and not growing, so we can expect sales to continue to be slower, not due to fewer buyers but simply fewer homes to buy. While in the over $250,000 segments both new listings and overall inventories are rising, giving buyers more choices. As a result we can expect values to rise at a slower pace with more inventory competition. For definition purposes, Pending Sales are the contracts written in the last month, while Closed Sales are typically the Pending Sales of 45-60 days ago (the time it takes to actually close a sale). Pending Sales are less exact, since a portion never close, but in terms of trending, they do give a feel for where the market is going. The jump in both pending and closed sales in the $250,000-500,000 segment can be explained in part from buyers moving up from lower price ranges to try to find a wider inventory to choose from.
For a historical perspective, here are the Southeast Michigan appreciation rates as shown by Case-Shiller over the past 23 years. After a tough time from 2005 to 2012 we have rebounded, bouncing from the bottom in 2012-2013 and settling down to what was the long term historical rate of 4-6%, a very healthy sign for the long term stability of our housing market. These numbers are not inflation adjusted, so the 7-9% of 1994 to 2000 would equate to 4-6% with an inflation adjustment.
The snow is gone, green things are sprouting, so get ready for an active spring market. As a seller, with more competition, be careful not to overprice, but do not hesitate to jump in the market now. There are buyers ready to look at any new listings entering the market.
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