May Market Update

As expected, the Michigan real estate market Market did react to the combined loss of the homebuyer tax credit and end of the Homestead deadline. The good news is the reaction was less than expected. Adjusting for seasonality, the Detroit metro area pending sales fell 30% compared to the feeding frenzy of February - April (which equaled the peak activity levels of 2004/05). We expected closer to a 50% drop. The sales activity was equal to the pace in both May of 09' and 08,' when bank owned properties were fueling the Michigan real estate market. The direction of economic news, even locally, is generally good so Buyers are gaining confidence. This won't be a flood, but if it continues, will be a strong offset for the increase in bank owned homes and potential rise in interest rates that will hit the market later this year and next.

The market has improved at all price points in terms of months supply of For Sale inventory, the most in the under $100,000 market.
Under $100,000: May 08' - 9 months supply vs. 4 months today - 55% improvement $100,000 to $400,000: May 08' - 16 months vs. 7.5 months today - 53% improvement
Over 400,000: May 08' - 24 months vs. 15.5 months today - 35% improvement
In terms of market activity, financial distressed sales still make up nearly 80% of all transactions, it is just that the mix has shifted from mainly bank owned to an even mix of bank, short sales and leases. As banks learn the importance of avoiding foreclosure, Short Sales may move to as high as 50% of all transactions. It is important for Sellers to keep in mind that Traditional Retail properties make up over 50% of all listings, yet 20% of all sales, highlighting the importance of getting your price to a level that will draw attention competing with the financially stressed sales. As a Seller, If your home has been on the market during the past four months and has not received an offer (in the most active time in the past 6 years) then it is pretty clear your price/condition is out of balance.


For homes under $100,000, if priced right, on average, you can expect an offer in less than 60 days at 96% of asking price. Home that don't, are most likely over priced by over 20% and will remain on the market for another 100+ days. For the $100,000-$400,000 market if the home does not sell in 80 days it is on average over priced by 13% and will stay on the market an additional 100 days as well. The $400,000 market on average will take 5 months to sell for 90% of asking price. If it missed that market, then it will likely remain on the market for another 7 months and will be over priced by 27%. The overall conclusion regardless of price range is if a Seller is not getting offers within the "No Price Reduction" market times, a fast price adjustment is in order.