The April Michigan real estate market continued to show the strong activity level just as we had seen during the first quarter. The actual rate of sales on an annualized basis did slow however. It is too early to tell if that change is significant, it could have been weather related. Compared to last April, real estate sales in Michigan were off about 15%, but last April was a peak tax credit month, so a 15% decline is not as bad as it may seem and is certainly not unexpected. In most every metro Detroit real estate market we continue to see six year lows in the Months Supply of Inventory (MSI). The cause of this may be that some of the growth slow down from March to April was simply there were not enough salable homes available on the market to purchase.
Even though home values appear to be strengthening, Sellers will still need to set their prices based on the most current sales activity. A home that was on the market last year at $75,000 over the then current market will still be overpriced today. Home values are bouncing off the bottom of actual comparable sales, not what the asking prices have been. We don't expect prices to jump dramatically (tough appraisal standards will keep a check on that) but there could be some nice bidding wars for well priced and conditioned homes bringing prices off their bottoms from last year.
Another thing to keep in mind is that buyers are still being very picky. Homes that are not updated or in great condition are still sitting on the market or going for below asking price. If possible, a Seller might consider using a FHA 203K rehab loan as a refinance to help fund their updates for a more salable home.
Lately there has been an issue that has gotten some press called the MERS (Mortgage Electronic Registration System) foreclosure problem. The core issue is the willingness for title insurance companies to write a title policy on bank owned homes that used MERS in their foreclosure process. It is too early to tell if this will be a significant issue but there have been a few banks that have taken their homes off the market until they can determine their title insurance status. It may have the effect of squeezing the available home inventory even further and in some cases causing a postponing or canceling of a sale if title insurance cannot be provided to the buyer. For current Sellers it would be a good idea to have your old title policy handy just in case there was a MERS foreclosure in your title history.
Great advice is to be sure you've done your homework prior to an appraisal. Research your comps, including pending sales and be prepared to walk through them with the appraiser at the property. With so many of our strong listings selling at or even above list price, appraisers will find it tough to keep up with the market without our help. Also, it is a great idea to council Home Buyers on the most active listings that they will need to make up the difference between the agreed price and the appraised value if they want to win the bidding war on the home.
It is tough to tell just how much of the increasing activity could be a temporary spike vs. a permanent market uptick. We are certainly one of the strongest real estate markets in the country. Regardless of which it might be, the strong activity makes this the best time to have your home on the market since 2005! So for anyone who is considering selling their home in the next 12 months, act now and act fast. Demand is rising, inventories are low as are interest rates.
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