While the Southwest Michigan housing market continued to set a solid pace year-over-year, July saw the market take a bit of a breather in both the number of homes sold compared to the previous month and pricing, too…where the average price slipped by fully 12-percent.
Gary Walter is Executive Vice President of the Southwestern Michigan Association of Realtors. He says, “For the last three months we have been setting records for number of houses sold, total dollar volume and or selling prices when compared back to 2006, the peak market year for our local market.” He adds, “In July 2016, the total dollar volume, median selling price and the year-to-date average and median selling prices for the month of July were the highest in the year-over-year comparison.”
However, Walter tells us that the July numbers dipped below the number of houses sold, total dollar volume and selling prices that had been recorded in June. He says, “The number of houses sold dropped 5-percent from June (331 vs. 348). The average selling price fell 12-percent ($206,179 vs. $223,871).”
Comparing July 2016 to July 2015, the number of houses sold decreased 4-percent (331 vs. 344). While year-to-date the number of houses sold was up 8-percent (1,926 vs. 1,784).
Even with the sales decline from a year ago, higher selling prices increased the total dollar volume for July 2016 by 4-percent ($68,245,498 vs. $65,536,372). The July 2016 total dollar volume was the highest in the region’s year-over-year comparison dating back to July 2006.
The average selling price last month, in July 2016, was $206,179 compared to $190,513 in July 2015 for an 8-percent increase. The median selling price was up 15-percent in July 2016 ($155,000 vs. $135,000). This median selling price set the record as the highest for a month of July since 2006.
Year-to-date, the total dollar volume was up 12-percent ($378,353,923 vs. $336,844, 927). The year-to-date average selling price of $196,445 was up 4-percent over July 2015 ($188,814) and also was the highest year-to-date average selling price since 2006. The year-to-date median selling price was up 5-percent and became the highest year-to-date median selling price in the year-over-year comparison ($137,000 vs. $131,000).
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
At the end of July with 2,409 houses on the market, the market had an 8.4-months supply of housing inventory at the current selling pace. A year ago in July, the market enjoyed a 10.2-months supply of houses for sale to buyers (2,698).
The number of bank-owned or foreclosed homes as a percentage of all transactions in the market increased to 10-percent in July. This was up from 9-percent in June. The lowest percentage in 2015 was 9-percent. The highest percentage, in February 2009 was 75-percent.
Locally, the mortgage rate dropped to 3.50 from 3.65 in June. In July 2015, the rate was 4.19. Nationally, the Freddie Mac mortgage rate in July was 3.44 compared to 3.57 in June 2016.
According to the National Association of Realtors – Existing-home sales lost momentum in July and decreased year-over-year for the first time since November 2015 due to frustratingly low inventory levels in many parts of the country. Only the West region saw a monthly increase in closings in July.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.2-percent to a seasonally adjusted annual rate of 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months, sales are now below (1.6-percent) a year ago (5.48 million).
Lawrence Yun is Chief Economist for the National Association of Realtors. He says existing sales fell off track in July after steadily climbing the last four months, noting, “Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month.” He adds, “Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
Yun reports, “Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand.” He points out, “As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace.”
The median existing-home price for all housing types in July was $244,100, up 5.3-percent from July 2015 ($231,800). July’s price increase marks the 53rd consecutive month of year-over-year gains.
Regionally, existing-home sales in the Midwest fell 5.2-percent to an annual rate of 1.28 million in July (unchanged from a year ago). The median price in the Midwest was $194,000, up 5.0-percent from a year ago.
The share of first-time buyers was 32-percent in July, which is below last month (33-percent) but up from 28-percent a year ago. First-time buyers represented 30-percent of sales in all of 2015.
All-cash sales were 21-percent of transactions in July, down from 22-percent in June, 23-percent a year ago and the lowest share since November 2009 (19-percent). Individual investors, who account for many cash sales, purchased 11-percent of homes in July, unchanged from June and down from 13-percent a year ago. Seventy percent of investors paid in cash in July.
NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says in addition to affordability concerns, an issue seen earlier in the housing recovery may be reemerging. Realtors are indicating that appraisal complications are appearing more frequently as the reason why a contract signing experienced a delayed settlement.
Salomone tells us, “Appraisal-related contract issues have notably risen over the past year and were the root cause of over a quarter of contract delays in the past three months.” He adds, “This is likely a combination of sharply growing home prices in some areas, the uptick in home sales this year and the strong refinance market overworking the already reduced number of practicing appraisers. Realtors are carefully monitoring this trend, and some have already indicated they’re extending closing dates on contracts to allow extra time to accommodate the possibility of appraisal-related delays.”
Nationally, the total housing inventory at the end of July inched 0.9-percent higher to 2.13 million existing homes available for sale, but is still 5.8-percent lower than a year ago (2.26 million) and has now declined year-over-year for 14 straight months. Unsold inventory is at a 4.7-month supply at the current sales pace, which is up from 4.5 months in June.
