If the local housing market continues to surge in December in Michigan’s Great Southwest, local Realtors will have to give strong consideration to re-aligning their benchmark “peak performance year” to 2016. That’s the suggestion of Executive Director Philip Amodeo at the Southwestern Michigan Association of Realtors, Inc. The current benchmark “best year ever” is essentially considered to be 2006, but 2016 has challenged those numbers month after month with only a few exceptions.
November home sales resumed the record pace after an October breather according to Amodeo who says, “In November, the housing market activity continued to break records in monthly and year-to-date numbers and prices. When comparing numbers on a monthly and year-to-date basis, we have looked back to 2006 as our peak year. In 2008 through 2010, we saw numbers and prices decline. From 2011 until now the market has slowly rebuilt itself. If the market continues to surge through December, we may need to realign our trend watch to set 2016 as the new peak year.”
Amodeo tells us that at the end of November, Realtors found themselves “just six houses shy of the number of houses sold in all of 2015 (3,296 vs. 3,302).” He adds, “This narrow gap was an 8-percent gain over the year-to-date standing in November 2015 (3,296 vs. 3,050). In November 2016, there were 289 houses sold compared to 222 houses sold in November 2015 for a 30-percent increase. Looking at the number of houses sold in the year-to-year comparison for the month of November and year-to-date, both numbers set new records.”
Amodeo continued, “The average time a home was on the market before it sold in November was 114 days compared to 131 days in November 2015. This was a 13-percent decrease. Year to date, the time on market has dropped from 134 days to 119, an 11-percent decline. This is a positive trend, indicating that homes are selling at a faster pace than recent years.”
The total dollar volume for November and year-to-date also smashed records. In November 2016 the total dollar volume at $57,523,192 soared past the $41,290,231 set in November 2015 by 39-percent. Year-to-date, the total dollar volume has grown 12-percent ($660,221,446 vs. $591,168,380).
The average selling price in November increased to $199,042 from $185,992 in November 2015 for a 7-percent climb. The November average selling price was the only housing market factor that did not break the record in the year -to-year comparison. However, the year-to date average selling price at $200,309 was the highest average selling price in the past eleven years. The year-to date average selling price in 2016 was up 3-percent over 2015 ($200,309 vs. $193,566).
The median selling price in November rose 14-percent to $137,000 from $120,000 in November 2015. Year-to-date, the median selling price was up 4-percent ($140,000 vs. $134,000). Both median selling prices, in November and year-to-date, raised the bar in the year-to-year comparison. 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 November, there were 1,877 houses on the market compared to 2,169 in November 2015. At that inventory level, the local housing market had a 6.3-months supply of homes for homebuyers. The inventory declined from 7.9-months supply in November 2015 and was down from the 7.1-months supply in October 2016.
The number of bank-owned or foreclosed homes as a percentage of all transactions in the market increased to 12-percent from 8-percent in October. Since April the percentage has ranged from 8-to-12-percent. The percentage peak this year was 20-percent in March. The highest percentage, in February 2009, was 75-percent.
Locally, the mortgage rate jumped to 3.92 from 3.58 in October. In November 2015, the rate was 4.1. Nationally, the Freddie Mac mortgage rate in November rose to 4.03 compared to 3.47 in October 2016.
According to the National Association of Realtors – A big surge in the Northeast and a smaller gain in the South pushed existing-home sales up in November for the third consecutive month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.7-percent to a seasonally adjusted annual rate of 5.61 million in November from a downwardly revised 5.57 million in October. The November sales pace was the highest since February 2007 (5.79 million) and was 15.4-percent higher than a year ago (4.86 million).
Lawrence Yun is Chief Economist for the National Association of Realtors. He says it’s been an outstanding three-month stretch for the housing market as 2016 nears the finish line. He reports, “The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months.” He adds, “Furthermore, it’s no coincidence that home shoppers in the Northeast — where price growth has been tame all year — had the most success last month.”
The median existing-home price for all housing types in November was $234,900, up 6.8-percent from November 2015 ($220,000). The November price increase marked the 57th consecutive month of year-over-year gains.
Regionally, existing-home sales in the Midwest decreased 2.2-percent to an annual rate of 1.33 million in November, but was still 18.8-percent above a year ago. The median price in the Midwest was $180,300, up 6.5-percent from a year ago.
First-time buyers were 32-percent of sales in November, which was down from 33-percent in October but up from 30-percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 35-percent (32-percent in 2015), which was the highest since 2013 (38-percent).
Yun says first-time buyers in higher priced cities will be most affected by rising prices and mortgage rates next year and will likely have to stretch their budget or make compromises on home size, price or location.
William Brown is a Realtor from Alamo, California and serves as President of the National Association of Realtors. He says consumers looking to buy in 2017 should find a Realtor, seek a preapproval from a lender and start their home search now. He points out, “It’s never too early to begin viewing listings online and in person with a Realtor to identify what’s available within the budget and where.” He also reminds us that, “There are fewer available homes during the winter months but also fewer buyers. With mortgage rates and prices expected to increase as the year goes on, the first few months of 2017 could be an opportune time to close on a home.”
All-cash sales were 21-percent of transactions in November, down from 22-percent in October and 27-percent a year ago. Individual investors, who account for many cash sales, purchased 12-percent of homes in November, down from 13-percent in October and 16-percent a year ago. Fifty-eight percent of investors paid in cash in November, which matched the lowest share since August 2009.
Nationally, the total housing inventory at the end of November dropped 8.0-percent to 1.85 million existing homes available for sale, and was 9.3-percent lower than a year ago (2.04 million) and has fallen year-over-year for 18 straight months. Unsold inventory was at a 4.0-month supply at the current sales pace, which was down from 4.3 months in October.
Yun says, “Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017.”He also notes, “Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country.”
