When the head of the local Realtors association benchmarks the current sales trend, one measure he always uses for comparison purposes is the peak period of 2006 and 2007 when the market for homes in Michigan’s Great Southwest was hitting on all cylinders. So, when you can match or beat that peak period, you know that the market is performing exceptionally well. Such was the case again in April according to Gary Walter, Executive Vice President of the Southwestern Michigan Association of Realtors, Inc.
Walter tells us, “The housing market since February has continued month-over-month increases in the number of houses sold and selling prices. The housing inventory level increased a very small amount over the same time period. Overall, the housing market in April was very comparable to the market results in April of the peak years of 2006 and 2007.” That’s excellent news for the housing market and Walter quickly adds, “Another positive for the local market in April was the drop in the number of foreclosed or bank-owned properties as a percentage of all closed transactions.”
Walter reports that the number of houses sold in April increased 10-percent over April 2015 (266 vs. 242). He says sales in April were within range of those in April 2006 (287) and April 2007 (271), while year-to-date, the local housing market closed sales were ahead of April 2015 by 11-percent (890 vs. 801) and significantly ahead of the peak years in April when the number of houses sold were 691 and 622 for 2006 and 2007 respectively.”
The total dollar volume for April was up 10-percent; rising from $45,091,173 in 2015 to $49,450,607 in April 2016. Year-to-date, the total dollar volume was up 12-percent ($158,082,544 vs. $141,420, 656). Equally important, the year-to-date, total dollar volume in April was the highest amount in the association’s year-over-year comparison dating all the way back to 2006.
The average selling price in April and year-to-date average selling price were almost even with April 2015. The average selling price was $186,172 in April 2016 compared to $186, 327 in April 2015. The year-to-date average selling price increased slightly to $177,620 in 2016 from $176,555 in 2015.
The median selling price of $140,000 in April was up 1-percent over $138,250 set in April 2015. From March the median selling price increased 11-percent ($140,000 vs. $125,900). The year-to-date median selling price was up 6-percent from a year ago ($128,500 vs. $121,750). Again reflecting the strong nature of the current market, the median selling price in April and the year-to-date median selling price were the highest median prices in the year-over-year comparison back to 2006.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Since April 2010, the housing inventory has dropped by almost 1,500 houses. The housing inventory in April 2016 was down 9-percent from the number of houses for sale in the April 2015 (2,134 vs. 2,334). At the current level of inventory, there is a 7.6-months supply of houses. In 2010, the inventory level was 15.8-months supply.
The number of bank-owned or foreclosed homes as a percentage of all transactions in the market dropped to 11-percent in April from 20-percent in March. The percentage in April was the lowest percentage for the year and the lowest in the month of April since 2009 when the percentage was 54-percent.
Locally, the mortgage rate declined to 3.73 from 3.84-percent in March. Last year in April, the rate was at 3.83. Nationally, the Freddie Mac mortgage rate in April was 3.61-percent compared to 3.67-percent in March for a 30-year conventional mortgage.
According to the National Association of Realtors – Despite ongoing inventory shortages and faster price growth, existing-home sales sustained their recent momentum and moved higher for the second consecutive month. A surge in sales in the Midwest and a decent increase in the Northeast offset smaller declines in the South and West.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.7-percent to a seasonally adjusted annual rate of 5.45 million in April from an upwardly revised 5.36 million in March. After last month’s gain, sales are now up 6.0-percent from April 2015.
Lawrence Yun is Chief Economist for the National Association of Realtors. He says April’s sales increase signals slowly building momentum for the housing market this spring. He notes, “Primarily driven by a convincing jump in the Midwest, where home prices are most affordable, sales activity overall was at a healthy pace last month as very low mortgage rates and modest seasonal inventory gains encouraged more households to search for and close on a home.” He adds, “Except for in the West — where supply shortages and stark price growth are hampering buyers the most — sales are meaningfully higher than a year ago in much of the country.”
The median existing-home price for all housing types in April was $232,500, up 6.3-percent from April 2015 ($218,700). April’s price increase marks the 50th consecutive month of year-over-year gains.
Yun goes on to report that “The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow.”
As Yun puts it, “Looking ahead, with demand holding steady and supply levels still far from sufficient, the market for entry-level and mid-priced homes will likely continue to be the most competitive heading into the summer months.”
Regionally, existing-home sales in the Midwest soared 12.1-percent to an annual rate of 1.39 million in April, and are now 12.1-percent above April 2015. The median price in the Midwest was $184,200, up 7.7-percent from a year ago.
The share of first-time buyers was 32-percent in April, up from 30-percent both in March and a year ago. First-time buyers in all of 2015 also represented an average of 30 percent.
At last week’s 2016 REALTORS Legislative Meetings & Trade Expo, U.S. Housing and Urban Development Secretary Julian Castro announced beneficial changes to FHA condo rules, which could help many first-time buyers, are moving forward and are currently at the Office of Management and Budget for review.
Tom Salomone, President of the National Association of Realtors says, “Secretary Castro’s update that the condo rule changes are in their final stages before implementation received great applause from Realtors both at the forum and throughout the country.” Salomone, a broker-owner of Real Estate II Inc. in Coral Springs, Florida adds, “To ensure that purchasing a condo increasingly becomes a viable and affordable option for first-time buyers, NAR supports the ongoing efforts to eliminate unnecessary barriers holding back condo sales. We hope that progress on this condo rule means we’ll see some much-needed changes in the near future.”
All-cash sales were 24-percent of transactions in April, down from 25-percent in March and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 13-percent of homes in April (matching the lowest share since October 2015), down from 14-percent both in March and a year ago. Sixty-nine-percent of investors paid cash in April.
Nationally, the total housing inventory at the end of April increased 9.2-percent to 2.14 million existing homes available for sale, but is still 3.6-percent lower than a year ago (2.22 million). Unsold inventory is at a 4.7-month supply at the current sales pace, up from 4.4 months in March.
The numbers reported for local sales include residential property in Berrien, Cass and the westerly 2/3 of Van Buren counties and should not be used to determine the market value of any individual property. If you want to know the market value of your property, you should contact your local Realtor.
