The combination of unseasonably warm fall weather and rapidly vanishing inventory continued to motivate buyers at a record-setting pace last month in Michigan’s Great Southwest making October 2017 the 10th month of the year to smash all previous records set both a year ago and reaching back to the historical benchmark highs set 11 years ago in 2006.
Allan Jeffries is Association Executive for the Southwestern Michigan Association of Realtors, Inc. He’s convinced that the one-two combo of a warm fall and very tight housing supply have kept the record streak roaring onward this year.
Jeffries tells us, “The number of houses sold in October 2017 increased 9-percent to 354 over 326 in October 2016. Year-to-date, the number of houses sold increased 5-percent (3,167 vs. 3,007).”
Meanwhile, Jeffries notes that the same tight housing supply exacerbates the market, saying, “The inventory of houses for sale dropped 12-percent to 1,830 in October 2017 from 2,069 houses for sale in October 2016. The local inventory has dropped by double digits for the last three years. At the end of October the inventory dropped to 5.9-months supply. In 2010 that same inventory level was at a 16.6-months supply.”
In October, the average selling price rose 18-percent to $238,088 from $201,242 a year earlier in October 2016. Year-to-date, the average selling price increased 9-percent ($217,718 vs. $200,425).
The October 2017 median selling price was up 6-percent at $156,113 compared to $146.800 a year ago. For the second month in a row, the year-to-date median selling was $155,000 vs. $140,000 in 2016.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Higher selling prices in October fueled a 28-percent increase in the total dollar volume ($84,283,224 vs. $65,606,024). Year-to-date, the total dollar volume climbed 14-percent from $602,680,254 in October 2016 to $689,513,153 in October 2017.
For six months the number of bank-owned or foreclosed homes as a percentage of all transactions has held steady from 4-to 6-percent. In October the percentage was 6-percent.
The previous lowest percentage in October was 8-percent in 2016. The highest percentage in October was 34-percent in 2009.
Locally, the mortgage rate increased slightly to 4.125 from 3.938-percent in September. Last year in October, the rate was 3.58. Nationally, the Freddie Mac mortgage rate in October was 3.94 versus 3.83 in September for a 30-year conventional mortgage.
According to the National Association of Realtors, existing-home sales increased in October to their strongest pace since earlier this summer, but continued supply shortages led to fewer closings on an annual basis for the second straight month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0-percent to a seasonally adjusted annual rate of 5.48 million in October from a downwardly revised 5.37 million in September. After last month’s increase, sales are at their strongest pace since June (5.51 million), but still remain 0.9-percent below a year ago on a national level.
Lawrence Yun is Chief Economist for the National Association of Realtors. He says sales activity in October picked up for the second straight month, with increases in all four major regions, noting, “Job growth in most of the country continues to carry on at a robust level and is starting to slowly push up wages, which is in turn giving households added assurance that now is a good time to buy a home.” He adds, “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”
Yun adds, “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida, however, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”
The median existing-home price for all housing types in October was $247,000, up 5.5-percent from October 2016 ($234,100). October’s price increase marks the 68th straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest sales inched forward 0.8-percent to an annual rate of 1.31 million in October, but are still 1.5-percent below a year ago. The median price in the Midwest was $194,700, up 7.1-percent from a year ago.
First-time buyers were 32-percent of sales in October, which is up from 29-percent in September, but down from 33-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.
NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty, says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the U.S.
Mendenhall tells us, “Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers.” She adds, “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.”
All-cash sales were 20-percent of transactions in October, unchanged from September and down from 22-percent a year ago. Individual investors, who account for many cash sales, purchased 13-percent of homes in October, down from 15-percent last month and unchanged from a year ago.
Nationally, the total housing inventory at the end of October decreased 3.2-percent to 1.80 million existing homes available for sale, and is now 10.4-percent lower than a year ago (2.01 million) and has fallen year-over-year for 29 consecutive months. Unsold inventory is at a 3.9-month supply at the current sales pace, which is down from 4.4 months a year ago.
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.
The Southwestern Michigan Association of Realtors, Inc. is a professional trade association for real estate licensees who are members of the National Association of REALTORS and ancillary service providers for the real estate industry in Berrien, Cass and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at www.swmar.com.
