Even as home sales drifted slightly lower again in February, prices in Michigan’s Great Southwest continue to roar, setting a record pace not seen since year-over-year comparisons of a dozen years ago prior to the Great Recession.
Alan Jeffries is Association Executive for the Southwestern Michigan Association of Realtors and he says that while the number of houses sold last month, in February, “was three houses fewer than in February of 2017 (184 vs. 187), the average and media selling prices for the month are up 19-percent and 17-percent respectively.” Jeffries tells us that the increasing in selling prices pushed the total volume up 17-percent, “making it the highest total dollar volume in the year-over-year comparison since 2006.”
Jeffries tells us, “Year-to-date, the number of houses sold was down 4-percent (374 vs 390), and the year-to-date total dollar volume was 2-percent higher than in 2017 ($76,396,204 vs. $74,637,887).” He goes on to point out that “The year-to-date total dollar volume set a record over 2017 to become the highest set in the year-over-year comparison.”
The average selling price in February 2018 was $197,381 compared to $166,520 in February 2017 (a 19-percent increase). Year-to-date, the average selling price was up 7-percent ($204,267 vs. $191,379). Both the monthly and year-to-date average selling prices set records in the year-over-year comparison.
The median selling price in February 2018 jumped 17-percent to $133,250 from $114,000 in February 2017. Year-to-date, the median selling price was up 11-percent ($144,250 vs. $130,000). The year-to-date median selling price beat the previous recorded prices since 2006.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
The slower sales pace can likely still be pinned directly to the unprecedented low inventory available on the open market across Southwestern Michigan. Jeffries says the inventory of houses for sale dropped 13-percent from February 2017. In almost a three county area, there were just 1,313 houses for sale at the end of February compared to 1,512 in February 2017. The market had just 4.2-months supply of houses for buyers. In February 2009, there were 3,099 houses for sale.
The number of bank-owned or foreclosed homes as a percentage of all transactions increased in February to 16-percent from 10.5-percent in January. The previous lowest percentage in February was 13-percent a year ago in 2017. The highest percentage in February was 75-percent in 2009.
Locally, the mortgage rate increased to 4.53 from 4.24-percent in January. Last year in February, the rate was 4.314. Nationally, the Freddie Mac mortgage rate in February was 4.43 up from 4.15 in January for a 30-year conventional mortgage.
According to the National Association of Realtors despite consistently low inventory levels and faster price growth, existing-home sales bounced back in February after two straight months of declines. Sizable sales increases in the South and West offset declines in the Northeast and Midwest.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 3.0-percent to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, sales are now 1.1-percent above a year ago.
Lawrence Yun is Chief Economist for the National Association of Realtors. He says sales were uneven across the country in February but did increase nicely overall. He tells us, “A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump.” He adds, “The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices – especially in the West – shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”
Yun talked about other factors, adding, “The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month. Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”
The median existing-home price for all housing types in February was $241,700, up 5.9-percent from February 2017 ($228,200). February’s price increase marks the 72nd straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest dipped 2.4-percent to an annual rate of 1.22 million in February (unchanged from a year ago). The median price in the Midwest was $179,400, up 4.5-percent from a year ago.
First-time buyers were 29-percent of sales in February, which is unchanged from last month and down from 31- percent a year ago. The organization’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34-percent.
Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty, is President of the National Association of Realtors. She says first-time buyers are seeing stiff competition for the available listings in their price range, noting, “Realtors in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their under-performing share of overall sales to start the year.” Mendenhall adds, “Prospective buyers should start conversations with a Realtor now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”
All-cash sales were 24-percent of transactions in February, which is up from 22-percent in January and the highest since last February (when it was 27-percent). Individual investors, who account for many cash sales, purchased 15-percent of homes in February, which is down from 17-percent in January and unchanged from a year ago.
Nationally, the total housing inventory at the end of February rose 4.6-percent to 1.59 million existing homes available for sale but is still 8.1-percent lower than a year ago (1.73 million) and has fallen year-over-year for 33 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.8 months a year ago).
Looking at financing, Yun says, “Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth.” As a result, he says, “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings.”
The numbers reported for local sales include residential property in Berrien, Cass and the westerly 2/3rds of Van Buren County 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.
