As the first quarter came to a close, Realtors across Michigan’s Great Southwest continue to be pulled between euphoria and fear as sales records continue to be made even as inventory continues to fall.
Southwestern Michigan Association of Realtors Executive Alan Jeffries says, “At the end of the first quarter of 2021, the local housing market continues to keep its robust pace while selling prices increased monthly and setting new records in the year-over-year comparison that looks back to 2006.”
Jeffries reports that the average selling price month-over-month from February of 2021 to March of 2021 increased 26-percent from $265,892 to $335,662. The number of houses sold in February was 200, and in March, 278 houses were sold for a 39-percent increase from one month to the next, however, year-over-year the March figure slipped minimally from 285 homes sold a year ago to 278 last month, representing a 3-percent decrease.
Despite that small fall-off in March, as the first quarter of 2021 came to a close a total of 749 houses have been sold, once again setting a new sales record. The previous record had been the 675 houses sold by the end of the first quarter of 2017.
All of those numbers create euphoria for the real estate market locally. The fear factor comes from the seemingly never-ending fall-off in available inventory. In fact, the current inventory of houses for sale in Southwest Michigan once again dropped 45-percent from what was on the market a year ago. With just 665 homes on the market currently, as compared to 1,214 homes for sale a year ago, the inventory for sale is now down to just 2.5-months of inventory available for buyers. By way of comparison, at the end of the first quarter in 2020, the market had a 4.9-months supply of houses for sale, and if you go back to March of 2009, there were 2,969 houses for sale in the region.
Jeffries reports that selling prices have continued to set new record levels each month here in 2021. The average selling price in March of 2021 was $335,662 as compared to $221,734 a year ago in March of 2020, marking a 51-percent increase. Year-to-date selling prices at the end of the first quarter also set records in the year-over-year comparison. The year-to-date average selling price in March of 2021 has increased 37-percent over March of 2020 ($303,233 vs. $221,825).
The median selling price in March 2021 increased 13-percent to $202,875 from $180,000 in March of 2020. Year-to-date, the median selling price soared 13-percent ($198,000 vs. $175,000). The median selling price and year-to-date median selling price also set new record prices in the month of March in year-over-year comparisons.
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
Even with fewer houses sold, the record-setting selling prices pushed the total dollar volume up by 72-percent in March of 2021 to $93,314,197 as compared to $54,103,134 a year ago. The monthly and year-to-date total dollar volume set new records for the dollar volume at the end of the first quarter as well ($227,114,925 vs. $136,422,547).
The number of bank-owned or foreclosed homes as a percentage of all transactions was 3-percent in February and stayed the same in March. In January, the rate was 4-percent. The previous lowest percentage in a month of March was 7-percent in March of 2018. The highest percentage of foreclosed homes in a month of March was 60-percent, set back in 2009.
Locally, the mortgage rate was 3.146, down from 3.18 in February. Last year in March, the rate was 3.635. Nationally, the Freddie Mac mortgage rate in March was 3.18, up slightly from 2.97 in February for a 30-year conventional mortgage.
The data provided in the report from the SWM Association of Realtors reflects home sales across Allegan, Berrien, Cass, and the westerly 2/3rds 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 are encouraged to contact your local Realtor.
Jeffries also continues to offer tips to both those selling a home and those who are buying:
- When Selling a Home…
Your Realtor has the expertise and local knowledge to advise on how to price your house, so it doesn’t languish on the market.
Here are four pitfalls that you can fall into and potential consequences when setting your price.
#1 Pitfall: Thinking your house is so great that you list it at too high a price. You’ll lose your most important leverage and timing of a new listing. The longer your house sits on the market, the less likely you will get your asking price.
#2 Pitfall: Assuming upgrades will get you a higher price. Upgrades don’t always equal value. In fact, research from the National Association of Realtors shows you might recoup 59-percent of your costs.
#3 Pitfall: Setting a dollar amount you need to make. The number you have in your head may not be in line with the market. This is where your Realtor’s knowledge of the local housing market and how your home compares to others in the area should be your guide for price setting.
#4 Pitfall: Letting emotions get the best of you. Listen to your Realtor on how to price your home. You need an outside perspective to give you the market analysis to price your home. The toughest thing is to think with your head and not with your heart when pricing your home for sale.
- When Buying a Home…
The answer to whether closing costs are tax-deductible — or mortgage interest and property taxes for that matter — is, “It depends.”
Basically, you’ll want to itemize if you have deductions totaling more than the standard deduction, which is $12,200 for single people and $24,400 for married couples filing jointly. Every taxpayer gets this deduction, homeowner or not. And most people take it because their actual itemized deductions are less than the standard amount.
Here’s the list of one-time home purchase costs that are not tax-deductible:
- Real estate taxes charged to you when you closed
- Mortgage interest paid when you settled
- Some loan origination fees (points) applicable to a mortgage of $750,000 or less.
Costs of closing on a home that aren’t tax deductible include:
- Real estate commissions
- Appraisals
- Home inspections
- Attorney fees
- Title fees
- Transfer taxes
- Mortgage refinance fees
Mortgage interest and property taxes are annual expenses of owning a home that may or may not be deductible. You should consult with a tax advisor before filing to maximize your deductions and confirm that you have deductions that exceed your maximum.
To view properties that are for sale in the local area, you can go to http://www.swmar.com, and click on “Search.” The Southwestern Michigan Association of Realtors, Inc. is a professional trade association for real estate professionals who are members of the National Association of Realtors, and ancillary service providers for the real estate industry in Allegan, Berrien, Cass, and Van Buren Counties. The Association can be contacted at 269-983-6375.
