Whether it was simply the style or location of the homes being sold or an honest to goodness price break for those in search of housing, the real estate market in Michigan’s Great Southwest saw a bit of price erosion last month even as new benchmarks are set for number of houses sold and other key stats.
At any rate, Alan Jeffries, who serves as Association Executive for the Southwestern Michigan Association of Realtors says, “After four months of selling prices holding fairly steady, the average and median selling prices dropped,” in August. He says the average selling price in August fell 12-percent from one month earlier in July ($196,723 vs. 224,705) while the median selling price slipped 3-percent ($159,500 vs. $164,819) over the same period.
Despite the lower prices, Jeffries says, “We continued to see new benchmarks set in 2017 where the number of houses sold in August, number of houses sold year-to-date, total dollar volume, year-to-date average selling price, August median selling price and year-to-date median selling price outpace previous market years back to 2006.”
The number of houses sold in August was the highest so far this year, with 418 sold. In July, only 330 homes were sold.
Looking at the year-to-year picture, the number of houses sold increased 8-percent over the number of houses sold in August 2016 (418 vs. 388). Year-to-date, the number of houses sold was up 6-percent with 2,442 this year compared to 2,314 in 2016.
Even with more houses selling in August 2017, the total dollar volume was very close to that in August 2016 ($82,230,523 vs. $81,956,166), largely thanks to those lower prices. Additionally, year-to-date, the total dollar volume was down 7-percent at $429,465,503 at the end of August 2017 compared to $460,371,934 in 2016.
The average selling price in August was $196,723 which was a 7-percent decline from August 2016 when the average selling price was $211,227. Year-to-date, however, the average selling price was up 5-percent ($209,539 vs. $198,950).
The median selling price of $159,500 in August 2017 was a 9-percent increase over the $146,700 set in August 2016. Year-to-date the median selling price rose 10-percent to $153,500 from $139,900 in 2016.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
The active listing of homes for sale decreased another 14-percent at the end of August 2017 with 2,036 homes for sale compared to 2,363 homes for sale a year earlier in August 2016. This kept the 6.6- months supply of homes for sale the same as in July. The lack of inventory becomes more significant when the inventory level was 3,821 in August 2009 compared to 2,036 in August 2017. That translates to a whopping 47-percent decline in inventory.
The number of bank-owned or foreclosed homes as a percentage of all transactions remained at the lowest level, 4-percent, in August. The previous lowest percentage in August was 10-percent, a year ago in 2016. The highest percentage in August (2009) was 36-percent.
Locally, the mortgage rate dropped slightly to 3.975 from 4.06-percent in July. Last year in August, the rate was 3.56. Nationally, the Freddie Mac mortgage rate in August was 3.82 versus 3.92-percent in July for a 30-year conventional mortgage.
According to the National Association of Realtors, existing-home sales stumbled in August for the fourth time in five months as strained supply levels continue to subdue overall activity, while sales gains in the Northeast and Midwest were outpaced by declines in the South and West.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, retreated 1.7-percent to a seasonally adjusted annual rate of 5.35 million in August from 5.44 million in July. Last month’s sales pace is 0.2-percent above last August, and is the lowest since then.
Lawrence Yun, is Chief Economist for the National Association of Realtors. He says the slump in existing sales stretched into August despite what remains a solid level of demand for buying a home. He says, “Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales.” He adds, “What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country. Sales have been unable to break out because there are simply not enough homes for sale.”
Additionally, Yun reports, “Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018.”
The median existing-home price for all housing types in August was $253,500, up 5.6-percent from August 2016 ($240,000). August’s price increase marks the 66th straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest rose 2.4-percent to an annual rate of 1.28 million in August, and are now 0.8-percent above a year ago. The median price in the Midwest was $200,500, up 5.0-percent from a year ago.
First-time buyers were 31-percent of sales in August, which is down from 33-percent in July and is the lowest share since last August (also 31-percent). NAR’s 2016 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 35-percent.
Yun contends that, “Market conditions continue to be stressful and challenging for both prospective first-time buyers and homeowners looking to trade up.” He notes, “The ongoing rise in home prices is straining the budgets of some of these would-be buyers, and what is available for sale is moving off the market quickly because supply remains minimal in the lower- and mid-price ranges.”
All-cash sales were 20-percent of transactions in August, up from 19-percent in July but down from 22-percent a year ago. Individual investors, who account for many cash sales, purchased 15-percent of homes in August, up from 13-percent in July and 12-percent a year ago.
Nationally, the total housing inventory at the end of August declined 2.1-percent to 1.88 million existing homes available for sale, and is now 6.5-percent lower than a year ago (2.01 million) and has fallen year-over-year for 27 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.5 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.
