Remember when we launched the new year in January with higher sales and lower prices as compared to a year earlier in Michigan’s Great Southwest? Yeah, well, flip those statements and you’ve got the picture for February when sales plummeted and sales hit record highs.
Alan Jeffries, Association Executive for the Southwestern Michigan Association of Realtors says, “Southwest Michigan’s housing market in January started the year off with higher sales and lower prices when compared to January 2019, but at the end of February, the opposite happened.” Jeffries says, “The number of house sales dropped significantly, and selling prices set new record prices when compared to February 2019.”
Jeffries tells us the number of houses sold in February dropped to 181 from 235 sold in February 2019 for a 23-percent decrease. Year-to-date, February fell 10-percent over February 2019 (371 vs. 410). In the year-over-year comparison back to 2006, February 2019 remains the highest number of sales overall.
Meanwhile, Jeffries points out, “Selling prices leaped double digits this February compared to a year ago.”
The average selling price in February 2020 was $222,938 compared to $199,433 in February 2019, up 12-percent. Year-to-date, the average selling price was up 11-percent ($221,885 vs. $199,304). The average selling price and year-to-date average selling price set new record prices in the month of February in the year-over-year comparison.
The median selling price in February 2020 soared 30-percent to $182,500 from $140,000 in February 2019. Year-to-date, the median selling price climbed 24-percent ($173,000 vs. $139,450). The median selling price and year-to-date median selling price also set new record prices in the month of February in the year-over-year comparison.
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
With fewer houses sold, the total dollar volume, even with higher selling prices, was down 14-percent in February 2020 ($40,351,946 vs. $46,866,871). However, with January’s input, the total dollar volume year-to-date was up 12-percent ($82,319,414 vs. $81,714,888) and set a new record in the year-over-year comparison.
The inventory of houses for sale dropped just 2-percent from February 2019 (1,201 vs. 1,229). That level gave the market a 4.9-months supply of houses for buyers. By way of comparison, in February 2009, there were 3,099 houses for sale.
The number of bank-owned or foreclosed homes as a percentage of all transactions remained the same as January at 7-percent. The previous low percentage was 6-percent in February of 2019. The highest percentage in February was 75-percent in 2009.
Locally, the mortgage rate was 3.438 in February, down from 3.589 in January. Last year in February, the rate was 4.57. Nationally, the Freddie Mac mortgage rate in February was 3.45 down from 3.51 in January for a 30-year conventional mortgage.
Nationally, according to the National Association of Realtors, existing-home sales climbed substantially in February after a slight decline in January. Of the four major regions, only the Northeast reported a drop in sales, while other areas saw increases, including sizable sales gains in the West.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose 6.5-percent from January to a seasonally-adjusted annual rate of 5.77 million in February. Additionally, for the eighth straight month, overall sales greatly increased year-over-year, up 7.2-percent from a year ago (5.38 million in February 2019).
Lawrence Yun, Chief Economist for the National Association of Realtors, says, “February’s sales of over 5 million homes were the strongest since February 2007,” adding, “I would attribute that to the incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years.”
Yun noted that February’s home sales were encouraging but not reflective of the current turmoil in the stock market or the significant hit the economy is expected to take because of the coronavirus and corresponding social quarantines, noting, “These figures show that housing was on a positive trajectory, but the coronavirus has undoubtedly slowed buyer traffic, and it is difficult to predict what short-term effects the pandemic will have on future sales.”
The median existing-home price for all housing types in February was $270,100, up 8.0-percent from February 2019 ($250,100), as prices rose in every region. February’s price increase marks 96 straight months of year-over-year gains.
Regionally, compared to the month prior, February sales increased in the Midwest, the South and the West, while year-over-year sales are up in each of the four regions. Median home prices in all regions increased from one year ago, with the Northeast and South regions showing the strongest price gains.
Existing-home sales increased 0.8-percent in the Midwest to an annual rate of 1.29 million, up 4.0-percent from a year ago. The median price in the Midwest was $203,700, a 7.9-percent increase from February 2019.
First-time buyers were responsible for 32-percent of sales in February, equal to the percentages seen in both January 2020 and in February 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 2019 – revealed that the annual share of first-time buyers was 33-percent.
Yun says, “For the past couple of months, we have seen the number of buyers grow as more people enter the market,” adding, “Once the social-distancing and quarantine measures are relaxed, we should see this temporary pause evaporate, and will have potential buyers return with the same enthusiasm.”
While offering a definitive forecast is extremely difficult in light of this national and global emergency, Yun says home prices will hold on well, suggesting, “Unlike the stock market, home prices are not expected to drop because of the on-going housing shortage and due to homes getting delisted during this time of crisis.”
Individual investors or second-home buyers, who account for many cash sales, purchased 17-percent of homes in February, equal to January and up slightly from 16-percent in February of 2019. All-cash sales accounted for 20-percent of transactions in February, down from both 21-percent in January and from 23-percent in February of 2019.
Nationally, the total housing inventory at the end of February totaled 1.47 million units, up 5.0-percent from January, but down 9.8-percent from one year ago (1.63 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, equal to the supply recorded in January and down from the 3.6-month figure recorded in February of 2019.
National Association of Realtors President Vince Malta, broker at Malta & Co., Inc., in San Francisco, says, “In the midst of this national emergency, NAR has been and will continue to be in contact with Congressional leaders and White House officials as they consider various policies to ease the economic impact of the coronavirus,” and adds, “NAR is engaged in these discussions and presenting proposals that will support real estate and the people that make up the industry.”
Malta notes, “It is truly inspiring to see so many of our fellow Realtors and brokerages adjust on the fly,” and suggests, “Agents nationwide are keeping interest alive with innovative technologies, holding virtual open houses and computer-generated tours.”
The numbers reported for local sales include residential property in 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 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 Allegan, Berrien, Cass, and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at www.swmar.org.