Sky-Rocketing Prices Prevail as Winter Chills Housing Volumes in SW Michigan

"Ole Man Winter" is being blamed for putting "a chill" on housing sales in Michigan's Great Southwest, as sales dropped by 18-percent in November from the previous month and 10-percent from the same month a year ago. Nevertheless, while winter chilled volumes, low inventories heated prices to record levels.

Alan Jeffries, Association Executive for the Southwestern Michigan Association of Realtors based in St. Joseph, says the number of homes sold in the region dropped from 324 in October to 266 in November, also falling short of last November's pace of 295 home sales. Jeffries says another serious issue -- one that has been exacerbating performance all year long -- is that, "From the end of October to the end of November 2018, the number of houses on the market dropped by 198 homes." He adds, "Comparing inventory levels at the end of November, there was a 4- percent decrease from a year ago (1,539 vs. 1,601).”

Calling it the chill of "Ole Man Winter," Jeffries says the upside for sellers is that, “Buyers, faced with the shrinking inventory, paid the highest average and median selling prices in November in our market’s year-over-year comparison back to 2006." He points out that, "Year-to-date average and median selling prices in November 2018 also were the highest reached in the comparison. The higher selling prices pushed the November and year-to-date total dollar volumes to record high amounts.”

The November 2018 average selling price sky-rocketed 25-percent to $253,290 from $202,582 in November 2017.  The year-to-date, average selling price of $233,720 was 8-percent increase over the $216,372 year-to-date average selling price in November 2017.

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The median selling price increased 11-percent in November 2018 from November 2017 ($178,250 vs. $160,000).  Year-to-date, the median selling price was up 6-percent ($165,000 vs. $155,000).

The median price is the price at which 50% of the homes sold were above that price and 50% were below.

Even with 29 fewer homes sold this November, the total dollar volume rose 13-percent from November 2017 ($67,375,183 vs. $59,761,638). Year-to-date, total dollar volume was up 4-percent from November 2017 ($776,417,966 vs. $748,862,791).

The inventory of houses for sale decreased 4-percent from a year ago (1,539 vs. 1,601).  At the end of November there was a 6-month supply of houses for sale; up slightly from 5.7-months' supply at the end of November 2017.  In November 2010 the inventory of houses for sale was 3,160 or a 15.8-month supply.

The number of bank-owned or foreclosed homes as a percentage of all transactions in November was 6-percent; up slightly from the 5-percent in October. The percentage of bank-owned or foreclosed homes has been less than 8-percent since March. The highest percentage in November was 36-percent in 2010.

Locally, the mortgage rate increased to 5.017 from 4.937 in October. Last year in November, the rate was 4.063.  Nationally, the Freddie Mac mortgage rate in November was 4.81 down slightly from 4.83 in October for a 30-year conventional mortgage.

Meanwhile, on the national scene, according to the National Association of Realtors existing-home sales increased in November marking two consecutive months of increases.  Three of four major U.S. regions saw gains in sales activity last month.

Total existing-home sales, which are completed transactions that include single-family homes, town-homes, condominiums and co-ops, increased 1.9-percent from October to a seasonally adjusted rate of 5.32 million in November. Sales are now down 7.0-percent from a year ago (5.72 million in November 2017).

Lawrence Yun is Chief Economist for the National Association of Realtors. He says two consecutive months of increases is a welcomed sign for the market, adding, “The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago. Rising inventory is clearly taming home price appreciation.”

The median existing-home price for all housing types in November was $257,700, up 4.2 percent from November 2017 ($247,200). November’s price increase marks the 81st straight month of year-over-year gains.

Regionally, existing-home sales in the Midwest rose 5.5-percent from last month to an annual rate of 1.34 million in November, down 4.3-percent from a year ago. The median price in the Midwest was $199,100, up 2.6-percent from last year.

First-time buyers were responsible for 33-percent of sales in November, up from last month and a year ago (31-percent and 29-percent, respectively). The National Association of Realtor's 2018 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 33-percent.

All-cash sales accounted for 21-percent of transactions in November, down from October and a year ago (23- and 22-percent, respectively). Individual investors, who account for many cash sales, purchased 13-percent of homes in November, down from October and a year ago (15-percent and 14-percent, respectively).

Nationally, the total housing inventory at the end of the end of November decreased to 1.74 million, down from 1.85 million existing homes available for sale in October. This represents an increase from 1.67 million a year ago, however. Unsold inventory is at a 3.9-month supply at the current sales pace, down from 4.3 last month and up from 3.5 months a year ago.

Yun suggests, “Inventory is plentiful on the upper-end, but a mismatch between supply and demand exists at affordable price points.” He adds, “Therefore, facilitating real estate development of affordable housing units in designated Opportunity Zones can provide better housing access in addition to boosting the local economy.”

The numbers reported for local sales include residential property in 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 Berrien, Cass and Van Buren Counties.  The Association can be contacted at 269-983-6375 or through their website at www.swmar.com