Despite social distancing and wild economic speculation, the Southwest Michigan housing market proved surprisingly resilient in the month of March, with sales actually increasing by 4-percent compared to the same month a year ago, but inventory continues to drop which will continue to strain the options available for prospective home buyers.
Alan Jeffries, Association Executive for the Southwestern Michigan Association of Realtors says, “At the end of the first quarter of 2020, which included months of economic speculation and the need for social distancing, the number of houses sold only declined by 5-percent from the same quarter in 2019.” Meanwhile, the housing market inventory of homes for sale also dropped by 4-percent, potentially contributing to the lower number of sales.
Perhaps due to the tighter inventory, Jeffries tells us, “Selling prices set record levels each month, and year-to-date selling prices at the end of the first quarter also set records in the year-over-year comparison back to 2006.”
The number of houses sold in March rose to 244 from 234, sold in March 2019 for a 4-percent increase, however, year-to-date, the quarter fell 5-percent over the same period last year (615 vs. 644). Historically, first quarter sales peaked at 675 at the end of the first quarter of 2017.
The average selling price last month (March 2020) was $221,734 compared to $217,265 in March of 2019 for an increase of 2-percent, while year-to-date, the average selling price is up 8-percent ($221,825 vs. $205,823). The average selling price and year-to-date average selling price both set new record prices in the month of March in the year-over-year comparison.
The median selling price in March increased 3-percent to $180,000 from $175,000 in March of 2019. Year-to-date, the median selling price has soared 19-percent ($175,000 vs. $146,500). The median selling price and year-to-date median selling price have also set new record prices in the month of March 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.
The record-setting selling prices, even with fewer houses sold, pushed the total dollar volume up 6-percent in March 2020 ($54,103,134 vs. $50,840,184). The year-to-date total dollar volume is up 3-percent and has also set the new record for the dollar volume at the end of a first quarter ($136,422,547 vs. $132,550,612).
The inventory of houses for sale dropped 4-percent from March 2019 (1,214 vs. 1,341). That level gives the market a 4.9-months supply of houses for buyers. By way of comparison, in March of 2009, there were 2,969 houses for sale.
The number of bank-owned or foreclosed homes as a percentage of all transactions dropped to 5-percent in March down from 7-percent in January and February. The previous lowest percentage in a month of March was 7-percent, set in March of 2018. The highest percentage in March was 60-percent in 2009.
Locally, the mortgage rate was 3.635 up from 3.438 in February. Last year in March, the rate was 4.475. Nationally, the Freddie Mac mortgage rate in March was 3.5 up slightly from 3.45 in February for a 30-year conventional mortgage.
Nationally, according to the National Association of Realtors, home sales increased year-over-year despite expected monthly March sales decline due to the impact of COVID-19. Existing-home sales fell in March following a February that saw significant nationwide gains. Each of the four major regions reported a dip in sales, with the West suffering the largest decrease.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, dropped 8.5-percent from February to a seasonally-adjusted annual rate of 5.27 million in March. Despite the decline, overall sales increased year-over-year for the ninth straight month, up 0.8-percent from a year ago (5.23 million in March 2019).
Lawrence Yun, Chief Economist for the National Association of Realtors says, “Unfortunately, we knew home sales would wane in March due to the coronavirus outbreak,” adding, “More temporary interruptions to home sales should be expected in the next couple of months, though home prices will still likely rise.”
While sales have declined, home prices are still solidly strong. The median existing-home price for all housing types in March was $280,600, up 8.0-percent from March 2019 ($259,700), as prices increased in every region. March’s national price increase marks 97 straight months of year-over-year gains.
Regionally, compared to the month prior, March sales decreased in every region, while the Midwest and the South experienced increases in year-over-year sales. Median home prices in all regions increased from one year ago, with the Northeast and Midwest regions showing the strongest price gains.
Existing-home sales decreased 3.1-percent in the Midwest to an annual rate of 1.25 million, up 4.2-percent from a year ago. The median price in the Midwest was $219,700, a 9.7-percent increase from March 2019.
First-time buyers were responsible for 34-percent of sales in March, up from both 32-percent in February and 33-percent in March 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 reports, “Despite the social distancing restrictions, with many Realtors conducting virtual open home tours and with mortgage rates on the decline, a number of first-time buyers were still able to purchase housing last month.”
Individual investors or second-home buyers, who account for many cash sales, purchased 13-percent of homes in March, down from both 17-percent in February and 18-percent in March 2019. All-cash sales accounted for 19-percent of transactions in March, down from both 20-percent in February and 21-percent in March 2019.
Nationally, the total housing inventory at the end of March totaled 1.50 million units, up 2.7-percent from February, but down 10.2-percent from one year ago (1.67 million). Unsold inventory sits at a 3.4-month supply at the current sales pace, up from three months in February and down from the 3.8-month figure recorded in March 2019.
Yun points out, “Earlier in the year, we watched inventory gradually tick upward, but with the current quarantine recommendations in place, fewer sellers are listing homes, which will limit buyer choices,” and adds, “Significantly more listings are needed, and more will come on to the market once the economy steadily reopens.”
NAR’s most recent Flash Survey showed that 93-percent of sellers changed behavior to help the home-buying transaction move forward with social distancing and necessary precautions.
Vince Malta, broker at Malta & Co., Inc., in San Francisco is President of the National Association of Realtors. He says, “It is NAR’s top priority to continue to aid and assist Realtors during these unprecedented, trying times,” and adds, “We have played an instrumental role on Capitol Hill as Congress secured multiple federal relief packages, and we will continue fighting on behalf of our 1.4 million members, American consumers, and the nation’s economy as these conversations persist.”
Malta adds, “We have seen an increase in virtual home tours, e-signings, and other innovative and secure methods that comply with social distancing directives,” and concludes, “I am confident that Realtors and brokerages will adapt, evolve, and fight, ensuring the real estate industry will be at the forefront of our nation’s upcoming economic recovery.”
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.com.