It’s official…the 2017 real estate year was another one for the record books. The roaring local housing market has established it’s second consecutive record-setting year in a row by virtually every measure making it the new peak year for housing in Michigan’s Great Southwest.
Southwestern Michigan Association of Realtors Executive Alan Jeffries says, “At the end of 2016, we were excited about setting a new peak year for the local housing market. It had been a long road back from the 2006, the previous peak year. Then in 2017 the housing market continued to outpace numbers set in 2016 while the inventory of houses for sale continued to shrink. The number of houses sold, the total dollar volume, and the average and median selling prices for 2017 all surpassed 2016 numbers crowning 2017 the new peak year for the housing market in Southwestern Michigan.”
The remarkable year despite low inventories has had the market buzzing with activity. But, the gains weren’t just year over year, some established long standing new records. As Jeffries points out, “There were also two other notable achievements. In August 418 houses were sold. This was the first time the 400 mark had been surpassed in any month looking back to 2005,” and, he says, “The highest average selling price ever was reached in September when it climbed to $252,111.”
Amazingly this was all done in a time when there were fewer than ever homes available on the local market, as Jeffries notes, “The dwindling inventory reached an all-time low at 4.4-months supply of houses for sale. At the end of December, there were 1,365 houses for sale in our market that includes Berrien, Cass and the westerly 2/3 of Van Buren counties. The inventory was down 9-percent from the same time in 2016 and was half of the inventory available in 2010.”
Despite those dismal inventory levels, the number of houses sold in 2017 was 3,733 compared to 3,589 in 2016 for a 4-percent increase. For the month of December, however, there was a brief shortfall with 272 houses sold versus 293 in December 2016 which was a 7-percent decrease.
The total dollar volume in 2017 was up 13-percent over 2016 ($811,829, 286 vs. $718,654,703 ). Comparing December 2017 to December 2016, the total dollar volume also was up 8-percent ($62,956,495 vs. $58,433,257).
It wasn’t just the number of homes being sold, either. The average selling price in 2017 increased to $217,473 from $200, 238 in 2016 for a 9-percent rise. Even though fewer homes sold in December 2017, the average selling price soared 16-percent from a year earlier in December 2016 ($231,457 vs. $199,430).
The 2017, median selling price rose 11-percent to $155,000 from $140,000 in 2016. In December 2017, the median selling price was $160,000 which was a 14-percent increase over the December 2016 median selling price of $140,000.
The median price is the price at which 50% of the homes sold were above that price and 50% were below.
In all of 2017, there were 7 months (May –November) when the number of bank-owned or foreclosed homes as a percentage of all transactions in the market ranged from 4-6 percent. From January to April the percentages ranged from 10-13. In December, the percentage jumped to 10-percent. The percentage transactions in every month of 2017 were the lowest reached in each given month since 2009.
Locally, the mortgage rate in December inched up to 4.075 from 4.063 in November. That was still a better rate than a year ago, inasmuch as in December 2016, the rate was 4.375. Nationally, the Freddie Mac mortgage rate in December rose to 3.99 from 3.90 in November 2017.
According to the National Association of Realtors, – Existing-home sales subsided in most of the country in December, but 2017 as a whole edged up 1.1-percent and ended up being the best year for sales in 11 years, according to the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops increased 1.1-percent in 2017 to a 5.51 million sales pace and surpassed 2016 (5.45 million) as the highest since 2006 (6.48 million).
In December, existing-home sales slipped 3.6-percent to a seasonally adjusted annual rate of 5.57 million from a downwardly revised 5.78 million in November. After last month’s decline, sales are still 1.1-percent above a year ago.
Lawrence Yun is Chief Economist for the National Association of Realtors. He says the housing market performed remarkably well for the U.S. economy in 2017, with substantial wealth gains for homeowners and historically low distressed property sales. He notes, “Existing sales concluded the year on a softer note, but they were guided higher these last 12 months by a multi-year streak of exceptional job growth, which ignited buyer demand.” Yun adds, “At the same time, market conditions were far from perfect. New listings struggled to keep up with what was sold very quickly, and buying became less affordable in a large swath of the country. These two factors ultimately muted what should have been a stronger sales pace.”
Yun also reports, “Closings scaled back in most areas last month for this same reason. Affordability pressures persisted, and the pool of interested buyers at the end of the year significantly outweighed what was available for sale.”
The median existing-home price for all housing types in December was $246,800, up 5.8-percent from December 2016 ($233,300). December’s price increase marks the 70th straight month of year-over-year gains.
Regionally, existing-home sales in the Midwest sales dipped 6.3-percent to an annual rate of 1.33 million in December, but are still 1.5-percent above a year ago. The median price in the Midwest was $191,400, up 7.8-percent from a year ago.
First-time buyers were 32-percent of sales in December, which is up from 29-percent in November and unchanged from a year ago. NAR’s 2017 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 34-percent.
Analyzing the numbers, Yun suggests, “Rising wages and the expanding economy should lay the foundation for 2018 being the turning point towards an uptick in sales to first-time buyers.” He cautions, “However, if inventory conditions fail to improve, higher mortgage rates and prices will further eat into affordability and prevent many renters from becoming homeowners.”
Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty is President of the National Association of Realtors. She says improving the new tax law is a top priority for Realtors in 2018. “Especially in high-cost, high-taxed markets, there’s still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time.” She adds, “As the housing market adjusts to the new law, Realtors will be listening to their clients and communicating to lawmakers ways to ensure owning a home is truly incentivized in the tax code.”
All-cash sales were 20-percent of transactions in December, which is down from 22-percent in November and 21-percent a year ago. Individual investors, who account for many cash sales, purchased 16-percent of homes in December, up from 14-percent both last month and a year ago. For the year, all-cash sales averaged 21-percent of sales (23-percent in 2016), and investor sales were at 15-percent (14-percent in 2016).
Nationally, the total housing inventory at the end December dropped 11.4-percent to 1.48 million existing homes available for sale, and is now 10.3-percent lower than a year ago (1.65 million) and has fallen year-over-year for 31 consecutive months. Unsold inventory is at a 3.2-month supply at the current sales pace, which is down from 3.6 months a year ago and is the lowest level since NAR began tracking in 1999.
National leader Yun says, “The lack of supply over the past year has been eye-opening and is why, even with strong job creation pushing wages higher, home price gains – at 5.8-percent nationally in 2017 – doubled the pace of income growth and were even swifter in several markets.”
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.
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.
