The year ended with a bit of a headwind compared to the prior months with both pending sales and new listings entering the market off of last December’s pace. Some of that may have been the timing of a late Thanksgiving, which cut some time off of December by concentrating shopping and holiday time. As a result of our current deep freeze, we can also expect that January sales will show a slowdown over 2013. None of these happenings are worth worrying over. They simply push sales ahead into February and March. As most have been predicting, 2014 is not expected to be as strong as 2013 in terms of homes sold, but don’t get fooled by the year over year comparison stats that might show sales declining. Remember that’s compared to a peak year, so the activity will still be very good, just not crazy good. Also, values are expected to continue to rise (most predict 3-6%). Though with current inventories so low, we think the number will be higher.
Here is an update of the pace of activity. These charts track the rate of increase in sales and new listings entering the market as well as the overall listing inventory. Combined, they provide a good feel for the current momentum in the market by comparing each month to the same month the prior year.
Oakland County Under $500,000 Home Values
Livingston Under $500,000 Home Values
For Wayne, Oakland and Livingston Counties, new listings entering the market (blue line) peaked in the summer/early fall and then declined, which combined with a steady increase of new buyers (red line) has caused listing inventories to drop rather dramatically (green line). The new listing decline is somewhat puzzling considering home values have risen, affording more sellers the opportunity to sell. Part of the cause is the reduction in bank owned new listings entering the market (now 5% of the total vs. 21% last December). The result should be a continued feeding frenzy for those salable listings on the market going into January, which will be an opportunity for sellers. On the other hand, buyers will continue to face frustration due to few choices and continued overbidding in many price ranges.
Wayne County Under $500,000 Home Values
Macomb County Under $500,000 Home Values
Macomb County also had a significant drop in overall For Sale inventory, but because of a slightly different reason. The rate of new sales (red line) stayed ahead of the pace of new listings (blue line) resulting in a net decline in available homes for sale. Macomb has not seen the same rate of increase in new listings as Oakland and Livingston, most likely because they had a slightly higher percentage of homes with values below mortgage balances. It is taking longer for those listings to be released to the market. Like the charts above, an increase in expired listings has accelerated the listing inventory decline in the past 90 days.
Washtenaw County Under $500,000 Home Values
Washtenaw County has moved at a different pace than the rest with a stronger rate of new listings and new sales. In fact, Washtenaw is the only county where the listing inventory has actually risen over the prior year, starting in August, even though the pace of new sales has been increasing, as well. The rate that listing inventories are increasing has slowed in November and December as new sales have outpaced new listings. The current inventory shortage in Washtenaw, although near record lows, is not as proportionately severe as the other counties (little solace for a Washtenaw home buyer). If the current sale pace continues, Washtenaw County can expect to quickly fall in line with the rest of Southeast Michigan’s declining inventories.
Over $500,000 Home Values for the Five County SE Michigan Market
For all five counties in Southeast Michigan, the market pace for the over $500,000 market has followed the same pattern. The rate of increase in pending sales had risen during the first half of the year and settled down the second half. New listings did the opposite by rising faster in the second half. The result has been a steady, but less dramatic decline in listing inventories. The additional purple line represents the pace of expired listings, which increased dramatically in the fall causing the majority of the decline in available inventory. The jump in the rate of expired listings is unusual and many of those listings certainly came back on the market the next month. It may also be a foreshadowing of a potential jump in inventories this spring, as those listings are re-circulated in the market at a later date.
Thank you all for your support.