Metro Detroit Real Estate Market Update - June 2022
Summertime is not only bringing hot temperatures to the summer market. Sales on available homes are still hot - if you can find them. This is your June 2022 Real Estate and Financial Market Update.
The latest job report numbers are a bit misleading with 428,000 jobs added to the economy in April of this year, making 12 consecutive months adding over 400,000 jobs. This puts us back at 90% of our pre-Covid jobs. We are also sitting at a pandemic low of just 3.6% for the unemployment rate. So how are we only at 90% of pre-Covid jobs when the unemployment rate is so low? For one, millions of people have completely removed themselves from the job market. In the last 30 days alone, 363,000 more people removed themselves from the job market due to the record high inflation. The cost for them to remain working is actually being outpaced by what they are able to save by staying home. This is especially true for people with children, due to the increasing rate of daycare. Additionally, wear and tear on vehicles, gas prices, and taxes are also playing a role. Once wage growth begins to catch back up over the coming months, we should see a decent amount of people begin to re-enter the job market.
USED CAR PRICES
Used car prices are typically at the forefront of inflation, being the first to get hit first and the hardest. We are seeing that used car prices have dropped a whopping 6.4% over the past 30 days, which is a super positive note that we are seeing things moving in the right direction, even though prices remain at a 14% increase year over year.
Interest rates have been on the rise this year and are currently hovering between 5-5.5%, versus the 2.98% we were seeing 12 months ago, and the 3.25% seen just 90 days ago. In his latest speech, Fed Chair Jerome Powell stated that he believes that interest rates have now been raised enough to have a significant impact. So even though economists originally believed we would see rates continue to increase upwards of 6.5-7% towards the end of 2022, we are more likely going to see them stay between 5.75-6.25%. This is wonderful news for anyone looking to make a large purchase, such as a home or vehicle, or for those looking to get a new credit card or take on any sort of debt. Of course inflation will remain the best parameter on which to judge where interest rates will go from here.
For the first time in months, the latest inflation report shows that inflation has decreased. The decrease is only 0.2% (8.3%, down from the 40 year high of 8.5%) and may only be momentary, but we are remaining optimistic based on the data shown from the used car report and Powell’s latest report. It’s important to remember that there are numerous factors that influence our economy, so it will likely take a number of months for any major shifts to be seen.
REAL ESTATE MARKET
Housing numbers are in and for Metro Detroit and Ann Arbor, the number of home sales are down 17% year over year. So in the first 5 months of 2022, 17% less homes have sold than in 2021. However this does not tell the whole story. The main cause for this drop in numbers is that there is still a severe lack of inventory available to purchase, so buyers are not finding the home they are searching for. Competition for available homes however is remaining high. As recently as this past week we are still receiving upwards of 10-14 offers on most properties. A large contributor to the lack of inventory is that before the last down market (2008-2010) most homeowners were staying in their homes for 7 to 8 years on average before selling. Right now that number is holding at 12.5 years, due to baby boomers living much longer than the previous generation, and their health is also so much better, so they don’t need to sell. This large amount of homes being withheld from the market, coupled with the largest generation there is (Millennials) looking to purchase their first homes, tand a massive shortage of new-construction homes, the inventory simply isn’t available to sustain the current number of buyers. This is why we are continuing to see home values increase amongst increasing interest rates and the current market conditions. Taking all of this into consideration, it is unlikely that we will see home prices (or the market) crash the way that some people are speculating.
Thank you for tuning in for your June 2022 Real Estate and Financial Market Update!
If you are planning on making a move, call us today at 248-886-4450 for any and all of your real estate needs. We would love the opportunity to show you the 5 Star service we have provided over 8,000 families, with 862 families served in 2021 alone!
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Contact Us to Help With Your Metro Detroit Home Purchase
Heading into May 2022 we are continuing to see some influencing changes taking place in both the real estate and financial markets. But will those changes be enough to cause the housing market to go up in smoke?
In this video I will update you on the latest changes happening with inflation, interest rates, and of course how they will impact the current and future real estate market.
Inflation continues to be the topic on most people's minds, and it continues to rise, for now. We’re now at a 8.5% inflation rate, being the highest seen in the past 41 years. This is being felt by Americans across the nation, whether at the gas pump, buying groceries, car shopping, and pretty much everywhere else you can name. However, this is not the highest rate we have experienced as a nation. Back in 1980, inflation rates tipped the scales at nearly 14%. Inflation is centered around two volatile products, being gas prices and food prices. As of now, gas prices are up 48% from where they were on January 1st, 2022. Food prices are up 14.1% just in the past 30 days.
As we know, the Fed began raising interest rates this year in an attempt to curve the inflation rate. It appears we are beginning to see that take effect. In certain sectors we are starting to see deflation, which will help bring prices back under control. Used car prices have peaked and have begun to come down slightly. Gas prices here in Michigan peaked at around $4.30 per gallon depending on your area, but have since dropped back below the $4 mark in most places. That being said, if you remove those two main factors (gas & food prices) from the equation and look at the rest of prices as a whole, inflation is now only 0.5%. This is way below the 2% that the Fed targets from a year to year basis.
This means that as interest rates continue to increase, causing business and consumer spending to decrease, we should see inflation rates peak and begin to drop by the end of summer.
Expanding on the effect of the Fed increasing interest rates, in just the past 60 days we have seen mortgage rates for a 30 year fixed climb from an average of 3% all the way up to 5.13% for a new mortgage. In addition, the increase in interest rates also has a large impact on things like credit card rates and auto loans for new and used cars. This may not seem like a big increase in rates, but when looking at how those rates impact buying power for the average American, it is now 15% to 18% LESS than it was 60-90 days ago. That’s a lot.
Looking at this from an affordability standpoint, if you purchased a $300K home on a 30 year fixed mortgage with 20% down 60-90 days ago, your monthly payment would be roughly $1,230. That same home purchased with today’s interest rates would now cost you $1,600 per month. As of now, we have not seen this increase in interest rates have an impact on the real estate market, and we do not anticipate it doing so. In fact, we are seeing more and more buyers enter the market to try to capitalize on the current interest rates before they increase further. And they will do so as we continue through 2022. We believe that we will see rates reach upwards of 6.5% before they begin to come back down. This will likely cause a slight decrease in buyers in the real estate market, but not enough to cause any sort of a ‘bubble burst’ that some have been predicting.
Here’s why. 5% is still a great interest rate, as we have seen much higher in the past. Also, once we reach 6.25% or 6.5% is when we will see the real estate market start to sputter, the Fed will then begin to drop those rates back down. We believe that those rates will likely come back down to roughly 4% in 2023.
REAL ESTATE MARKET
What this means for those currently in the market to sell, or buy a home is this... who you work with MATTERS!
Sellers, right now 35% to 40% of all accepted offers on homes fall apart before the closing. As a reference, pre-pandemic that number was 4% to 7%. This can happen for a number of reasons, but having an agent who is not able to negotiate on your behalf and navigate you through any potential issues that may arise means you have a 40% chance of your home ending up back on the market, leaving buyers questioning what is wrong with the house, in turn causing the value to go down. This is important because there are a large number of buyers who are still locked in at the lower interest rate, but this will not last. Once that locked in rate expires, there are not LESS buyers able to afford your home. So acting quickly and not losing time on a deal that will not close is critical.
If you are a buyer, you need to get locked in at the lowest interest rate possible… NOW. If you are not yet locked in on an interest rate, let’s get you on the phone with a lender TODAY to make that happen. This is important because of the difference in interest rates between 60-90 days ago and today. You want to make sure that the homes being shown to you are still within what you want to spend monthly, and with the increase we have seen, there can easily be a $400 up to $1,000 or more difference in that monthly payment today.
We are now fully into the spring market, meaning we have many more buyers and more sellers entering the market. Four companies, including Knock and HomeLight that have combined nationwide data and have found that if you are a cash buyer it is taking an average of 1.4 offers to secure a home. This is not a surprise, as cash is always king in the real estate market. However, for those buyers seeking to finance a home (which is 90% of all buyers on the market) it is taking an average average of 7 offers to get one accepted. This is for a conventional loan, and these numbers get worse for those looking to finance through FHA or VA. Looking back at The Perna Team’s data from the past 60 days, our buyers are currently averaging getting their offer accepted in 1 in 3.5 offers.
The moral is, if you are a buyer and have had 2, 3, even 4 offers not be accepted, do not give up. The truth is there is no real estate bubble and we will continue to see home values continue to increase, especially due to the low inventory on both resale and new construction homes. If you are interested in purchasing a new construction home, our Team has developed some fantastic working relationships with local builders, enabling us to get our buyers priority on available lots. Additionally we have developed some great programs on the mortgage side allowing us to reduce the down payment and deposit needed, as well as being able to get our buyers a couple of extra upgrades and protection, depending upon the specific builder being used.
If you are looking to purchase a home, our advice is to act now. Rent prices will continue to rise, as will home values. Even with the interest rates beginning to rise, by waiting a year for rates to drop back down near 4%, the increase in home values will ultimately cost you more in the end. Act quickly to lock in your rate and begin your search, knowing that it may take a few offers to get one accepted. When rates do drop back down, refinancing to lower your interest rate and monthly payment is always an option.
For any questions, or any real estate needs you and your family may have, call us at 248-886-4450. We would LOVE to the opportunity to show you the 5 Star service we have provided over 8,000 families, with 862 families served in 2021 alone!
We're already a quarter of the way through 2022 (how did that happen?) and there are some definite shifts taking place in the real estate and financial markets!
Back to the Grind
The Jobs Report showed a growth of 468K jobs in February, which is fantastic. Even bigger, this drops the unemployment rate down below 4% to 3.8%, which is considered by most economists to be 0%, as the 3.8% is mostly made up of those opting out of the job market for more time at home, or taking that much needed vacation after a hectic couple of years dealing with the pandemic.
All the Way Up
Inflation CONTINUES to rise. We are now at 7.9%, even higher than the 7.5% we were seeing in January. This is in part to the rising gas prices, which finally seem to be coming back down a bit, thanks to China locking down a couple of large cities due to COVID concerts, bringing the price per barrel back down below $100. Additionally, some states have petitioned the Government to omit the gas tax for a couple of months to help take the pressure off at the pumps while we experience these high prices.
As we have been expecting, the Fed has finally made its first rate hike on interest, bringing the percentage from 3% up to 4%. Now this likely won’t affect mortgages, as the finance sector had already raised rates in anticipation of this happening. However, we have at least 3 more hikes in our future this year if inflation is not curbed.
Home values continue to rise. The Wall Street Journal recently released a statement that if you owned a home in 2021, your equity position went up more than the average job in the United States. So if you are in the market to purchase a home, do so now before these next rate hikes take place, lessening your buying power for the home you want.
May the Odds Forever be in Your Favor
Dealing with Multiple Offers has pretty much become the norm when purchasing a home due to the low inventory levels and high demand for available homes. However, we have seen the average number of offers drop pretty significantly to 4.3 offers per home from a staggering 15-18 offers per home as more sellers are now entering the market, thus dramatically increasing the likelihood of an offer being accepted.
We Hate to Burst Your Bubble
For quite some time now there have been talks about a housing bubble burst in 2022. We're here to tell you there won’t be. Between the strong economy, rent prices continuing to rise another 10-12% this year, inflation rates and more, it just won’t happen. Check out our video below on ‘The Housing Bubble will BURST in 2022... or will it?’ for a deep dive into this subject and a full explanation of why we are confident in the housing market remaining stable.
The bottom line is if you are planning to or able to buy a home this year, I would highly recommend it. Between home values rising another 10-12% in 2022 before appreciation values begin to flatten out, increasing rent prices, being able to lock in a fixed payment on a home, taking advantage of still low interest rates before they increase, tax breaks and building equity, NOW is the time to act.
If you are looking to make a move in the future, or for any other real estate needs, call us at 248-886-4450 . We would LOVE to the opportunity to show you the 5 Star service we have provided over 8,000 families, with 862 families served in 2021 alone!
Interest, Inflation & Inventory. Oh My!
Not even 2 months into the new year, we’re already seeing some big changes taking place in both the real estate and economic markets that everyone should be aware of. Here is where we stand, as of February 2022.
The great resignation is a real thing, where we are seeing more people than ever leaving their jobs. However, in January 2022 we did see 467,000 jobs added. The good news is we are still adding jobs at a steady pace, which is a sign of a strong economy. The bad news is this gives Jerome Powell the ammunition needed to continue raising interest rates.
Things Are Getting Interest-ing
Jerome’s primary goal in increasing interest rates is to help drop the skyhigh inflation we have been experiencing. In order to do this we must first have a stable and strong economy. Once we do reach that point, expect to see a couple additional major interest rate hikes. In fact, with the economy we are currently experiencing, Wall Street is anticipating up to seven interest rate hikes this year.
Our guess is that we will see four hikes, starting next month in March 2022. That being said, if you have an interest rate of 4.25% on your home, NOW is the time to make the call to your lender to see if refinancing would make sense for you.
That's HOW Much?!
From what we saw in January, it looks like we may be starting to point in the right direction needed to see inflation rates start to move back in a positive direction. This is due to a couple of reasons.
First, all the COVID money is starting to dry up. After the government handed out trillions of dollars in COVID money and people on average having the biggest bank accounts seen in 15 years, things began to reopen and people began spending all of that money, driving the economy way up along with demand and inflation rates. In December 2021 however, we saw retail spending drop and people begin to get back into their normal spending routine.
Second, costs of living have increased. Rent costs have skyrocketed with the US average increasing 14% in 2021, while here in Metro Detroit we saw a 16.5% increase. The average used car price increased $6,000 from the average just 24 months ago. The price for new cew cars respectively increased roughly $8,000.
Taking all of this into consideration along with increasing interest rates, we should see some pressure taken off of the supply chain and inflation rates begin to drop.
We're Here for the Gains
The stock market has seen it’s ups and (mostly) downs lately and nobody really seems to know what to expect. The DOW is down 6% off its peak. NASDAQ is down 9% off its peak. 70% of all stocks on the NASDAQ are down 20%+, with 40% of those down 60% or more. That's a HUGE number. However, we are seeing companies like Amazon and Apple experience some big gains at the same time.
Our belief, even though everything is overvalued and growth is expected to slow, we will see a steady growth of around 7%. The market has always bounced back after a dip, so continue to invest, but in a basket of stocks like Mutuals and ETFs vs individual stocks.
Sold to the Highest Bidder
Once again, the real estate market is on fire. To be honest it never slowed much this year as seen during previous winters. Inventory levels remain super low with stiff competition on available homes. In fact, we saw 600 LESS homes enter the market in January 2022 compared to those in January 2021. This is due to the increase in home prices year over year and the number of buyers entering the market taking advantage of the lower interest rates before they increase this further year.
Additionally, investors able to pay cash and/or offer over list price are trying to scoop up available homes to capitalize on the increasing rent prices, effectively pushing out other buyers submitting conventional, FHA, or VA loans - which is the vast majority of ALL offers.
We do predict that we will see this pressure alleviated some as more sellers enter the market and the average number of offers received per home reduces. This means that these next couple of months may be the best time to make that purchase before interest rates do increase further.
8 Predictions for the 2022 Financial and Real Estate Markets
It's a new year, and that means new predictions for the financial and real estate markets. From rents to renovations, read on for The Perna Team's input on what to expect in 2022.
1. Rents Will Continue to Rise
In 2021, average rents jumped by more than 16% in Metro Detroit. In some areas, rent for a three-bedroom condo or home is now exceeding $2,000 per month.
Those renting a property should take a look at rents for comparable properties to forecast if theirs is likely to increase on the next release. With rents likely on the rise and current mortgage interest rates low, it may be a good idea to consider whether or not to become a homeowner in 2022.
2. Millennials Will Continue As Biggest Homebuyer Demographic
In 2022, the percentage of millennial homebuyers will increase to the deep 40s, making up almost half of all homebuyers and sellers. Sellers looking for high-ROI home improvements should take millennial preferences into consideration.
In addition, as millennials begin to turn 40 and start looking for their second home, they're likely to become the second-biggest 2022 seller demographic after Generation X.
3. It's the Luxury Market's Time to Shine
In the latter half of 2022, we predict that the luxury market will explode. With inventory going down, conventional loan limits going up, and jobs, wages, and equity growing, more buyers are looking to break into the luxury real estate market.
4. Construction and Supply Chain Issues Aren't Going Anywhere
Expect delays in acquiring materials for both new construction homes and renovation projects. Allow for six to seven months instead of the standard four to five. Those planning major renovations, such as basement or kitchen remodels, should budget at least three times the standard timeline to get materials. Renovating in late 2022? Plan to start booking contractors now.
5. Plan For Labor Shortages
With approximately 9.5 million tradespeople to fill 14 million jobs and new national infrastructure plans on the horizon, skilled trade workers and contractors are in high demand. Plan for projects to take three to four times as long, budgets to go up 10 to 20%, and calls to go out in the first quarter of 2022 for any projects this year.
6. Take Advantage of Low Interest Rates While They Last
7. It May Be a Good Time to Diversify Your Stock Portfolio
In 2021, markets peaked over 70 times, and that's just not sustainable. Between interest rates and supply challenges, some stocks are going to fare less well in 2022 than in 2021. It might be wise to move some money into mid cap index funds and over more uncertain individual stocks.
8. Crypto Will Balloon As It Gains Acceptance
We predict that the crypto market will ballon 50–70% as certain banks and governments start to accept crypto as recognized currency and 20–30% more people start investing. Those not currently in the crypto game should take another look at the large currencies like Bitcoin and Ethereum, which are likely to produce steady growth in 2022.
Stay On Top of the Market Trends
To the prepared buyer or seller, these market predictions may present a great opportunity. If you're looking to buy or sell in Metro Detroit this year, contact The Perna Team to get more detailed information on real estate trends to make the most of your investments.
Metro Detroit's Real Estate Market is Still Going Strong
The Metro Detroit real estate market has been getting a lot of attention lately, with inflation on the rise and economists predicting that it is likely to remain high until interest rates increase. As the interest rate increases, it becomes more expensive for people to purchase homes — which can have an adverse effect on home values in the area.
Compounding this issue is the fact that many consumers still feel hesitant about spending money during these uncertain economic times.
Despite these challenges, the Detroit real estate market is doing quite well. The city has undergone a remarkable transformation in recent years and it's now one of the most vibrant and up-and-coming metropolitan areas in the country. This blog post will provide information about what factors influence Metro Detroit's real estate market this month so you'll know how to make wise decisions when it comes time to invest!
Historic Low Interest Rates May Be Coming to an End
Jerome Powell's renomination as Chair of the Federal Reserve means that interest rates are likely to rise to around by June 2022. This also means that NOW is your last chance to buy at a low interest rate or to refinance if you are currently paying high rates. If you have been waiting for the perfect time to buy or refinance, now is the time. The Detroit real estate market is heating up because of it, so you should try to get in before the low interest rates are gone.
The Omicron Variant is Rippling Through the United States
On Friday, stocks in Europe fell further as investors continued to monitor developments around the omicron Covid variant, casting warning signs for important U.S. economic statistics.
However, the news is not all bad: While the Omicron form is considered to be considerably more contagious than the Delta variant, it is allegedly less harmful in terms of the severity of sickness experienced. It's possible we will be able to combat this quickly, meaning the effects seen on the stock market should pass quickly as well.
Holiday Spending Paints the Market in a Positive Light
The holiday season is always a good indicator of the health of the economic market. In 2021, spending is up across the board, with Black Friday sales, in particular, seeing a significant increase. This indicates that Americans have money to spend, which is pushing inflation rates higher and creating shortages in certain sectors. Thankfully, Jerome Powell has signaled that he will be continuing to increase interest rates across the board, which will help to curb inflation.
The Real Estate Market is Continuing to Boom In Detroit
November 2021 was a banner month for home closings in the Metro Detroit area, with 11,450 transactions taking place. The performance of the real estate market is in an upward trend year-over-year, as more and more Millennials look to buy houses.
Many potential home buyers are feeling the pressure of being priced out of the market by 2022, into 2023, due to the rising cost of houses.
However, the November Case-Shiller report also shows that home price appreciation levels are beginning to slow down, and prices aren't going up as quickly. This can be seen clearly here in Metro Detroit, as there were 12,239 homes that entered the market, with 10,758 homes being marked as pending.
The Detroit real estate market is also cooling off, making it easier for people to get into new homes. The average time on the market for a home is now 27 days, which is cause for celebration for buyers looking to have less competition on their home purchase.
Now is the Time to Buy a Home in Metro Detroit
Real estate in Detroit is continuing to do well, with no signs of stopping. Now is the time to jump into buying a home, so you can lock in a fantastic interest rate and beat current high inflation levels. If you're interested in buying a home in the Detroit metro area this month, reach out to the Perna team today and let our local experts guide you through the ins and outs of the Detroit real estate market.
Sale Prices Hit Historic Highs in Metro Detroit's Real Estate Market
Hello Metro Detroit! We have some big changes taking place, so welcome back to your September 2021 Real Estate Market Update! Make sure you keep watching until the end of this video, where I’ll be talking about a famous Detroiter who just opened a new restaurant downtown and what that has to do with The Perna Team.
The Real Estate Market is Still Going Strong
Getting right to it, we saw 11,800 homes close in Metro Detroit this past month, making this the strongest September in over half a decade! We also saw 2,200 more homes come onto the market in September of 2021 than what was seen in 2018-2020. Many people are now more comfortable in selling their homes now that inventory levels are increasing, resulting in homeowners who are simultaneously buying and selling claiming the largest demographic of the market's homebuyers. This knocks first-time home buyers into the number two demographic and has been a major factor in driving the average sales price in Metro Detroit above $300K for the first time in history.
As autumn arrives, the real estate market continues to remain very strong, with many people continuing to buy and/or sell their homes. This is happening due to two major factors. Rent has continued to rise over the last few months and is now, on average, 14% higher than what was seen 6 months ago, making a mortgage payment more attractive than ever. Also, interest rates are increasing. They surpassed 3% for the first time this year, incentivizing many people to buy before they rise further. This increase is primarily due to the soaring inflation rates, along with the FED suspending the stimulus spending of the past months.
Now is a Great Time to Move
If you're thinking about moving anytime in the next 6 months, the time to act is now. If you’re a seller, get the most money for your home by listing sooner rather than later before interest rates increase, thus diminishing the number of buyers that can afford that monthly payment. If you're interested in buying a home, take advantage of today’s interest rates to get the opportunity for more home at the same monthly payment! If this describes you, we have a superb lender who can lock you in at today’s rates for up to 90 days!
Government Statistics & Updates
While Jerome Powell’s speech catalyzed the rising interest rates, he simultaneously spurred the stock market to drop, ending in the red in September. Traditionally, the stock market is a solid option for investors, but with rent on the increase at the moment I’m putting my money into more investment properties.
Inflation is still at a historic high, and I’ll be the first to admit that I was mistaken in how I foresaw this playing out. With many ships stuck waiting offshore for 30-60 days just to dock and unload their cargo, many companies are still experiencing issues with their supply chains. Bed, Bath & Beyond, for example, has already been warning that they may not be able to fulfill orders before the end of the year. With Christmas around the corner, this month may be the best time to get your online shopping done to maximize your ability to get your packages in time for the holiday.
Back at the beginning of 2021, we saw a big push for a $15 per hour minimum wage, which has since been shelved. However, due to inflation and the fact that we are nearing pre-pandemic unemployment rates, employers are now rushing to hire enough employees to keep their businesses going. Quite a few people have found post-pandemic that staying at home provides a better quality of life when monthly expenses like daycare are eliminated, which is putting a strain on the workforce. Because of this, numerous employers scrambling for workers are now offering starting wages at $15 or above in addition to other incentives. So despite the increased minimum wage falling off the table, wages are increasing, which will continue to drive the housing market.
Many famous actors & musicians have called Detroit home, and now Detroit is also home to one of their mothers' spaghetti. Eminem recently celebrated the opening of his new Detroit restaurant, aptly called Mom’s Spaghetti, by serving up heaping bowls to some of the lucky first visitors on opening day. I’m a huge Eminem fan myself, and coincidentally, my team has his previous Oakland Township estate listed for sale right now.
Thank you all for sticking around for your Metro Detroit Real Estate Market Update for September 2021! Please call us anytime at 248-221-2777; we're happy to help with all of your real estate needs.
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How Falling Lumber Prices Are Leading to the End of the Housing Shortage in Metro Detroit
Oil & Lumber Prices
After months of increasing prices, lumber rates have dropped down to normal. At its peak, lumber prices were causing an average increase of $37,000 for the cost of a new home. With the lowered prices, we saw 708,000 sales of newly constructed homes in July, which is providing relief to the real estate market and the low inventory we have been experiencing.
Oil prices have recently fallen 9.9% due to OPEC unloading a large amount of oil onto the market. However, Hurricane Ida has caused a temporary shut down of 95% of Gulf Coast oil refineries. Because of this, gas prices are expected to increase again by the second week of September, with the expectation of prices falling again by the third or fourth week of the month.
Government Statistics & Updates
At the onset of COVID, the government set aside $14 billion in funds to state governments meant for assisting tenants with paying rent. Since then, 11% of this money has been distributed with 89% unspent, due to issues with distribution on the state level. The Treasury is now retracting those unspent funds to redistribute it over the next 60 days to those in need.
The Eviction Moratorium is scheduled to end on October 3. According to Goldman Sachs, it is expected to affect as many as 750,000 people.
On August 27, 2021, Jerome Powell covered three main points during his speech: job growth, inflation, and government bonds. COVID caused a peak national unemployment rate of 13%, but it now sits at just 5.1%, much closer to the pre-pandemic rate of 3.8%. Until that rate is achieved, Powell is not making major shifts in the supply of money going into the economy.
Inflation is still a concern due to the halt of production seen in 2020. Inflation rates in June were at 5.4%, decreasing to 4.2% in July. We are awaiting the August figures, but hoping this trend continues.
Finally, the federal government will be tapering off buying bonds causing up to a quarter-point rise in interest rates. This will help slow businesses from expanding, providing the supply chain a bit of ease to catch up.
Metro Detroit Real Estate Market Update
With more inventory causing a decrease in competition, sellers are feeling more at ease about finding their next home when selling. In August, we saw 17,000 homes go onto the market — up from 16,000 in July. Meanwhile, home sales dropped from 12,300 in July to 11,700 in August. Sales typically see a 15-20% drop each year when going into fall, but this year, that change was less than 5%. With these numbers, we are now seeing more homes entering the market than those being sold, so the white-hot market is beginning to slow.
The average sales price in Metro Detroit went up another $5,000 in August. I’m sticking to my prediction that we will end the year at roughly $308K for the average sales price in the area.
Numerous Wall Street companies are pouring billions of dollars into the real estate market and purchasing single-family homes at a rate of 8,000 per month. That’s nearly 100,000 properties per year, which may help home values continue to rise as we move forward.
Thank you for tuning into your August 2021 Metro Detroit Real Estate Update!
Big Changes Are Coming to the Metro Detroit Real Estate Market!
Metro Detroit August Real Estate Market Update
In this video, we'll be reviewing the numbers, where we're at, which direction the Detroit real estate market is heading, and how that impacts you as a buyer, seller, or homeowner wondering what the upcoming changes mean for your home equity position.
Looking at the past 6 months, we have seen a significant increase in the number of homes sold in the Metro Detroit area, jumping from 8,200 homes in February to 13,500 homes in July. Also increased is the number of listings entering the market each month, with that number exceeding those being sold over the past 90 days. Additionally, 808 homes went unsold in July — the first time in a year this number has exceeded 400 homes.
How Did We Get Here and What Does This Mean for You?
When the pandemic hit and the FED reduced the interest rates to 2.85–3% we saw an increase of 35–45% in the number of people looking to purchase to take advantage of the savings. This also caused an influx of Millennials buying a home for the first time — making up 40% of all buyers in 2021. With the majority being first-time home buyers and having no home to sell in the process, this massive increase & pressure on the buyer side of the market simply overwhelmed the market & there were not enough homes for sale to alleviate that pressure.
Change: over the past couple of weeks we have seen a gradual, then sudden shift in the market across the nation. The average national home value skyrocketed over 20% year over year ($289K July 2020 — $366K July 2021), and economists are predicting that number will reach $408K by the end of 2021. Here in Metro Detroit during that time span, we saw an average sales price of $244K grow to $291K, with a predicted $315-$320K year-end.
This has left many people wondering what is going to happen when interest rates change? What is going to happen when expected foreclosures hit the market? Will we see the market crash? As of right now, there are only TWO things that could cause this explosive market to crash. Interest rates & foreclosures.
If the interest rate jumps back above 4% it would quickly remove that 35-45% increase of buyers we have seen, potentially causing a crash. Conversely, Janet Yellen, the FED Chair, has announced that interest rates will remain down at least through the end of the year to offset the sharp rise in inflation we’ve been experiencing.
When the pandemic began, delinquency rates on mortgages spiked from 0.8% to 14%, approximately 7.2M mortgages heading towards foreclosure. Twice the number we saw in the crash of 2008. However, the government called for a moratorium on foreclosures and prevented this from happening. Learning from the last crash, banks know it’s more beneficial to keep someone in a home vs foreclosing.
Banks have been working with mortgage holders on redoing loans as well as giving a reprieve on payments, allowing those payments to be added to the back of the loan. In turn, this dropped the number of expected foreclosures from 7.2M down to 2.2M — less than half of the previous down market.
What Do We Foresee in the Current Market?
With school starting back up soon and winter on its way, we will see the portion of buyers needing to move prior to then removing themselves from the market. This will provide relief for remaining buyers with no time constraints. Instead of 15–20 competing offers per property, they may only see 2–3 other offers, or sometimes none at all. In fact, in July we had 25 buyers get their offers accepted with no competition whatsoever. In combination with rising home values, now is the time to purchase!
Sellers are expected to continue receiving great traffic to their homes and receive multiple offers depending on the property — just not at such a high level as experienced earlier this year. However, this remains the best time to get TOP DOLLAR when selling, while taking advantage of low interest rates and less competition on a new home.
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If you are looking to make a move, we would love the opportunity to show you why so many of our clients rave about their experience of working with us. Call us today at 248-886-4450.
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Discussing the 2021 Housing Shortage with Fox 2 News
Thank you Fox 2 News for welcoming me to talk about the 2021 housing shortage!
The market is definitely booming, but buyers are still facing stiff competition due to low inventory causing high demand for available homes on the market. This is due to a number of factors.
Supply on available homes is WAY down. Construction on new homes came to a dead halt when the housing market crashed back in 2008. For the past few decades, we have seen between 20-30 MILLION new homes built every year. However between 2010-2019 only 5.8M new homes were constructed. This is an automatic 20 million additional homes missing from the current market, close to 700,000 of which are missing right here in the Metro Detroit area.
Up until recently, lumber prices were at an all-time high. Up to 4X the normal price, which had a tremendous impact on the cost of labor as well. Prices have begun to drop over the last 45 days, but we need to see them continue to do so. My prediction is that even though we have seen production on homes increase again over the last 30 days, we still have roughly 2 years before we are out of the woods. It takes a decent amount of time for a builder to locate a plot of land, develop it, get everything squared away with the city, and then build the property on the land.
Additionally, we are seeing the Millennial generation entering the buyers market in numbers never seen before. According to the National Association of Realtors, 37% of buyers in the current market are Millennials. With the low interest rates, working from home, and the fact that it is now typically cheaper to purchase a home than to rent, Millennials have seized the opportunity to move into the real estate market.
We are also seeing the Baby Boomer generation living in their homes for longer periods of time now versus in the past. For the past several decades, homeowners typically lived in a home for an average of 7 years before selling. That number has now increased to 11-12+ years — nearly a 50% increase. This may not seem like it would have too large of an impact, but when you consider that number of those homeowners staying up to 50% longer, it means MILLIONS of additional homes not entering the market.
The good news is that even with the low inventory and high demand, we have started to see an increase in the number of homes entering the market every month. In fact, we have consistently broken our monthly sales records every month of 2021. Our proven marketing strategies are often generating multiple offers for our seller's homes, netting them TOP DOLLAR for their home. And even with the high demand, we are winning the bids on our buyer's dream homes — many times NOT as the highest bidder & saving them THOUSANDS in the process!
If you are looking to make a move anytime in the next 12 months, or have a question about real estate please call us at 248-886-4450
For an instant online analysis that’s 97% more accurate than Zillow, click here to receive your home evaluation in just 30 seconds http://www.instantonlineanalysis.com
For an in-depth look at your home’s value using our no-obligation market analysis, click here https://bit.ly/TPT_HomeEvaluation
To search all available homes for sale currently listed on the market, please visit http://bit.ly/TPT_homesearch
To join in on our weekly LIVE Saturday Real Estate Q&A Webinar like our page at http://www.facebook.com/metrodetroithomevaluations and be notified when the broadcast begins!
For a glimpse into the service we have provided hundreds of families, click the following link for reviews submitted by our past clients http://bit.ly/PernaTeamReviews
If you have been considering a career in Real Estate and would like to hear about our one of a kind training program, message us directly or check out our real estate agent scholarship program at http://www.REscholarship.com
Metro Detroit June 2021 Real Estate Market Update
June 2021 is in the books and what a month it has been!
Before we dive into the numbers for the Metro Detroit Real Estate Market, the National Association of Realtors just made an exciting announcement that home values have increased by 23.6% year over year! This is an amazing amount of growth and brings the average home price in the United States up to $350,000.
The number of home sales in Metro Detroit during the month of June exceeded 12,000 properties, which is up nearly 1,000 properties when compared to just last month.
We've also seen a jump in the amount of inventory going onto the market - over 16,500 new homes in June. This is more new real estate for sale entering the market in a one-month period than we have seen in nearly two years!
Looking at the average days on market, we are at an all-time low of just 23 days for ALL properties in Southeast Michigan. That may seem like quite a bit, but when we take out all of the outlier properties (vacant land, homes over $3-4M, homes with a ton of acreage, unique homes, etc.) this number actually drops our days on market all the way down to an average of just 9 days!
If you are considering making a move this year, today is the day to get started! Real estate in MI is booming. For buyers, with a larger supply of inventory, July and August are your months to get out and see some homes! For sellers, the low-interest rates are keeping a large number of buyers on the market looking for their next home!
Don't hesitate to call us today at 248-886-4450 for any and all of your real estate needs. We would love to help you with your Metro Detroit property search or connect you with one of our amazing listing agents for a free, no-obligation home evaluation if you're considering putting your home for sale.
For an instant online analysis that’s 97% more accurate than Zillow, click here to receive your home evaluation in just 30 seconds.
Use our no-obligation market analysis for an in-depth look at your home’s value. You can also search all available homes for sale currently listed on the market.
Be sure to join in on our weekly LIVE Saturday Real Estate Q&A Webinar where Michael Perna and Austin Pothast will be answering your real estate questions! Like our page and be notified when the broadcast begins!
For a glimpse into the service we have provided hundreds of buyers, explore reviews submitted by our past clients.
Metro Detroit May 2021 Real Estate Market Update
The real estate market is still on fire with 51% of homes closed in May of 2021 selling ABOVE asking price!
This is the first time we have seen the closed sales above the asking price go above the 50% mark. Additionally, the average time on the market has dropped to a record low of just 17 Days across the board.
In Metro Detroit, we saw average sales prices increase to $262,500, up to $10,500 from the April 2021 average of $252,000. This is an incredible jump. On a national level over the past 12 months, we have seen the average sales price increase 13.2%, with the increase in Metro Detroit just a bit higher at 14%.
The number of sales we are seeing month over month is holding steady with just a slight increase of 100 homes between April 2021 (10,800 homes) to May 2021 (10.900 homes). However, the number of Pending properties is up even further with over 13,000 properties accepting offers over the past 30 days. This means two things: The number of sales is increasing & the number of available homes on the market is increasing.
In April we saw 14,495 homes hit the market, with an increase to 15,400 homes in May. This additional 405 homes may not seem like a large increase, but it is providing some relief to buyers who have been struggling to find their next home or get an offer accepted in the competitive market.
Providing additional relief is the average number of offers per property drop meaning that the competition is starting to lift. We were at an average of over 6 offers, but are now down 50% to over 3 offers.
Interest rates are still holding steady with an average of 2.95% (per the Mortgage Broker Association), making this a GREAT time to purchase a new home. We do know the FED has committed to keeping interest rates below 4% through 2022, but we don't know how long the current rate will hold.
If you are looking to buy or sell, or are interested in finding out the value of your property, please reach out anytime at 248-886-4450.
We have been having great success not only in helping our buyers win their new homes but in finding homes not yet listed on the market. We would love to help you and your family get to your next destination!
For help with your real estate needs, or to ask any questions, please call: 248-886-4450
To search all available homes for sale currently listed on the market, please visit https://www.thepernateam.com/property-search/search-form/
For an instant online analysis that’s 97% more accurate than Zillow, click here to receive your home evaluation in just 30 seconds http://www.instantonlineanalysis.com/
For an in-depth look at your home’s value using our no-obligation market analysis, click here: https://www.thepernateam.com/sellers/free-market-analysis/
For a glimpse into the service we have provided hundreds of families, click the following link for reviews submitted by our past clients: http://bit.ly/PernaTeamReviews
Join us every Saturday morning at 10:00 am EST for our LIVE Real Estate Webinar where we will be taking all questions! Be sure to like our page so you are notified when the broadcast begins: https://www.facebook.com/metrodetroithomevaluations
If you have been considering a career in Real Estate and would like to hear about our one of a kind training program, message us directly or check out our real estate agent scholarship program at https://www.thepernateam.com/real-estate-scholarship.php