Metro Detroit Real Estate Market Update - Updated October 2021!
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.
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
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To search all available homes for sale currently listed on the market, please visit: http://bit.ly/TPT_homesearch
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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