Realtors see glimmer of hope in house sales

Under-100K housing stock depleting

The real estate industry has seen more than its share of downs in last few years as the ripple effect of unemployment and the ensuing foreclosure crisis left an unprecedented number of homes on the market.

In the process, home values and sales were crippled, and in turn, so were tax bases, essential services and aesthetics in communities across the state.

While local Realtors are not entirely upbeat — the words “cautiously optimistic” are being used freely — about the state of the housing market in metro Detroit, they are finally starting to see a few ups in terms of home sales.

“In fact, the entire last quarter was phenomenal — we’ve seen some really record-breaking types of activity,” said Realtor David Reese of Real Estate One in Troy.

Realtor Joanna Darmanin of Century 21 Town & Country in Royal Oak concurred: “First-time buyers are the strongest segment of the buyers market right now, and really, across the board, the homes that are selling are those in the lower price ranges — prices are super low; people can’t believe how low the prices are. … I’m selling a ton of houses.”

That activity is due, in part, to the federal Housing and Recovery Act of 2008, which offered first-time homebuyers a tax credit of up to $8,000, or 10 percent of the home’s purchase price. Local Realtors laud it as a major factor in the upsurge of home sales in the under-$100,000 bracket.

“On balance, sales in 2009 were far superior to those of 2008. Last year (’08) nothing was going on, but this year (’09) was better for a couple of reasons: No. 1, the tax credit, and No. 2, other general market dynamics — prices are lower; interest rates are lower; there’s a large inventory (etc.),” said Kelly Sweeney, CEO of Coldwell Banker Weir Manuel Realtors in Birmingham.

Sales swelled the month of November, in particular, as first-time buyers were scrambling to take advantage of the tax credit.

“Some people were settling for homes that weren’t exactly what they wanted because they wanted to get in before the tax credit expired,” said Realtor Gary Patrosso of Keller Williams Realty in St. Clair Shores. “After the extension, what happened was twofold: Because of the extension sales stayed pretty constant, but they did go down a little because people said, ‘OK, now I can back off because now I have more time.’”

With the extension of the first-timer tax credit to April 30, local Realtors expect the flurry of lower-priced homes sales to continue.

“I would say southern Oakland County is experiencing more robust activity than northern Oakland County for a number of factors: Places like Lake Orion and Waterford have a tremendous amount of new construction that was built from 2003-06, and many of the people that were buying new construction are now unemployed; and more mature communities, like Royal Oak or Birmingham, that have been developed over the years don’t have such a large glut of homes on the market,” Sweeney said.    

The same holds true in Macomb County, with sales in more established, and affordable, south-end communities holding steady and sales of newer, more expensive homes to the north still on shaky ground.

“Macomb County is doing quite well, well, OK. It depends on the market segment; we’re down to about a three-month inventory of homes priced below $100,000. Sales of bank-owned and HUD homes in Wayne County, however, have been very good because they’re so inexpensive,” said Patrosso, citing sale prices under $10,000.

Those sales have been effectively depleting the housing stock and stabilizing the prices of lower-priced homes.

“The inventory for homes priced at $100,000 or less is getting skimpy, and we’re starting to see multiple offers, which was unheard of four years ago. We think it’s (the lower-priced market) finally bottoming out,” Reese said.

How that will affect the rest on the market is still uncertain.

“Home prices are really stratified right now,” Sweeney explained. “It’s hard to measure, but what we’re seeing intuitively is prices are still free-falling in the higher-price ranges; they’re still falling slightly in the mid-ranges; and in the lower-price range, they’re starting to stabilize.”          

As for the expansion of the homebuyers tax credit to include “trade- or move-up buyers” — 10 percent of the purchase price, up to $6,500 — it is still too early to tell if it will have a similar effect on mid-range home values and housing stock.

“You really can’t measure that yet,” Sweeney said of the tax credit expansion. “Certainly, it will have an impact, but keep in mind that impact probably won’t be as great as we’ve seen with first-time buyers.”

That’s partially due to lagging mid-range home sales hampering potential trade-up buyers, said Patrosso: “The fact that they threw in the $6,500 incentive for current homeowners is good, but it’ll only affect the people who can sell their home in that time frame.”

“I haven’t seen a huge influx in that type of activity, and I don’t think that credit is going to push too many people — if their house isn’t selling, $6,500 isn’t a lot of money. … It’s just icing on the cake for those who qualify,” said Darmanin, who actually had a client “who was already looking for a home and lucked out because she had already sold her home this year and qualified for the $6,500 credit.”

While local Realtors aren’t expecting much of a change in mid-range — and little positive change in high-range — home sales, they’re remaining cautiously optimistic.

“We’re really looking forward to the next four months — the tax credit extension, plus the expansion, should continue to stimulate sales. We’re anticipating sales in 2010 to be the reverse of last year, when sales were slow in the first quarter,” said Reese, who, like the other Realtors, is expecting “a huge flurry of activity” in the first six months of 2010.

“Twelve months ago, the market looked bleak as inventory hit the high-water mark. In 2008, there were 52,000 homes on the market (locally). In 2009, it was down to 37,000 houses. We’re not where we need to be yet — a healthy market would be closer to 18,000 homes — but we’re trending in the right direction,” said Sweeney, noting that the market isn’t likely to turn fully around until unemployment improves.

More information about buying or selling a home in the current market can be found by contacting a local Realtor: Century 21 Town & Country, Royal Oak, can be reached at (248) 642-8100; Keller Williams, St. Clair Shores, at (586) 541-4058; Real Estate One, Troy, at (248) 813-4900; and Coldwell Banker Weir Manuel, Birmingham, at (248) 644-6300.