Experts say lower inventory stabilizing real estate market

By Kristyne E. Demske
C & G Staff Writer

Across the country and in metro Detroit, it seems the real estate market has stopped its free fall.

The metro Detroit market is “very stable” right now, said Brian Powers with Keller Williams Macomb-St. Clair in Chesterfield Township.

“We definitely bottomed out for the time being,” he said. “It remains to be seen if this is the bottom or if it’s just a temporary bottom.”

Nationwide, the National Association of Realtors reported that pending home sales rose strongly in October, staying above the levels of this time last year.

The Pending Home Sales Index, which reflects contracts for sale but not closings, was at 93.3 in October. That’s up from 84.5 in September and from 85.5 in October 2010, and economists with NAR said they hope the levels indicate that more buyers are taking advantage of affordable housing stock.

Powers echoed that sentiment, saying that there is not a “consistent and sustainable recovery” of house prices, but simply more transactions occurring. He did, however, say that homes are still sitting on the market for about the same amount of time they did in 2010: about 103 days for a non-foreclosure sale in Macomb County and about 119 days in Oakland County.

“Prices have not skyrocketed at all, but our inventory is down, and I think that may be due to the banks (having) fewer short sales on the market,” said Robert Dundon, a Realtor in Birmingham with Coldwell Banker Weir Manuel. “If they’re priced well, they’re selling and selling relatively quickly.”

He said he doesn’t believe prices will return to pre-bust levels until 2019 or 2020, but nevertheless, 2011 is definitely better for the housing market than the past few years.

“I think most agents would say that this year was better than the year before,” he said.

Powers said both new and existing homeowners are in the market right now. Buyers looking to upgrade a starter home are still losing some money on the sale of that home, but they’re finding that they will save much more on their new home than they’re giving back, he said.

“We are still seeing a lot of first-time buyers,” he said. “With the interest rates being so low and the rental market the last couple years has just gone through the roof,” buying a home will save money on a month-to-month basis.

“It’s like a no-brainer.”

Rob LaPerre, president of Great Lakes Mortgage Funding in Sterling Heights, said that the housing market picked up a bit this summer with a small increase in pricing.

But, he said, it still is not easy for buyers to get into a home.

“The inventory for good, clean properties is limited,” he said.

He said there are still many distressed properties clogging up the market, driving up the demand for properties in good repair that are priced well and not tied up in foreclosure proceedings.

LaPerre said most buyers have already become accustomed to the tighter requirements for home financing, but more are able to move into homes now even with lower incomes.

“Rates are great right now, so I think that’s pushing people more into the market,” he said. “Some people’s incomes (are) down and making less money, but house prices are down so much and the rates are more affordable (so they are) able to buy houses.

“In this market, a lot of area’s prices are down 30, 40 percent from what they were five years ago.”

And many are renting out their current home to upgrade to one that’s new to them.

“My house might be a little upside-down, but you know what? The rental market’s real good right now because of the strict guidelines to getting financing,” he said.

A buyer cannot get Federal Housing Administration (FHA) financing for a home for three years after a foreclosure, he said.

“In the meantime, a lot of those people were families, and they’re looking for good houses to rent.”

LaPerre said he’s seen a small up-tick in new home construction, as well.

“Whereas a year ago, I never got a call on” new home construction loans … “in the past three months, I’ve gotten maybe three calls,” he said. “I think that the builders (are) getting these lots for a good enough price and are able to reduce their costs.”

“Inventory levels are still lower than where they were a couple years ago, and that’s really helped to stabilize the market,” said Powers.

The National Association of Home Builders pointed to data from the U.S. Commerce Department to indicate that sales of new homes are inching up right now. However, the nationwide inventory of new homes for sale was still at an all-time record low for October, with about a six-month supply of new homes.

But some local builders said they are seeing signs of promise.

On the higher end of the market, custom homebuilder Todd Emerson said he has seen a large increase in the number of people wanting a new home and thinks 2012 will be even better.

“I believe that next year I may as much as double my sales,” said Emerson, with Sterling Development in Birmingham. He constructs new homes in the areas of Birmingham, Bloomfield Hills and Franklin.

“Usually, when things start to happen and people start to spend money, it’s usually the top tier, which are my customers, and it trickles down from there,” he said.

You can reach C & G Staff Writer Kristyne E. Demske at kdemske@candgnews.com or at (586)498-1041.