Metro DetroitApril 23, 2014
Housing market remains on the rise through long winter
By Joshua Gordon
C & G Staff Writer
Winter usually is a slow time for selling homes, but even in a record-setting winter season in metro Detroit, the housing market has remained on the rise with the market continuing to favor the sellers.
Compared to a few years ago, when houses could be on the market for months on end, Pat Teeley, an associate broker with Re/Max Vision, said sellers can have interested buyers within a few days of listing a home.
“You have one house that comes on the market, and there will be at least a dozen buyers that are looking at it,” Teeley said. “But, obviously, only one gets it, so then you still have 11 out there waiting for their house to come along. Our economy is getting stronger, and there is still not enough inventory.”
Teeley, who mostly sells property along the Woodward corridor — including Royal Oak, Berkley and Ferndale — said with sellers getting multiple offers, they are always looking for the highest and the best.
Some sellers have “got greedy,” Teeley said, listing their homes above market value and having to backpedal to a lower price. But for the most part, the offers only grow once a house is on the market.
“The mindset used to be to go out and give wiggle room so sellers and buyers had room to negotiate. But now, the mentality has switched, so sellers go at market value or below and then get multiple offers, and it is a feeding frenzy situation,” Teeley said. “It is a supply and demand situation where there is still not enough good houses for sale for the amount of potential buyers that are out there.
“These buyers are tired of looking at houses and writing offers and not getting them. It is very frustrating, but buyers need a strong stomach for this market because prices have gone up dramatically.”
Buying a home can be even more costly at this time, at least in up-front costs, said John Kurczak, a Realtor with Keller Williams in Sterling Heights.
While the buyer and seller may settle on one price, a low appraisal could mean the buyer is paying more in closing.
“A buyer and seller may settle on a $200,000 sale price, but the bank will say the home is only worth $180,000, so the buyer will pay the difference in closing because the bank does not agree with the actual sale price,” Kurczak said. “Appraisals are about six months behind the market demand, but the banks don’t want the homes over-appraised, where the market will go back to where it was a few years ago. They are being cautious with their evaluations, but buyers see nothing else available and want to get into something with the prices low.”
Low prices have been another contributing factor in the booming housing market in metro Detroit, Kurczak said. With the lower prices, out-of-state buyers have made the buying market even more crowded.
“I have out-of-town people moving in, and they can’t believe they can buy a home for such a good price, so they are seeing these high-end homes and close in less than 30 days,” he said. “I had a couple from Maryland who bought a 5,000-square-foot home for $821,000 in less than 30 days. Our prices are going up right now, but they are nowhere near other states’, as Michigan has been cautiously increasing prices — not like other states, like California or Texas, that have seen their prices skyrocket.”
Teeley agreed that out-of-state buyers have contributed to a strong market because even if they don’t plan on staying long, they can buy a house and save money when compared to renting.
“I had this engineer who came here from France who bought a Rochester condo, and another couple from Hungary buy a home,” she said. “They feel strongly that their job is good because the economy is getting better, but also the rental rates are through the roof. You can buy a house now, and your payment will be less than renting a house. They may not stay here, but their mortgage payment is cheaper and they have the comfort of knowing renting is easy if they do leave.”
Out-of-state buyers may be looking for the more luxurious homes, but Teeley said local buyers still seem to favor the three-bedroom bungalow type of homes. Homes near downtown districts have also been a popular request.
While buyers may have to work harder to find a home, selling a house isn’t as easy as just making a listing. Kurczak said buyers may have to wait to get a home, but they are wanting houses to be more up-to-date and in need of less work when they move in.
“Buyers are picky out there, and homes that are in perfect condition can sell for $10,000 to $20,000 over list price, easily, because buyers don’t want to do work,” he said. “About 30 percent of the time, my painters or contractors are hired to do work before a home goes on the market because it helps the homes sell quicker. If you put in $6,000 in windows and floors, buyers are giving value to that and realize how much it costs and don’t want to deal with it and want to move right in.
“On the other hand, sellers are seeing the return, and they can sell their updated homes in five days.”