Shutterstock image

Inventory still lacking in housing market, may continue into 2018

By: Joshua Gordon | C&G Newspapers | Published December 11, 2017


METRO DETROIT — The housing market in metro Detroit continues to follow the recent trend of benefiting the sellers as 2017 comes to a close, as there isn’t enough inventory to fulfill the demand from buyers.

And part of the reason for that, Realtor Debbie Corey said, starts at the top, as empty nesters are being cautious in downsizing, making it hard for the families looking to upgrade to find a home, as well as the first-time homebuyers who are next in line for the starter houses.

“We have been stalled in the market because we have a lot of baby boomers who want to downsize, but are afraid they can’t find something else and will be homeless,” said Corey, who works at Real Living Kee Realty in Rochester. “It has held up a lot of the inventory coming on the market, and it has had a domino effect.

“I think they just need to be educated that they can find that next place and sell their home at the same time.”

With inventory lacking, it means homes are selling fast and for top dollar, said Bill Frohriep, who works for Century 21 Town & Country in Clinton Township.

The pace is not as brisk as it was in the spring and summer, Frohriep said, but that is to be expected as the market is less crowded on both sides during the colder months.

Still, there are always people looking for homes, so if people are thinking of putting their home on the market, Frohriep said they should have no problem finding a buyer.

“You have people transferring into town for their job or just sold their home and are looking,” he said. “There is no question we have more sales close in the middle of the year, as people try to work around the school year, but I am not in hibernation in the wintertime. For the seller, there is less competition in the winter months.”

Because the market continues to do well and benefit the sellers, Frohriep said that means home values have also gone up. It all adds up to little to no disadvantage for sellers in this type of market, he added.

Buyers also have a benefit, as interest rates continue to hover around 4 percent. Still, Frohriep said buyers have to be prepared to move fast and make concessions if they want to get a home.

“Make sure you have done everything upfront and are pre-approved in case there are multiple offers, so you know what you can afford,” he said. “You may have to relax your list of must-have items so you can gain more possible properties to view and consider. If you are looking in too small of an area with too much criteria, that is fewer homes you have to look at.”

Corey agreed that a list of too many criteria may make it hard to find a home with limited inventory and so many buyers. While buyers are still looking for homes that have renovated kitchens and bathrooms, Corey said potential buyers may need to be willing to put in some “sweat equity” to get everything they want.

“You have younger people who don’t want to do anything and older people who want the same amenities in a smaller house,” she said. “There are unrealistic expectations, and you have to be open to doing a few things.”

Renovated kitchens and bathrooms help house values, Corey said, but a project like finishing a basement won’t get a seller the same type of return on investment.

As far as the type of homes that buyers are seeking, Corey and Frohriep agreed that ranch-style homes are in high demand. It is a popular build style around metro Detroit, Frohriep said, so people are familiar with it and maybe grew up in that type of home, while older buyers benefit from having everything on the same floor.

Two-story homes are still popular, however, among families that need more space, he said. Most buyers are also looking at things like updated roofs, furnaces and two-car garages as additional amenities that won’t require additional money after closing.

Many buyers are preferring to be near active downtowns, Corey said, but if they are in a neighborhood, they like to have things like good schools, sidewalks and a community pool.

As for what 2018 holds in the local housing market, Frohriep said he expects the market to continue to be similar to 2017, with housing values increasing between 3 and 5 percent, as long as interest rates remain stable.

Corey said she hopes to see more inventory, as the buyers are getting anxious to find their dream home.

“There is this pent-up demand, and if we don’t have the inventory, that will probably be around for a while,” she said. “I think it will be hot for the first-time buyers, and there will be more opportunities for them, but to move the market, we have to move the empty nesters.”