May housing stats show high prices, fast sales and no letup

By: Kara Szymanski | Metro | Published June 30, 2021

 This first-time homebuyer in downtown Rochester bought the house the first day it went on the market, according to Realtor Caron Koteles Riha.

This first-time homebuyer in downtown Rochester bought the house the first day it went on the market, according to Realtor Caron Koteles Riha.

Photo provided by Caron Koteles Riha

 This home in  Rochester Hills has been listed at $470,000 and has received multiple offers.

This home in Rochester Hills has been listed at $470,000 and has received multiple offers.

Photo provided by Caron Koteles Riha

 This home recently sold in Clinton Township.

This home recently sold in Clinton Township.

Photo provided by Kevin Higgins

METRO DETROIT — During a year of many changes for everyone, the housing market also saw some major changes, and it shows no signs of cooling down anytime soon. With high buyer demand, low mortgage rates, and a short supply of inventory, sales prices are surging. Many buyers are finding their dream homes and then finding it difficult to make the catch with so much competition.

According to a press release from the Greater Metropolitan Association of Realtors, or GMAR, the median sales price of homes in the tri-county area in May was up by 21.7% from May of 2020, a rise from $189,000 to $230,000, which is now the highest overall median sales price on record going back to January 2003.

Additionally, when separating the May sales by residential homes and condominium homes, $235,000 is the highest residential median sales price and $217,250 is the highest condominium median sales price on record over the last 18 years.

Also striking was the decrease in the average number of days on the market for a property when comparing May 2020 to May 2021. The average days on the market decreased by 61.8% from 68 to 26 days. The 26 days is the lowest average seen in the last 18 years of records.

Homes are going fast. The Greater Metropolitan Association of Realtors press release included the following sales information from Realcomp.

In Macomb County in May 2020, there were a total of 489 home sales, and in May 2021, there were a total of 1,137. That’s a 132.5% increase.

In Oakland County, there were a total of 673 sales in May 2020; in May 2021, there were a total of 1,845. That’s a 174.1% increase.

In Wayne County, there were a total of 790 sales in May 2020, and in May 2021, there were a total of 1,721. That’s a 117.8% increase.

Kevin Higgins, an associate broker and Realtor at Real Living Kee Realty, said in an email interview that the past few years have been a seller’s market, and as the market of houses available grows smaller, buyers become more competitive.

“For the past three to five years, we have been in a seller’s market ... as we had been experiencing an ‘inventory shortage.’ ... Over the past nine to 12 months, we have been experiencing an ‘inventory crisis.’ As the inventory dwindles, buyers become more and more aggressive; they have continued to bid 10%-20% over the list price with significant appraisal guarantees,” he said.

He said now, many buyers are waiving the requirement for a home inspection, and they are also giving sellers who require post-closing occupancy free occupancy.

He said many buyers are getting discouraged because of the competition.

“It would appear that the market is a little less aggressive, as many buyers who have written two, three, four and more offers that got rejected ... are now sitting on the sidelines because they are burned out from losing so many bidding wars,” said Higgins.

According to the Greater Metropolitan Association of Realtors press release, closed sales increased 108.2% for residential homes and 151% for condo homes. Pending sales increased 1.8% for residential homes and 33.4% for condo homes. Inventory decreased 51% for residential homes and 52.4% for condo homes. The median sales price increased 24.3% to $235,000 for residential homes and 14.4% to $217,250 for condo homes.

The market would seem to have enormous upside for sellers, right up until they have sold their home. Then they could be buyers and have the same struggles as other buyers. As Higgins said, some sellers are coping by getting a period of post-closing occupancy. There are other things that sellers are doing, too.

Caron Koteles Riha, an associate broker with Real Estate One in downtown Rochester, said that after sellers accept an offer, they are moving into a home that they’ve already purchased, moving into a vacation home, or they are deciding to rent until they figure out their next move.

“Some buyers are a little apprehensive of this market; however, we are seeing that the market is gaining strength on the seller side and does not appear to have any change in sight. Interest rates may go up in the next 18-24 months, but at this time, they are holding strong at (the) lowest rates we’ve seen in years,” she said in an email interview.

She said many buyers entering this market are discouraged, but if they are working with a knowledgeable and qualified Realtor who is representing their best interests and keeping them up to date on the constantly evolving market, they will be in good hands and will make a better financial decision today that saves money in the long run.

“Our research shows that this market has ultimately followed the inflation levels since 2000, and we are in line with normal pricing. Given the history of our real estate market, the bubble, the recession, and now the new growth, it does not appear our pricing is inflated at all. With delays in manufacturing, COVID restrictions causing shortages, this market will remain the same if not stronger over the next 18 months,” she said.

With a limited supply of existing homes to purchase, the Greater Metropolitan Association of Realtors said that the focus is on homebuilders to help meet buyer demand.

The difficulty, GMAR stated, is that increasing material and labor costs, along with supply chain challenges, have significantly increased construction costs. In turn, builders are passing these costs on to homebuyers. Summertime, high prices and the end of COVID restrictions might entice people to be sellers, GMAR said, but “historically low levels of homes for sale are likely to continue for some time.”