Photo provided by Sophie Smith


Realtors report 2018 was a seller’s market

By: Brendan Losinski | C&G Newspapers | Published December 28, 2018

METRO DETROIT — Real estate professionals are saying 2018 strongly leaned toward being a seller’s market in southeast Michigan, but they added that this could begin to shift in 2019.

John Farhat, a Realtor with Keller Williams, said 2018 definitely showed a low inventory of homes for sale and a large number of prospective buyers in most Detroit area communities, which made selling homes far easier.

“2018 was still a seller’s market … much like 2017,” said Farhat. “My business and the business of a lot of other agents in my office included a lot of listings. I’ve heard rumblings that things could be shifting in 2019 to a buyer’s market, but I’m not convinced. I think it becoming a neutral market in 2019 is more likely, and it could shift further to a buyer’s market farther in the future. In some areas, you could start to see a shift in what has been an ultra-competitive seller’s market.”

“It was definitely a seller’s market,” agreed Andrea Esse, of ReMax Defined. “It was good across the board. There weren’t as many transactions as 2017, but the average sale price did go up.”

Experts generally agree that the reason for the market’s current state was the low inventory of homes and low interest rates, saying that the Federal Reserve of the United States has set relatively low interest rates for the last few years.

“Demand was so high and inventory was very low in 2018. I sell primarily in Royal Oak, and the demand was so much higher than the inventory of homes available,” Farhat explained. “Interest rates will play an interesting role in this shift. Even if buyers think prices will level off, I think interest rates will rise. If they go up, it could negate the lowering of a purchase price.”

Esse said interest rates are what people should be looking at when determining what 2019’s housing market will look like.

“There was a struggle for buyers, as prices could be higher and properties were moving quickly. Homes were selling very quickly if they were priced right. There was a lot of bidding between buyers. Interest rates were very great, so this prompted this situation,” she said. “Now, interest rates are going up and are sort of stabilizing. Things are still moving and selling, but the interest rates are playing a big role. … If these interest rates stay relatively stable, I think 2019 will be a big housing season.”

A seller’s market also means there are more people buying homes as well. Farhat said this means there is stronger confidence and suggests an improving economy.

“What’s been helping the market is buyer confidence and employment confidence,” he said. “That had held back the market in the past, and people are now feeling more secure that they will maintain their job and income level, so they are more likely to go in on a house; but the recent news about (General Motors) shutting down some plants could cause some people in Michigan to think twice and consider that the economy isn’t as secure as they thought.”

While winter is generally considered a slow season for selling a home, Farhat said that taking a home off the market during the colder months could be a mistake.

“There’s pros and cons to selling in winter. The negative is that there’s an obvious lack of appeal with no green grass or blooming trees outside. Those factors do affect people’s emotions, and emotion is a major factor in buying a house,” he remarked. “I believe there are buyers year-round, and if you take your house off the market in the winter, you could miss buyers who are looking in the winter. This has the added factor of there being less competition in the winter.”

Esse said selling a home in the winter is possible, but people need to be aware of the extra challenges that come with it.

“In the winter months, make sure you’re pricing adaptively to stay competitive, and make sure the home has easy access with regard to snow and other weather issues,” said Esse. “Just make sure agents can freely show the home. This isn’t the busy season, so make it as easy as possible to access the home.”

Farhat said there are two types of houses that are selling popularly right now. This first is a house completely in need of everything; one that needs a major remodel or tear-down that investors can rebuild and then upsell. The other type is a home that is as move-in ready as possible. The people buying these homes are those who don’t have $50,000 to put into rehabilitating a house, so sellers would want to make their home as finished as possible. He said people shouldn’t be afraid of investing money into a house to make it more appealing to buyers.

“I wouldn’t be concerned about investing money on making a house ready to sell; you can possibly double any investment you put in by, for example, fixing up your kitchen before putting it up for sale,” said Farhat. “The younger generation also are buying more houses, and I think they have a higher-level expectation than the previous generation. Things that used to be luxuries are now considered necessities.”

Esse added that there are factors that people looking to sell a home any time of year should look at.

“People should be putting themselves in the perspective of the buyer,” Esse advised. “Take a look at the home in a different lens. Look at the curb appeal — what people see when they pull up or walk up to the property. Look at the lawn, the decor and the whole experience. Ask an agent how they would recommend you stage the house. Then, of course, you want to get the right agent with the right experience and knowledge. They also can tell you how to properly price a home. Don’t rely on online sources like www.zillow.com.”