How long will the Michigan housing market be like this? Will it cool down? Is it going to continue to heat up? A question that is making wrinkles appear and hair fall out all over the country for people within the state of Michigan, and people looking to relocate to Michigan. Stick around, because I’m going to show you where the markets’ been and where it’s going, starting right now.
In order to give you a great representation of the housing market in Michigan, I thought the best way to do this would be to give you the cold hard facts, and do some detailed interpretation of the data. I’ll take into account the month’s supply, shows per listing, sale price, pending sales, closed sales, and much more.
So how can we tell if a market is cooling down?
- Original price vs. sale price (3 years)
- Pct of list price (this market is so crazy even the software can’t comprehend over 100%)
- month’s supply,
- shows per listing (*increase demand, less inventory, not necessarily over priced)
- sale price,
- pending sales,
- closed sales
As you can tell, the phrase “housing market crash” is a popular one, and media outlets are using it to get some additional views, but I thought I would just throw some real facts at you instead of create panic for you so you’d make a decision without thinking.
So when people tell you, yeah Michigan’s housing market is definitely cooling down, it’s winter time, no one buys homes in the winter. Just laugh at them a little bit because Michigan feels like it’s winter more than it’s not, and you and I both know the whole state doesn’t put their real estate plans on a 4+ month hold or real estate professionals probably wouldn’t have a job.
It’s unfortunate, but based on what I showed you about homes going above asking price, you’ll have to keep that in mind when budgeting, because this market as of right now, is not one you can have the mentality that you’re going to find this hidden gem way under asking price, because for starters, that’s what every buyers goal is in this market. And if for some reason you get an accepted offer under asking price, chances are that home was overpriced anyway and you are just getting it for “market value” or there’s something extremely wrong with the home and you just haven’t gotten your inspection yet to figure it out.
That’s the strategy when it comes to pricing homes today. You’re either pricing it lower than “market value” to cause a bidding war and to drive the price much higher, which is something a few of my clients wanted to take advantage of and we ended up locking in an offer $29,000 over asking price which came out to roughly $12,000 over market value. The other so called strategy is to price the home high, and accept an offer below the asking price to make the buyer think they are getting a deal, but in reality, the home was just extremely overpriced anyway.
I have made a few videos about pricing strategies, 2022 market conditions, and housing forecasts, where I went deeper into where mortgage rates are going, so if you want to watch a video on that, I’ll link it below. Aside from how the market is at the moment, it’s no secret that mortgage rates are climbing whether we like it or not. In August, I capitalized on a 2.6% interest rate. Now I have clients who are getting approved for upwards of 3.6% in December and early January. That may not seem like a significant jump to you, but what about in the next two months? Or the next two months after that?
Before you finally pull the trigger on getting pre-approved, checking your credit report and getting all your ducks in a row, you could be securing a 4.3% mortgage rate. And as you could see from the graphs I showed you, Inclines and declines were happening at a gradual rate, it wasn’t just an all at once jump in the graph. So if you’re waiting for 2008 to happen all over again so you can buy up houses for cents on the dollar, it most likely won’t happen unless we have some catastrophe of some kind that drives a wedge in these educated forecasts.
So the question remains for some of you out there. Should you wait to buy a home or should you buy one now? And at the end of the day it is your choice and up to you. If you ask a Realtor, they’ll say the best time to buy a house is always 5 years ago, and that’s true, but it’s not so much that, as it is advice to not just wait around for the perfect moment, because truthfully there isn’t one, and if you know of one, I bet you knew Nostradamus was wrong about 2012. In all seriousness, I say it never hurts to start now even if the process is dragged out. If you’re actually planning on doing something, just do it. Mortgage rates aren’t getting any lower and if you’re one of the many buyers who finds a home they actually like in this inventory shortage, then by all means get on it.
If you have questions or hypotheticals you want to run by me, please don’t hesitate to reach out. I’m just a call, text or email away anytime.
Andrew McManamon is a licensed Real Estate Professional in the great state of Michigan. His philosophy to put people first has paved the way to his extraordinary real estate career. Born and raised in Brighton, MI, Andrew acquired a bachelors degree in business management and marketing from Cleary University in Howell, MI. The combination of his experience and education allows him to take a strategic approach towards every transaction and help his clients make more informed and confident decisions.