August 2013 Monthly Real Estate Market Report
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Just when you think it can’t get any wilder, it does. July activity hit near record highs and lows, highs in terms of home sales and lows in terms of low inventories. Again, more listings and buyers entered the market in July so at the end of the month the net result is fewer homes on the market. The feeding frenzy continues to be concentrated on homes on the market for under 90 days (and for the most part, under two weeks) where 90% of all buyers are focusing. The market continues to show that about 40% of the available listings on the market for over 90 days have only 10% of the buyers looking at them. Despite the wild activity, there are still many sellers who don’t feel the love from all those buyers. In most cases, it is because of a combination of condition, location and price (with price being the ultimate fix of the first two).
The big question of the month has been, “What is the impact of Detroit’s bankruptcy filing on the city’s housing demand?” The answer is, as of now, very little. Demand still remains strong, following the rest of the metro area, with median prices rising to a five-year high and multiple bids for many neighborhoods. For the most part, homebuyers and sellers have anticipated some sort of financial change for the city. Although bankruptcy might not have been the ideal solution, it is a solution for moving forward, giving potential homeowners hope for better things to come.
We try to get ahead of where the market is going by tracking the rate of change of the key housing indicators such as new listings, pending sales and listing inventories. Since real estate sales are seasonal (more activity in the summer, less in the winter) we compare the change in any given month, say June of 2013 to that same month the prior year. By charting those changes we can see the speed at which any given indicator is moving. For example, sales may have been up each month, but the amount of increase is less each month, showing the market is still moving up but at an increasingly slower pace. We can anticipate a slower market even though the raw numbers are still going up. This allows us to look forward to see what trends we can expect in the next 3-6 months.