How long will it be a buyers Market? Will prices for homes keep falling?
Every day we are hit with news updates as to how bad the housing market is because of all the homes for sale. The truth is, not as many homes are selling in our market as new listings becoming available. The reason for slowing sales is media coverage and unemployment impacting sales more than the interest rates or national economic conditions. Michigan is an automotive based state. People seem to be taking a wait and see attitude, what's next? Gas prices have soared using up spendable income. Cutting back on going out to eat has saved some people money. Not taking that well deserved vacation has helped others. Yet others are finding it hard to make ends meet no matter what they cut. Buyer's getting the wrong loan type has also impacted the national and local economies. (ARM'S adjustable rate mortgage) The interest adjustments raised the monthly payments beyond what the buyer could afford along with all the other bills that accumulated with easy credit.
Michigan has been one of the national focal points for lending fraud and foreclosures. In fact, Michigan is in the top five in the United States for both fraudulent lending practices and foreclosures. As the foreclosures mount this adds more homes for sale and more choices for buyers. Usually when you buy a foreclosed home you do not know what you are getting. They are not maintained, no home warranty is available by the seller and your purchase agreement is designed to protect the lender or the party that foreclosed "only". It is not to say that you can not find a gem in the foreclosed market but the truth is not very often. Another myth is that foreclosed homes are bargain priced! Foreclosed homes are "market priced" or even above the market at times.
All the economists and market guru's say we are in this mode for another 18 months. The truth is we are at-least 18 months to maybe 24 months or longer. National economics impact Michigan but automotive production and the related suppliers impact us more. That means if you are selling a home you probably will not get as much as you hoped for, unless you are willing to wait for the right buyer to come along. That also means your home will sit with a for sale sign in the front yard for a year or more. Buyer's have more choices now than in years. The definition of a buyers market is when you have more listings than buyer's. We have a 3 1/2 year supply of homes in most areas. A few years ago we had more buyer's than homes available, a "seller's market".
Buyer's can actually find a bargain on every corner right now. The interest rates are very reasonable sitting at just over 6% in most cases. First time buyer's also have programs to help them purchase. If you are thinking of buying or selling you have to understand the market. Sellers are going to sell lower than they would have liked too because of the competition of other homes being marketed. When the seller sells they are going to be able to buy or replace the home they just sold at a lower price as well...so did the seller actually lose money, probably not. When the market turns to a "seller's market", and it always does, the home values will go up again and so goes the market.
It sounds so simple when you write it down. The truth is the sale and purchase of homes is nerve racking and stressful. In fact, selling a home has been rated as one of the most stressful events in a person's life. That is why most people, (80+%) use someone to help them, when they sell. Why put all the stress and legal obligations on yourself if you don't have too? The market has cycles and has been tracked for a long time. The cycle also impacts the type of representation you can find. Career Realtors are here to help. When the selling gets tough the market creates many "former Realtors" who go back to whatever they were doing before. Finding the right Realtor to help you understand the market and meet your needs is just as important as listing your home at the right price or purchasing with someone knowledgeable to help protect you from the unknown.
I hope this helped you understand a bit more of the "housing market cycle" please email me with any questions or comments. I never said it was easy but it is the market.
Sincerely,
Gary White
Associate Broker
Five Star Real Estate
garywhite@grar.com