The consistently strong home purchase market has certainly been a focal point for the past few years with sales and prices continuing to rise. Since 2012 the housing market for metro Detroit, and for that matter the entire state, has remained strong. I am quite confident that the housing market will continue this solid trend for 2017, even with a slight rise in mortgage rates.
Home sales have increased steadily from 2012 to 2016, according to Michigan Realtors residential sales statistics; for Ann Arbor, Detroit, Livingston, Oakland, and Macomb counties. Data indicates home values have also increased consistently and in almost all of Southeast Michigan considerably from 2012 to 2016. Most home values have nearly reached pre-recession levels and some have even surpassed them. According to a Realcomp II Ltd. report for southeast Michigan, 2016 had an increase of closed sales by 3.4 percent from 2015 and more than any year in the previous five.
Home prices rose 6.3 percent from the previous year and the number of house showings increased 16.7 percent. However, listings have decreased and low inventory will be the rule for 2017. Millennials are rapidly flexing their muscles as the next big age group of home buyers, but they are waiting until relatively later in life to buy. Baby boomers are expected to make up one-third of all buyers in 2017. Sellers have received 96.9 percent of list price received at sale, an increase of 0.5 percent; and since sales prices should continue to rise, so will increases in list price received.
Consumer confidence is high, home property values have increased substantially, and the buzz of buyers is infectious. In my opinion, now is an excellent time to be in the housing market. Even though interest rates have gone up since the election, with all of the positive economic news, we knew that interest rates were not going down to zero. Rates do have to go up and if you take a look historically, when you have a 30-year rate in the low to mid 4 percent range and a 15-year rate in the high 3’s, I say that’s a positive interest rate environment and quite conducive for vigorous home purchase activity for the year 2017.
The energy and attitude in the market is that if the home is properly presented, it’s going to have multiple offers that could result in bidding wars this spring and summer. We have seen this happen before, to what extent will this happen again this year, we will have to wait and see. I have discussed 2017 housing trends at length with business partners; real estate agents, builders, financial and economic experts and we are all like-minded and very optimistic about what the market holds for this year.
The overall landscape of the home buying market in Michigan is very solid, and that is coupled with what are still historically low interest rates. Even if the rates approach 5 percent, the market is signaling that 2017 will be another strong home purchase year.
Glanz co-founded Capital Mortgage Funding in the spring of 1992 with partner Dan Burke. He is a regular contributor to DBusiness.