Current market conditions and a tight inventory of houses for sale across metro Detroit will create a competitive market and push prices higher this year, says Jeanette Schneider, vice president of RE/MAX of Southeastern Michigan.
“In the past, you had the luxury of looking at a lot of homes, and then going home and sleeping on it,” Schneider says. “Today, if you’re serious about a house, you’re going to have to move quickly.”
Schneider anticipates the inventory of homes for sale in the region will remain lower than the demand for homes. For prospective buyers, Schneider recommends they establish what they can afford before starting to look for homes.
“What the buyers really want to do is be very clear on what their needs are versus what their wants are,” Schneider says. “The more clear they can be, the better. We’ve seen bidding wars happen in many cases.”
She believes that as the region’s economy will continue to recover and home prices will rise. In 2013, the average home prices in the region jumped from $127,401 in 2012 to $154,447.
Additionally, this year marks the rollout of New Qualified Mortgage rules. From this point forward, new mortgages must only be 30 years or less, whether with a fixed rate or an adjustable rate. Borrowers also must pass a point/fee test in order to qualify, which is resulting in more stringent lending.
It’s also likely that “boomerang buyers” will enter the market as recent revisions to Federal Housing Administration guidelines allow homeowners who lost their home to foreclosure to reenter the market as buyers. The traditional seven-year waiting period has been revised to just one year, in some cases.
While the new mortgage rules and guideline revisions will impact some buyers, Schneider doesn’t think either will affect a “significant number of people to throw off the market one way or another.”
Overall, Schneider is optimistic about 2014. “It’s nice to see closings getting back to an actual seller and buyer and not banks through the foreclosure process. (The market) is fun again.”