With mortgage rates back to rock-bottom lows and a larger selection of houses finally available, metro Detroit’s housing market is set to turn a corner this spring and become hotter for buyers and sellers.
Buyers should find it easier to get a mortgage, with new low-down-payment programs and fewer paperwork requirements. And unlike the past few years, they should find a less-frenzied atmosphere with fewer bidding wars because there are more homes to choose from.
Sellers are finding it more attractive to put their homes on the market because prices have been rising the past few years, which also means fewer homeowners are underwater on their mortgages and can afford to sell if they want, real estate agents say.
“The spring has finally sprung,” said Kendra McConnell Hurd, a Realtor in Birmingham with Coldwell Banker Weir Manuel. “I think the affordability factor is key — with mortgages rates still so very low and jumbo mortgage rates still very low.”
She listed a waterfront house along Long Lake in Commerce Township for $455,000 late one afternoon last week. Within a few hours, she had six showings lined up for the next day.
It doesn’t hurt that more people have jobs, the stock market continues on a bull market tear and the auto industry has fully recovered and has been hiring. And interest rates for 30-year, fixed-rate mortgages are back below 4% after having risen slightly last year.
Although home sale prices in suburban Detroit are still 20% or more below their peak of a decade ago, prices have been gradually rebounding since mid-2012, with many neighborhoods seeing yearly gains of 10% or more, due in part to a thin supply of move-in-ready houses.
Good homes sell quickly
Despite expanded inventory this year, real estate insiders still expect this home-selling season to be somewhat like last year, with higher prices and multiple bids for desirable properties.
Sales and prices have been up so far across southeast Michigan, according to a review of property transfer records by Bloomfield Township-based Advertising That Works.
“The quality inventory sells very quickly,” said Frank Tarala, a private real estate broker with Principal Brokers Network in Rochester. “There are properties that try to stretch the pricing range, and they seem to eventually sell, but not necessarily for the money they were trying to achieve.”
Oakland County: The number of home sales jumped nearly 17% in the first quarter compared with 2014 as the median sale price rose 5% to $172,750, according to Advertising That Works figures.
■ Macomb County: Sales rose 6.4% for the quarter as prices gained 6.5% to $114,000 from a year ago.
■ Wayne County: Sales for just the month of March were 4.4% higher, and the median sales price climbed 13% to $72,000, the only data available from Advertising that Works.
An asterisk to these numbers was the brutality of last year’s winter. The record snowfall produced an extremely sluggish first quarter in real estate that, by comparison, could make this year’s market seem hotter than it really is.
“We will get a better feel for the true buyer demand later into the spring or early summer,” said Dan Elsea, president of brokerage services with Real Estate One.
Even so, there were 6% more properties on the market in metro Detroit this March than last year, according to data from the Realcomp multiple-listing service, which doesn’t include for-sale-by-owner listings.
The option to build
Ready to move up into a larger house, Mike and Amy Perlman, formerly of Commerce Township, found slim pickings last year among existing homes in the region. “There was something with every house we looked at that wasn’t quite right,” Amy Perlman said.
So they opted to build their own home, choosing a four-bedroom floor plan in the new StoneLeigh development in South Lyon by Hunter Pasteur Homes, where prices range from about $450,000 to $600,000.
With its quality schools, close proximity to I-96 and U.S.-23, and relative affordability, South Lyon has emerged as perhaps the hottest area in southeast Michigan for new home construction.
“You can get the same house in South Lyon that you’ll get in Novi or Northville but for $150,000 or $200,000 less,” said Randy Wertheimer, president of Hunter Pasteur Homes.
The Perlmans and their three children moved into their new two-story brown brick house last month. They had considered waiting until closer to spring to sell their former Commerce Township house, which listed at $329,900, but the strong interest in their home compelled them to sell sooner. They sold in late February for $318,000.
“We did debate whether or not we wanted to wait to see if things picked up, but we ended up having a lot of showing activity late in January and decided a sure-thing offer was our best option,” Amy Perlman said.
Agents say that attractive properties that are realistically priced can still attract multiple offers within days.
Fannie Mae and Freddie Mac recently reintroduced 3%-down mortgage programs for borrowers who haven’t owned a home for years and can meet credit score and low debt-to-income ratio requirements. And banks and lenders have lightened up on their paperwork requirements.
Realtor Jason Matt of Keller Williams in Plymouth recalled how two or three years ago, prospective borrowers often needed to present copies of pay stubs, employment verification and bank account statements on a nearly weekly basis to get a mortgage.
Lenders are still requiring such income and savings information, “but now they’re not continually asking; it was almost like badgering before,” Matt said. “It’s gotten a lot more normalized. And the buyers who shouldn’t have gotten loans in the past are still not getting loans now.”
Agents cite the appraisal process as another reason why sellers should be careful not to be overly ambitious with price demands this spring. Although low appraisals are not scuttling as many deals as in 2013 — when rising prices were still relatively new — many appraisers still err on the conservative side after having lived through a real estate crash.
Deborah Ronayne, associate broker in Northville with Berkshire Hathaway Home Services, has been seeing home appraisals come in as much as 10% below what a seller and buyer have agreed to. To bridge such a gap between the mortgage amount and the sale price, the two parties would need to renegotiate or the buyer must bring additional cash to the closing.
Ronayne had a recent deal involving a house in downtown Northville. The buyer ended up paying an additional $60,000 cash because the property, which sold for $725,000, appraised for only $665,000.
“They really wanted that house — pretty much at any cost,” she said. “But they were a very fortunate buyer that they could do it. Not everybody can.”
Why it’s a good time to buy a home
■ Interest rates are once again super low: 3.66% last week for a 30-year, fixed-rate mortgage compared to 4.34% in April 2014.
■ Mortgage lenders have reintroduced low 3% down payment mortgages
■ Lenders also eased the mortgage approval process for qualified borrowers
■ There are more properties on the market to choose from than last spring. Metro Detroit had 13,494 listings in March for houses and condos, not including properties that were for sale by owner. That is 6% more than last year.
Why it’s a good time to sell a home
■ Sales prices have been steadily rebounding since about 2012. Metro Detroit home prices in January were 50% higher than their lowest post-recession point, yet still 23% off their peak in late 2005 and early 2006, according to the Standard & Poor’s/Case-Shiller Home Price index.
■ Desirable homes that are priced right often get multiple offers
Average rates on a 30-year, fixed-rate mortgage
Last week: 3.66%
September 2014: 4.16%
March 2014: 4.34%
September 2013: 4.49%
March 2013: 3.57%
September 2012: 3.50%
March 2012: 3.95%
Source: Freddie Mac
Recent median home sale prices
Wayne County: $72,000 in March.
Oakland County: $172,750 in first quarter.
Macomb County: $114,000 in first quarter.
Washtenaw County: $185,000 this year through February.
Source: Data collected from county offices by Advertising That Works.
Source ( http://www.freep.com)