Michigan realtors say they can feel a change coming in the market. After a summer of competitive pricing, huge cash offers and waitlists just to see houses, they’re seeing buyer burnout.
Detroit broker Darralyn Bowers said the demand has started to level out as buyers are taking a step back to assess if they can compete in such a hot market.
“Buyers have become frustrated with the system,” she said. “They’ve become frustrated with the fact that they cannot get an offer through. These multiple offers, these over asking price, the zealousness of the market — it’s kind of turned off some buyers and they’ve decided to wait.”
July numbers show the days on the market hit a new milestone in Michigan after breaking records all summer, according to real estate data company Realcomp.
In May, the average days on market decreased by 61.8% compared to 2020, coming down from 68 to 26 days. The pace continued to pick up from there. On average, homes were on the market in July for 21 days, the lowest average in 18 years, according to Realcomp.
Related: Michigan home prices highest since 2003
In Jackson County, the median sales price is still almost 10% higher than last year, but it’s the number of showings for each listing that indicates the market correcting itself said Missy Vandercook, Sproat Realty associate broker.
In a usual market, she would expect about three offers per listing. This summer that soared to double digits with 10 to 20 offers per listing. As the summer comes to an end that frenzied bidding war is simmering down.
“We’re starting to see not necessarily prices going down, but they’re leveling out,” she said. “We’re not seeing that huge, overbidding like we were earlier in the spring and summer.”
Historically low interest rates will continue to incentivize buyers and Vandercook points out that if a buyer can stomach the wild ride then it’s a good time to stretch their dollar. She warns, though, that buyers should be wary of going beyond their budget just to win an offer.
“Instead of going about it as what you’re pre-approved to, it’s what can you afford,” she said.
For those waiting for a “normal” market, it’s still unclear when that will be or how that will look. But Lansing broker Pat Feldpausch said a cool down is on the horizon.
“I think it’s a little too early to determine what this market has done, but we could surely feel something is happening,” he said.
He factors in school starting, the Delta variant and the eviction moratorium into the supply and demand equation.
Michigan’s real estate supply in July was still 36% lower than the previous year, according to Realcomp.
Nationally, supply has inched up as sellers jump in the market and building costs level out, but supply is still overall 18.8% lower than a year ago, according to The National Association of REALTORS.
Foreclosed homes play a role in this supply as well, Feldpausch said. Older clients came to his Re/Max office in Clinton County looking to sell their family home to make a profit and opted to live at their second, summer home. Now vacation is over and those retirees are looking to buy again, he said.
“They’re going back and they’re living at the cottages waiting to see what happened to the market and to see if they can buy it when it gets lower,” he said. “We were expecting to see a lot more homes with a moratorium dropping off and, of course, we know that didn’t happen.”
Related: Pandemic hasn’t spurred ‘eviction tsunami,’ but experts fear it could still hit
The Centers for Disease Control eviction moratorium was set to end June 30. The Biden administration extended, and the Supreme Court approved, the moratorium for another month. Then on Aug. 3, Biden announced a 60-day extension for counties with high transmission of COVID-19. About 95% of the nation’s counties meet that threshold, according to CDC data.
Early in the pandemic, experts dreaded a “tsunami” of evictions in Michigan given the state was averaging 14,000 eviction case filings per month pre-pandemic. In July 2020, it was estimated there would be a backlog of 80,000 eviction cases.
But the moratoriums have kept this at bay.
The most reliable factor, Feldpausch said, is that there’s always a reason to move.
“What happens is people can only wait so long so they end up buying, it’s just the nature of what’s going to happen,” he said. “Life is moving at 100 miles an hour versus what it was in the 50s, but people still do their moves.”
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