So, the story goes that coal miners would carry caged canaries into the mines with them. Canaries, being very sensitive to toxic gas, would cease singing as the gas levels rose to dangerous levels. Thus the phrase canary in a coal mine.
I have maintained for some time now that Michigan is the canary in the housing coal mine for some time now. Our housing market peak was late 2004/early-mid 2005. We then saw the market decline from mid 2005 till present.
A lot of what is currently griping the nation’s housing market is a mis-perception. Especially as that perception applies to the Ann Arbor real estate market. The perception is that homes are not selling and cannot sell no matter what is done with the quality, price or marketing of that home. The reality is that well-priced, great quality homes sell even before their nearest foreclosed competition.
Of the 5 buyers this year that told me, “We only want to look at foreclosures, because that’s where the values are,” only one of them actually put an offer in on foreclosed home.
As a Realtor®, I have been working with buyers and sellers in this changing market for a few years now. It is with some bemusement that I have been able to counsel agents across the country on how to handle the depreciating markets that they are now experiencing. Bemused, because what they are now experiencing, Michigan went through a few years ago!
I guess this article from Yahoo! exemplifies just how rough things have gotten across the country. Michigan has been dealing with all of these issues for some time now, except maybe the recession thing, but we sure battled the perception of a one state recession! These are the nine items they believe will cause the 2009 housing market to continue to flat-line:
9 Housing-Market Head Winds for 2009
- Recession (Started 12/07…in 2008 we sold MORE real estate than in 2007!)
- Higher Unemployment (still over 93% of folks are employed!)
- Consumer Confidence (perception v. reality: “we’re fine, but my neighbor….”)
- The Underwater Effect (sellers that need to sell, will and do)
- Tighter Credit (Been in place for nearly all of 2008. Not a new issue for 2009.)
- Slowing Household Formation (those households still need a roof over their head!)
- Radioactive Effect (Investor money has FLOODED into SE Michigan in last year)
- Foreclosure Sales (Michigan no longer leads in new foreclosures, not over with, but slowing)
- Subprime Mortgages (This goes hand-in-hand with Underwater Effect)
Well, since Michigan has been in this housing market longer than the majority of the country, and we’ve been dealing with most of the nine issues above, here are my reasons you should be in the Michigan housing market NOW:
- Lower Prices: With housing prices as low as they are, getting into a bigger home than you could afford a few years ago is possible. “The time to buy is when there’s blood in the streets,” Baron Rothschild;
- Mortgage Rates: With 30 year fixed rates hovering around the 5% mark, the combination of price and rates is great! But when I point this out everyone says, “Yeah, but who can get financed?” There’s that perception thing again. Perception is that it’s really hard to get financed for even a car these days. Reality is that in the span of an hour waiting for my oil to be changed, I saw 4 cars get purchased via financing. Did I also mention that 2008 was my best year in real estate EVER? If no one could get financed, how did that happen?
- Inventory: Choices, choices, choices! Want to look at only foreclosures? We got ’em. Want to look for 3 bedroom, 2 and a half bath homes on the Old West Side of Ann Arbor? We can do that too! Whatever you are looking for, I’m confident a property matching your needs is out there.
- Upsizing: If you own a home that is getting too tight, you should consider entering the market. The potential scenario you could experience is that for the same amount you purchased your home, you could purchase something larger. That means more square feet for the same dollars!
What are your thoughts about the 2009 Ann Arbor real estate market, or even the national market?