The most recent issue of the Michigan Realtor (MAR) is out and has a great article outlining the Michigan housing market compared to the rest of the country. To sum up the article:
- Michigan did not rise to the housing value heights that other states have;
- Housing market recovery will likely follow an economic recovery in Michigan;
- Michigan housing prices are back to 1999/2000 price points.
Team366 and this blog have talked about price being king when it comes to real estate sales. The Big House Data summary for the Fourth Quarter 2007 Inventory Report state:
Putting the area on notice, that to sell a home, you need to be at or lower than the
2000 and 2001 price points, many Pfizer’s relocation department showed us what it takes to sell homes in slow markets….Price.
And that summary from last year has continued to hold true in the Ann Arbor area real estate market for 2008. The article from MAR backs up the fact that Michigan housing values are back to 2000 price points….as a state.
Another interesting fact to glean from the MAR article is that while the national housing market continued to accelerate the number of homes sold, the 2005 housing market in Michigan was down, even though prices remained relatively the same.
|Figure one, taken from the article, shows the average sales price of homes sold in Michigan versus the nation. What is curious is that the nation starts at a higher average sales price than Michigan. Also intriguing is that from 2004 to 2005, Michigan’s average sales price remained stagnant while the national average sales price continued to climb through 2006.
Figure two, also taken from the article, shows the number of sales per year. Again, this is Michigan sales against the national sales. This time, however, to ‘level’ the playing field, all sales are indexed against the year 2000. This means that the number of sales for the state of Michigan and the nation equal an index value of 100.
|By examining this graph, we see that the number of transactions in Michigan for the year 2007 was below the number of transactions in the year 2000. We can also see that the decline in the number of units selling in the state of Michigan began from the year 2004 to the year 2005.
Compared to the national trends, we as a state were ahead of the nation in entering into a housing market slowdown. It can also be inferred that we will likely pull out of the housing market decline before the rest of the nation, but that inference has too many “but’s” in it for this analyst to be comfortable!
It could be posited that Michigan is kind of like the canary in the coal mine: if the canary isn’t doing well, soon the whole shaft is gonna be coughing! The automotive industry stumbled, hard, and Michigan took it is taking it on the chin. Combine the slow down in manufacturing with an economy that is now sputtering, and a credit crunch that makes bankers reach for the antacids and Michigan has been weathering this “storm” for quite some time.
The silver lining for the good folks of Michigan is three fold:
- We didn’t have too far to fall compared to the rest of the nation, so our “readjustment” could be over soon;
- Investors have noticed Michigan’s property values (just like Warren Buffet buys low and sells high, it’s a good sign of the bottom when investors swoop in);
- All the folks that left the state gave up their claim to Michigan’s greatest commodity -FRESH WATER!
Frankly, if you’ve made it this far through the post on real estate housing trends, you deserve a cookie and a pat on the back! Don’t hesitate to drop a comment or give us a ring to talk further about the housing market and how it affects you.