You’ve seen the headlines, but do they portray the reality of our local housing markets?

We’re three months into the year, and it’s time to assess the status of the housing market.  At the end of 2022, there was a great deal of trepidation about housing.  Prices were up and so were interest rates, and people were wondering how sustainable the market was.  Headlines like these were common in the national news media:

“’Collapse’ in home prices coming, experts say,” and “Will the housing market crash in the US in 2023?” and “Foreclosures are surging:  Is a repeat of the Great Recession looming?” and “When will the housing market crash?”

But do these national headlines accurately reflect what’s going on here locally?  As we wind down the first quarter of 2023, let’s examine some data to see what’s really going on in our local housing markets.

Just a quick reminder:  These articles I share here are researched and written by me!  As part of my commitment to ongoing support for my clients and partners, I write these articles to help them understand what’s really happening in the markets, beyond the headlines and soundbites.

Home price growth

There has been a lot of focus on home price growth during these last few years.  The shortage in home inventory combined with insanely low interest rates created an incredibly competitive housing market, which fueled rapid price growth.   Across the country, from June 2020 to June 2022, home prices increased by over 40%! 

While our local markets did enjoy significant price growth, we did not perform as well as the national average.  Over that same period, Macomb County saw the greatest price increases in our tri-county area, with an increase of almost 27%.  While impressive, that is far short of the national average of 40%. 

If we consider the possibility of a “correction” (read:  reduction) in property values, then it stands to reason that the markets that saw the most significant price increases will also see the most significant price decreases.  In that sense, we expect our local markets to fare better than many markets around the country.

Inventory

At the start of 2023, we saw headlines that implied that the housing market was beginning to shift to favor buyers.  Nationally, housing inventory jumped by 55% from December 2021 to December 2022.  And yes, that is a big increase!  There are two important aspects about this statistic to keep in mind, though:  For starters, the increase of new inventory by 55% still only put total active inventory at less than 700,000 homes nationwide – a near-record low amount of homes for sale.  And secondly, that increase of 55% was the national average.  How did our local markets do?

Locally, we did not see nearly the surge in home inventory.  Over the same period that saw national inventory increase by 55%, the largest inventory increase locally was in Wayne and Macomb counties, where inventory increased by a paltry 16%.  In fact, over that same period, Oakland County saw a 4% reductionin active listings.   

With respect to homes for sale, our local markets did not experience the same surge in inventory that many markets around the country did.  Therefore, while other markets may be softening & possibly even shifting from a seller’s market to one that favors buyers, our local markets remain very competitive and tend to favor sellers.  As has been the case for years now, most buyers will find themselves in multiple-offer situations this Spring and Summer.

Days on Market

An important measure in any housing market is how long a new listing is on the market before it’s under contract to a buyer.  This measure is referred to as “days on market,” or DOM for short.  Generally speaking, in a “healthy” housing market, average DOM for a property is 30 or more.  From January 2022 to January 2023, the national average DOM increased from 19 days to 33 – that’s a BIG DEAL!   This increase means that the level of competition is declining, giving potential buyers more time (and perhaps leverage) to make a decision to buy a home. 

However, our local markets are not enjoying a similar increase in DOM.  In fact, over the same period that saw the national average DOM increase from 19 to 33, DOM in many of our markets (Livingston, Macomb, Oakland, Washtenaw, and Wayne counties) actually decreased!  Homes in our local markets are still selling very quickly and our markets remain very competitive, despite a significant increase in the national average DOM.

So what’s it all mean?  It’s important for economists and analysts to understand national trends in housing, but for folks like you and me – who might be thinking about buying or selling – what really matters is what’s going on in our markets.  When reading about national trends, it’s important to remember that the USA is a big place!  As they say about real estate, it’s all about “Location, location, location!”  All housing markets are LOCAL, so what happens in the San Diego housing market may be different than what happens in, say, Clarkston, MI.    The data here in our local markets makes clear that competition remains high!

If you found this interesting or helpful, please feel free to share it with a friend, family member, or co-worker – it’s my goal to educate and empower as many people as possible during this incredibly unique time in housing!

Here is how I can help!

• If you are looking to purchase a new home or have questions about the market, getting preapproved, etc., or
• If you are a Realtor or a Broker looking for a lender with great financing solutions to help educate your clients on the state of the market to help them feel good about their decisions,
  
  Please call today – I am happy to help however I can!