By David Fleet
For millions of people, their home has taken on a new role.
“Before the pandemic, people would eat, drink, sleep and watch tv in their house,” said Michael Stoskopf, CEO of the Home Builders Association of Southeastern Michigan. “Now, since the pandemic hit, they actually have to live in their house. It’s become the office and school too.”
Stoskopf, who represents more than 1,500 building related trades in Oakland, Wayne, Macomb and St. Clair counties said that soon after the pandemic started construction of homes was halted by executive order.
“When construction was allowed to resume in May many homeowners realized they wanted to remodel, add on or just build a new home,” he said. “We saw a dramatic increase for the months June through December (2020) there were more new homes built in the past seven months than the same time in 2019.”
“Part of that (increase) is when existing homes decline new home construction increases to make up for that,” he said. “Couple that with record low interest rates and that makes matters worse.”
Even prior to the pandemic, housing inventory hit record lows, and that trend continues in 2021, say real estate professionals.
According to reports from Realcomp released last week for the 48462 area code, which includes sections of Atlas, Brandon and Groveland townships within The Citizen’s readership area the historically low inventory of existing homes which is creating a highly-competitive seller’s market.
That trend is expected to continue into the new year according to RealComp is Michigan’s largest multiple listing service for real estate.
“The drop (in existing homes inventory) is pretty substantial,” said Jason Gault, REO-Ortonville.
According to the report Months Supply of Homes for Sale in the entire MLS area in Southeast Michigan is down about 48 percent and in the 48462 area it is down 61 percent.
“This equates to about 1.4 months supply in SE Michigan and about 1.0 month supply in (zip code) 48462,” said Gault. “A stable market is generally a market that fluctuates between 4 to 6 months’ supply of homes. This is still, however, a very strong seller market.”
Not only did things slow up in the industry in 2021, but home prices also skyrocketed.
“For sellers, it could be the perfect opportunity,” he said. “This is a good time to sell if you are selling a starter home as the competition is strongest in this market segment or you haven’t refinanced in a few years. Rates are at the lowest they have been right now.”
“Also, if you are looking to downsize,” he said. “Yes the competition is tough, but you will get to capitalize on the sale of your larger home while spending less on a smaller home and taking advantage of lower interest rates today that will save you additional money over time. You have additional options on where to live while you are shopping for your next home, such as with relatives.”
With the significant decline in existing home sales home record numbers of buyers are considering new construction, added Stoskopf
“The biggest challenge is the demand for new construction is so high,” he said. “The time-line to get in a new home can be up to seven months, that’s if the builder has the capacity and the trade base.”
Stoskopf advice, be prepared.
“Understand what you can afford and how confident you are in your job,” he said. “Be fiscally responsible and do a One Time Close Construction loan. We don’t want a repeat of the Great Recession.”