By David Fleet
Editor
With a low supply of homes and high buyer demand sellers continue to dominate the area real estate market.
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 historically low inventory of existing homes is creating a highly-competitive seller’s market. RealComp is Michigan’s largest multiple listing service for real estate.
“Supply and demand is driving the current market trends,” said Jason Gault, REO-Ortonville.
According to Realcomp, there were 71 homes actively for sale locally in September of 2019, whereas in September of 2020 there were 24 homes for sale – a reduction of 66.2 percent. Pending sales are up 13.7 percent while closed sales are up 37.5 percent respectively over the same period.
“The lack of existing homes and increased buyer demand is creating multiple-offer situations,” said Gault. “This often drives purchasers to write offers that are above asking price and waiving traditional contingencies such as home inspections and appraisals.”
Long term these trends are expected to continue into 2021.
“As the effects of COVID begin to lessen, the market should start to see inventory numbers begin to rise again and buyer demand to remain strong but steady,” he said.
“New construction homes are filling in the void and there is going to be an uptick in foreclosures starting in 2021.”
The increased supply of foreclosed homes should be readily absorbed by the market as strong demand and favorable mortgage options are expected to continue. However, there is a chance that additional legislation extends the moratorium on COVID related foreclosures and evictions.
The local housing market followed the national trend with total housing inventory declining from the prior month and in 2019 to 1.47 million, enough to last 2.7 months – a record low – at the current sales pace, according to the National Association of Realtors. Existing-home sales grew for the fourth consecutive month in September to a seasonally-adjusted annual rate of 6.54 million – up 9.4 percent from the prior month and nearly 21 percent from one year ago. More than 7 in 10 homes sold in September 2020 – 71 percent – were on the market for less than a month. The median existing-home price was $311,800, almost 15 percent more than in September 2019.
“The underlying market fundamentals, along with the Federal Reserve stating they will maintain current rates through 2023 should lead to an eventual return to a more balanced market,” added Gault. “For the short-term however, seller’s will continue to benefit from the current conditions.”