With inventory rising and interest rates down, metro Detroit home prices start to level off

With interest rates primed for a fall, would-be metro Detroit homebuyers should soon see some relief.

While falling mortgage rates help buyers afford more house, what’s more is that two new reports from local real estate organizations show prices are leveling off — and even falling slightly. The leveling off in prices comes as the available inventory on the market has increased in recent months.

Still, metro Detroit home prices remain significantly elevated over a year ago, but data from Farmington Hills-based multiple listing service Realcomp II Ltd. and Troy-based brokerage Re/Max of Southeastern Michigan shows that price growth slowed significantly from June to July, right in the thick of the busy summer buying and selling season. The two reports cover slightly different metrics, but show similar trends. 

The Realcomp report shows that median sales prices edged down about one-third of one percent from June to July, while the Re/Max report shows prices up just slightly, well below 1%, on a month-over-month basis. Both reports show that home prices are up more than 5% year-over-year.

 

However, prices beginning to show some signs of leveling off comes as more inventory comes to market and as interest rates have dropped to their lowest level in a year. 

From a national standpoint, around the start of the year metro Detroit was leading the country in price growth but has now moved steadily back to middle of the pack as more expensive metro areas — New York, Los Angeles and San Diego — have gained momentum.

“July sales bounced back, outpacing both last year and the previous month,” Jeanette Schneider, president of Re/Max, said in a statement. “The uptick in home sales was aided by inventory levels that rose slightly giving more options to buyers and more sales activity. Some sellers have recognized they can take advantage of swift activity and offers near asking price by putting their home on the market now. With interest rates coming down recently, this could fuel more listings and buyers coming to the market.” 

On the inventory front, the total amount of homes on the market grew nearly 8.4% from June to July and was up by 16.6% from a year earlier, per the Realcomp data. New listings last month also grew from both a month and year earlier. 

“Significant upticks in Homes on the Market and New Listings on the Market bode well for the summer selling season,” Realcomp CEO Karen Kage said in a statement. “This comes at a good time as interest rates also move in the right direction.”

With interest rates starting to move down, real estate executives are also expecting that could help improve the inventory situation as owners locked into low interest rates finally see an economic incentive to list their properties. Doing so, however, could also bring significant demand into the market, further driving up prices.

The downward trend on interest rates also means the market is on “the cusp of a (refinancing) boom … where the floodgates open” and homeowners who bought in the last couple of years are able to refinance at lower rates, Mat Ishbia, CEO of Pontiac-based mortgage lender United Wholesale Mortgage said on an earnings call last week.

Compare Properties

Compare
You can only compare 4 properties, any new property added will replace the first one from the comparison.