The pandemic-induced homebuying spree induced by historically low interest rates exacerbated a housing shortage. Slowly, that situation seems to be changing, both in Southeast Michigan and in many other regions of the country.
New reports from metro Detroit real estate businesses released this week show that inventory has returned to levels not seen since the early days of the COVID-19 pandemic, which started in spring 2020, and that sales activity has picked up for the typically busy spring and summer season.
“Increasing inventory levels of homes on the market is always a positive and this past month saw the most homes available in May since 2020,” Karen Kage, CEO of Farmington Hills-based multiple listing service provider Realcomp II Ltd., said in a statement. “Add in the fact that median sales prices remain healthy and you have the makings of a vibrant residential real estate environment to continue to build upon.”
Realcomp’s data from May shows that new listings and the total number of homes on the market in metro Detroit increased, both from one year earlier and the previous month. The former grew 3.8% from last year, while the latter rose 15.7%, per Realcomp data.
The two metrics also increased 14.8% and 15.3% from the previous month, respectively.
Meanwhile, the Realcomp report, as well as a separate report by Troy-based brokerage Re/Max of Southeastern Michigan, each show that closed sales increased in May over the previous month, but still remain behind the same time last year.
The two reports, released monthly, track similar metrics and generally show similar overall trends.
Per Realcomp, closed sales ticked up 11.7% between April and May as the spring buying season kicked into gear. Re/Max also shows a double-digit month-over-month increase.
Closed sales year-over-year, however, declined between 3% and 4.5%, according to the two reports. Pending sales also increased month-over-month, but declined from one year earlier.
“While May didn’t quite match the sales activity we saw a year ago, it did follow the usual seasonal increase of home sales from April, which is typical at this time of year,” Jeanette Schneider, president of the local Re/Max franchise, said in the report.
“Despite interest rates not falling significantly, buyers are actively searching for homes and sellers that come into the market are finding ready buyers. Given that buyers are factoring in the rising costs to buy a home, they aren’t wasting time looking at homes that don’t meet their needs or are overpriced.”
Both reports also show that prices continue to increase.
While the Realcomp and Re/Max reports show increased sales activity from the prior month and increased options for buyers, many house listings in Southeast Michigan are also considered “stale.”
Online brokerage Redfin reported Wednesday that around the country, some 62% of homes on the market have been sitting there for at least 30 days. Closer to home, Realcomp’s report shows that 30 days exactly stands as the average days on market for homes in the region, while Re/Max has that figure at 22 days.
The Redfin report attributes the staleness to “(s)tubbornly high mortgage rates and record-high home prices (having) priced out many homebuyers, tempering demand even at a time of year when the housing market is typically warming up.”
