Metro Detroit residential real estate has a new abnormal — prices keep going up but the housing inventory keeps dwindling and sales keep sagging.
February marked the 12th consecutive month the median sales price of Metro Detroit home and condominiums saw double-digit growth compared to the same the period a year ago, according to data released Monday by Realcomp, a multiple listing service in Farmington Hills.
The median sales price rose 34 percent to $107,000 in February in the five-county Metro Detroit area. That amounted to a $27,000 improvement from February 2013.
But overall sales declined 14 percent to 3,074 units last month. The number of sales have been falling steadily for at least two years, according Karen Kage, Realcomp CEO.
Inventory — the number of units on the market — also fell by 14 percent last month. Inventory has been vanishing for three years, Kage said. It now stands at 12,531. Back when the market was healthy in 2007, inventory was around 63,500, Kage said.
In Wayne County, the median selling price rose 19 percent to $53,350, while sales dropped 12 percent to 1,301. Inventory sagged to 5,317, a 16 percent decline from February. 2013.
In Oakland County, the median sales price grew 18 percent to $165,000, while sales dropped 12 percent to 975 homes. Inventory dropped 12 percent to 4,052.
In Macomb County, the median sales price climbed 35 percent to $108,000, while units sold dove 20 percent to 633 homes. Inventory decreased 11 percent to 2,340.
In Livingston County, median sales price increased 11 percent to $179,500, but sales fell 11 percent to 165 homes. Inventory dropped 15 percent to 768.
The frigid weather has slowed the market but that is not the only drag on the market, according to Lawrence Yun, chief economist for National Association of Realtors, in a prepared statement.
“Some housing activity will be delayed until spring. At the same time, we can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates,” Yun said. “These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”
The Home Builders Association of Michigan forecasts 15,966 single-family new home permits in 2014, up nearly 20 percent from the 13,359 in 2013. It’s still far from Michigan’s historical average of more than 30,000 new homes per year.
As a whole, Michigan is close to recouping the severe job losses of the last decade and will steadily continue to do so over the next two years, according to an annual forecast by University of Michigan economist George Fulton and his colleagues, Joan Crary and Donald Grimes. The Michigan economy will add 130,000 jobs during 2014 and 2015. Those gains are in addition to the 80,000 new jobs last year and more than a quarter-million since early 2010.
Metro Detroit job growth will be slower, according to a Comerica economic outlook released last month. As of December 2013, payroll jobs increased in the Detroit metro area by 0.8 percent over the previous year, significantly under the U.S. national average of 1.7 percent. The report forecast “modest job growth” for the metro area over the next year.
Courtesy of The Detroit News