ST. JOSEPH, MI – “After the surge of homes sold during the first quarter, thanks to the Stimulus Tax Credit, we have seen a steady drop in the number of houses sold each month, compared to the same month in 2009, to the point that our year-to-date number has dipped 3 percent below where we were at in September 2009. The good news for sellers is that we have continued to see the average and median selling prices steadily increase each month. At the end of the third quarter, average and median selling prices were up 9 percent over selling prices at this time in 2009. The higher selling prices have kept the year-to-date total dollar volume up 6 percent over last year,” stated Gary Walter, EVP, of the Southwestern Michigan Association of REALTORS®, Inc.
“The number of houses sold fell 17 percent from the number of houses sold in August 2010 and 23 percent from the number sold in September 2009. This is the second time this year that we have had such a huge swing in unit sales when comparing to last year. In July we had a 29 percent dip in sales. While we sold fewer houses, the selling prices on a monthly basis climbed back up to where we were in peak sales years such as 2006 and 2007. In fact, comparing to September 2009, the average selling price this year in September was up 4 percent ($180,957 vs. $174,728) and the median skyrocketed by comparison up to 20 percent ($125,750 vs. $104,928),” Walter continued. The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Nationally, existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.
Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.
The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.
Regionally, existing-home sales in the Midwest jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”
To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how homeownership builds wealth over the long term,” Golder added.
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.
In SWMI, Walter stated that in September, two-thirds of the homes sold and closed where through normal transactions. “Transactions involving foreclosed or bank owned properties were at 31 percent. This is roughly where we were last month. Our lowest level in bank-owned or foreclosed homes as a part of all closed transactions was 24 percent in July. The lowest point in 2009 was 34 percent,” he said.
“Starting the first of October, we had 3,574 houses listed for sale, which is a 5 percent drop from the number of houses listed for sale in September. With this inventory level, based on the last 12- month’s sales, we have a 17.3-month supply of homes for sale, which is down significantly from last year when we had a 19.0-month supply. The increased sales caused by the tax credit during February through April helped to reduce the inventory this year,” Walter reported.
Nationally, the total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12.0-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.
“The mortgage interest rate continues to slip to historically low numbers each month. Housing is very affordable for buyers and buyers continue to have a large selection of houses from which to chose their dream home. Sellers are finding increasing and more stable prices,” stated Walter. Interest rates in SWMI decreased from 4.49 percent in August to 4.47 percent in September. Interest rates in September, 2009 were 5.3 percent.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.
The numbers reported for local sales include residential property in Berrien, and the western half of Van Buren and Cass counties. All three counties are included in numbers and percentages and do not reflect differences in any individual areas.
The Southwestern Michigan Association of REALTORS®, Inc. is a professional trade association for real estate licensees and ancillary service providers for the real estate industry in Van Buren, Berrien and Cass counties. The Association is located at 3123 Lake Shore Drive St. Joseph, MI 49085, (269) 983.6375. They can also be contacted through their web site, www.swmar.com.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.