Northern Michigan Home Sales on the Rise?
Northern Michigan Homes Sales Improving? Depends on how you look at it.
For two consecutive months (August and September) the number of sold homes has trended upward in Northern Michigan. The 2009 year to date number of home sales is up 20% according to the Water Wonderland Board of Realtors, the board that oversees Otsego County Real Estate firms and generally the northern central part of Michigan. That’s the good news! The bad news is that the average home sale price for the same period in the same region has declined 23%.
If you watch the news, you’ll see a lot of coverage of the foreclosure market for the last couple of years. With homeownership being a big part of the American way of life, this is a delicate subject and especially for Realtors when it happens to someone who we helped to purchase the home. It’s a double edge sword for us too, because Realtors are also tasked with the job of selling these homes for the banks after they get them back by default. A bank is able to price the homes very aggressively, write off the bad loan and sell the property at a price less than the previous mortgaged amount. The flood of these foreclosures is the root cause of the decline in average home sales price because these properties are now in direct competition with all home sellers.
For buyers in the market now though, things couldn’t be better. There is a huge inventory of homes for sale at extremely affordable prices and interest rates are still fantastic! As I write this column for example a house can be bought for prices we haven’t seen since the 1990’s on a 30 year fixed loan at 5% or less. Add in government programs like the First Time Home Buyer Tax Credit (up to $8,000) and you’ll find there has never been a better time to buy a house. These reasons are why the number of sales has so drastically increased.
So, have we hit the bottom and started to recover? I cautiously say yes. I like to think that we are at the soft bottom, kind of like the muck at the bottom of the lake. We will probably squish around here for a little bit up and a little bit down, but I think we are at the end of the deep drop off. In Otsego County, since the first of the year the number of homes sold is up in all three categories: those on lots, acreage and waterfront. Once the foreclosures are liquidated back to a more normal level, the home prices can start to climb.
The complete housing recovery is going to be gradual one and it won’t come back anywhere nearly as fast as it fell off. The market is going to come back and will take some time to get to where we were in price two years ago, but I am optimistic that it is on track. Hopefully congress will extend and expand on programs like the New Home Buyer Tax Credit to continue the aid in the recovery as well. So let’s keep our fingers crossed and hope that the current up hill trend continues.