“Shocking!” “Brutal!” “Never seen this before in my career.” These are the words of some Michigan realtors who say they can’t believe what they’re experiencing with the home buying process right now.
It’s an unprecedented seller’s market. Very low inventory and historic low mortgage interest rates have created what can only be called a brutal home-buying perfect storm.
“I’ve been licensed as a real estate agent for 29 years and I’ve never seen anything like this,” Linda Brand, associate broker with eXpRealty at LindaBrandHomes.com told MLive. “You have to be set for disappointment if you’re trying to buy a home. It’s sad. It’s not good for buyers or agents who are working for buyers. It’s great, though, if you’re a listing agent or seller.”
According to Realcomp, Michigan is down to a one-month supply of housing inventory, down 61% from a year ago. And the average number of showings per home has climbed to its highest level in 16 years at 19.5. The median sale price is also up 13.5% from a year ago, from $185,000 to $210,000. That’s the highest it has been for the month in 18 years.
Brand says many people can’t even see a home because they are flying off the market almost as quickly as they’re listed.
“You pull up to see a house, someone’s inside, there’s another waiting to go in. They’re only giving you a 15-minute window to see the house. Sellers are not even allowing showings until the weekend and then they’re taking best offers by Monday. I had one seller who said she had 56 showings over a weekend.”
The low supply of houses on the market has created a type of demand that many realtors say they’ve just never experienced. Jeff Duneske of Duneske Real Estate Advisors at OneDaySold.com says he had a recent deal fall through, in a way that he says he still can’t believe really happened.
“I’ve been in this business for 21 years and have never seen this happen, Duneske told MLive while sounding flabbergasted. “I listed a great home in Commerce Township for $420,000. Showings booked so fast, I had agents asking why they couldn’t see the home. Fast-forward, I had one offer come in at a staggering $50,000 over list price. The runner-up offer was cash at $460,000 – no inspection. They came up to $468,500 that the seller took.”
“The other buyer didn’t believe me when I said the $50,000 over list price offer was not accepted. It was one of the hardest phone calls I’ve ever had to make. There’s not much that takes the wind out of my sails in life, but this did. You’ve got to be kidding me that an offer like that doesn’t make it. It’s incredible.”
The term “cash is king” has never been so true in the housing market as it is now for buyers. Brand says showing homes right now is like a rat race.
“Buyer agents are racing around showing homes, writing offers and just not getting any houses. If you’re a buyer and don’t have a significant cash down payment, you’re not going to win a bidding war. It’s sad. It’s not good for buyers or agents who are working for buyers. It’s great if you’re a listing agent or seller because they’re going to sell houses no matter what.”
Duneske says the listing price right now is essentially comparable to a reserve price at an auction.
“In this market today, it’s basically like a starting price. On average, homes are going for 2% above for all of Southeast Michigan. That’s just incredible. You almost have to hope you have a rich relative that’s going to front you a dump truck of cash. When you get cash offers, it’s really hard for the buyer to not look at them closely.”
Another factor affecting the low inventory is that a lot of homeowners simply aren’t putting their homes up for sale because they are afraid they won’t be able to find a new home to move into.
“There is so much pent-up inventory because sellers are afraid to put their homes on the market,” Duneske said. “I probably have three dozen sellers that would put their homes on the market if they thought they could find their next home to move to.”
So, what does the near future hold for the housing market? Duneske says he doesn’t see things slowing down anytime soon.
“It was only 10 years ago coming out of the recession that the market was turning. It just hasn’t stopped and the reality is, it’s not going to…