Accelerants in the housing market? Demand and low interest rates

December 12, 2020

Ann Arbor Real Estate Numbers

Any fool can know. The point is to understand. — Albert Einstein

I try not to get too excited. I aim to always be a calming influence with clients. But the sales activity from November blew me away. And I’m trying to put it into context.

Take a look at this chart prepared by the Ann Arbor Board of Realtors and released just yesterday:

I’m still digesting them and while I decipher what they might mean let’s look at a couple that really stand out:

  • Single family listings and sales in November up over 27 percent, respectively, compared to a year ago. More than 60 more properties came onto the market last month than the previous November. That means more than 60 more buyers and sellers were able to do a transaction.
  • Condominiums proved also to be in demand: sales up nearly 46 percent compared to a year ago even though condo listings were up less than 4 percent. That means that condominiums listed earlier this year started selling. That is borne out by the drops in average list and sales prices.
  • Single family home prices continue to rise for both listings and sales. Average listing prices are up to $377,582 compared to under $350,000 for November 2019. Sales prices, the real number buyers and sellers are concerned about, also continue to climb, to above $370,000 in 2020 from under $330,000 in 2019.

This average single family home list price continues to slide between low to mid-$300’s and continues its trajectory higher. Here’s the same chart from the Ann Arbor Board from a year ago, comparing November 2019 to November 2018:

One thing you might notice is that the 2019 numbers from the chart above don’t match the recent report figures. I believe that represents some additional counting and shuffling from after the report was issues last year. I’m going to ask the Board about the discrepancy.

But if you look at new single family homes listings and sales for 2018, you’ll see that 2020 even beat them:

  • 215 new s/f listings in 2018 vs. 295 in 2020 (and we have been complaining about nothing to show or sell!)
  • 278 new s/f sales in 2018 vs. 303 sales in 2020.

I’m generally not a numbers guy. I’d much rather be with clients face to face navigating the listing or buying process. But part of my role is to see trends and make sense of them.

The industry news nationwide has been fixated on repeating trends of super low inventories of available for sale homes and condominiums, the changes in how buying and selling of properties works under the coronavirus pandemic and how the historically low interest rates are driving demand for refinancing and purchasing.

What I sense is there’s a push-pull between peoples’ fears of seeing properties–actually going into for sale-homes–and this Gold Rush of mortgage financing created by lenders. “Why wouldn’t we refinance or buy a new home at these rates?” is a common refrain.

The market in Ann Arbor mirrors what’s going on in communities across the country. Even across the region, from Saline to Milan to Dexter to Ypsilanti, we are seeing generally similar numbers sales and pricing, though there are of course some differences.

We Realtors® suspected that the delays in the proverbial “Spring market” caused by lockdowns from the coronavirus pandemic would shift home sales into the fall and beyond. What’s more, I’m often addressing the common questions from clients about the best time of year to sell. I’m beginning to think there are not hard and fast rules regarding this just as with, for example, stocks. You’ve probably heard people say you can’t time the market.

The problem for potential sellers in the Ann Arbor area contemplating putting their home up for sale has been not having somewhere to which to move (if they were staying in the area, perhaps say downsizing). Nearly 300 new listings (more inventory) in November and more than 300 sales indicates that the economic incentive to buy is greater than the fear of coronavirus for many people. And the continuing rise in sales prices gives sellers reasons to at least test the market.

I believe the right time to sell is when you are ready. Sure, winter weather can make things more challenging and the coronavirus has tanked open houses for now. But what’s clear from the numbers is that the most prepared sellers are able to attract buyers and somehow we’re all still getting to the closing table.