Michigan Market Update 2011

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Conne Terova
Conne Terova
248-318-7342
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Michigan Monthly Market Update - December 2011

December showed a bounce back in buyer activity from a slight slowdown in September through the first half of November. Pending sales were up along with showings and website activity.

With 2011 as the year the market began to move off the bottom, the focus now turns to how fast will we get "back to where we were?" With the extent of the market decline and the economy's slow growth most of the real estate industry is cautious in predicting a return to peak levels. Over time, values will return to and even exceed peak levels and they will do so faster than expected (just as we fell faster than expected). What we are seeing day-to-day "on the ground" is strong pent-up buyer demand for residential real estate and buyers willing to pay more than the asking price (albeit at prices 40% off peak). This activity is not being reflected in the national statistics since they tend to be four to eight months behind current market activity.

This Home Value Index Trend Chart shows our current forecast of home values for Southeast Michigan. It is based on a steadily improving economy and uses a combination of historical appreciation rates and an estimate of the decline in foreclosed properties.

We have moved from a peak valuation point in 2005 to the bottom point in early 2011. It has taken a little over five years to hit the bottom of the market and it should take about the same amount of time to recover as well. Interest rates are the biggest wild card in a steady recovery. With property values at a low-point, there is room in the market for higher rates without hurting demand. However, if rates rise dramatically, three to four years from now when values have recovered, to a degree, this could result in another market set back extending the "back to peak" point a few years. The main point of this exercise is to show that "peak" values are a few years away, so if a seller is waiting for their 2005 values, they should plan on a few years wait time, not months. But, keep in mind, all boats rise in a recovery, so as a seller waits for their value to rise, the property they want to purchase will also rise, but in the future, at higher interest rates and payments!

Finally, the banks are expected to increase their inventory release rate, which will have some impact on appreciation rates this year. However, a large share of those properties are in poor condition and will therefore tend to draw investors and bulk buyers, with less impact on the typical single family property sale. Overall, it cannot be said enough that 2012 and probably 2013, will still be in that perfect balance of an improving seller's market as well as a great buyer's market.

If you'd like more information on the market, like to list your property, or want information on any property from any broker, you may call or email at anytime.

Thank you,

Conne Terova
Realtors That Make It Happen For You!
P: 248-318-7342
cterova@yahoo.com
http://www.teamterova.com