It’s no secret that the housing market is hot in Northern Michigan. Homes are selling for more, and often faster than ever before. Anyone shopping for a home with a price tag of $300,000 or less will tell you that unless you’re prepared to make offers the day you see homes, you’re most likely not going to be competitive.
But, the mid and lower tiers of the housing market aren’t the only places seeing incredible growth in 2020. Luxury homes, specifically those with sale prices of over $1,000,000, are seeing significant jumps in terms of activity in 2020; the likes of which we haven’t seen since the ominous days of 2006 and 2007.
Fear not, we don’t believe this isn’t a repeat of the bad-mortgage housing crash of 12 years ago. The market’s footing may be a little less certain than we’re comfortable with, but certainly not for the same reasons.
In this article, we’ll take a look at some statistics going back the last five years from three counties in Northern Michigan to try and understand exactly what’s happening, and also go over three reasons why we’re seeing this activity.
Grand Traverse County – By The Numbers
Grand Traverse County, the seat of the region in terms of population and commerce, is no stranger to luxury home sales. Downtown Traverse City has always been a very desirable place to live; the desire to be within walking distance of world-class restaurants, beaches, shopping, movie theaters (yes, two of them), and all the amazing festivals that happen in our fair city push many downtown price tags above $1M.
But, things have accelerated this year; magnifying a trend we’ve been seeing since 2016. Here are some highlights:
- As of the end of October 2020, there are almost half a dozen more sales over a million dollars in Grand Traverse County than there was in all of 2019. With two more months still to go, this could be a record-breaking year.
- The median sale price for million dollar plus homes is higher than it’s been since 2017. This means that the existing homes in this sector are increasing in value faster than homes in the sector just below the million-dollar mark are increasing.
- The list-to-sale ratio, which measures how close a home’s sale price is compared to its list price, has remained pretty steady year to year; suggesting that real estate agents are still doing a good job of pricing homes in relation to inventory and demand.
Leelanau County – By The Numbers
Things are done a little different out in “the county”. Life tends to move a little slower, farms and vineyards dominate the landscape, and, at least when it comes to 2020, luxury home sales are moving at breakneck speed. This area’s housing market spread between the higher-end and lower-end markets is more extremes than usual; there’s less in the middle than just about anywhere else in Northern Michigan.
We’ve seen some pretty dramatic moves in the million-dollar and above market so far this year. Here’s what you need to know:
- The number of sales over a million dollars in Leelanau County in 2020 through the end of October is 37, up from a total of 33 in 2019, and 19 in 2018, making it likely the county will double its volume in this sector in just two years.
- The dollar volume of sales for 2020 is up over five million bucks over 2019, and 2020 is far from over. This year’s amount more than doubles that of 2018, and again, we still have a couple of months to go.
Benzie County – By The Numbers
When you’re comparing Grand Traverse, Leelanau, and Benzie counties, one of these things is not like the other. Even though the typical home sale in Benzie county looks very different than that in the other counties, the movement in the high end of the market is still dramatic, in fact, when comparing it to the 2019 numbers and beyond, the performance of 2020 is even more impressive. Here’s what we found:
There were more than twice as many sales over a million dollars in Benzie county so far in 2020 (compared to 2019), and we’re not done yet.
The list-to-sale ratio for a home sold over a million dollars in 2020 is 97.27%, up a TON from 83.83%. Since this measurement is taken by understanding the median listing price vs the median sale price for the county at large, we can be pretty confident this isn’t thanks to extreme outliers. This is likely due to buyers recognizing that they don’t have as much room to negotiate with sellers and demand is too high – this is a seller’s market.
The Benzie county median sale price for a home over a million dollars is down by about $50,000 from 2019. Though there are many reasons this could be the case, the answer that makes the most sense in the context of this market is that, unlike in Leelanau county, there are a lot of homes making the jump from the mid-tier of the market to the high end. With more homes just above the million-dollar mark, the median sale price will be lower.
3 Reasons Why The Luxury Market in Northern Michigan is Accelerating
Though the year is far from over and there’s still a lot of analysis to be done of the numbers, the initial findings for these specific counties point to a clear conclusion; the luxury market is hot and isn’t showing signs of slowing down. Will 2021 continue in the same direction as 2020? Hard to say, but our guess is yes.
Here are three reasons why we think things are moving so fast right now, and why they’re likely to continue into 2021:
1. The Inventory Shortage is Hitting Every Sector of the Market, Including Luxury
You can read about it everywhere from the New York Times to the TC Ticker – there is a real estate inventory shortage. The long and the short of it is, there are more buyers than there are available homes, and the simple law of supply and demand dictates that prices will continue to rise until that demand is met.
However, since there are some external factors that are beyond normal market conditions, specifically, low interest rates that are making buying more advantageous now, we’re likely to see demand continue to rise (or at least stay steady) for a while.
2. The Out-of-Town Buyers are Going to Keep Luxury Strong
Buyers from major metro markets like New York City, Chicago, Indianapolis, and San Fransisco are looking to communities like Northern Michigan for lower population density, higher quality of life, and lower cost of living. The fact is, a million dollars barely buys you a thousand square feet in Manhattan, so coming to Traverse City with a million-dollar (or more) budget is very appealing.
3. Home Prices are Rising Faster Than Ever Before
OK, so maybe we’re not totally sure this is, historically speaking, the fastest that home prices have risen, but it’s got to be close. With market prices soaring, we are seeing the top of the middle tier in the housing market inching into the luxury market, and there are (well, were) a lot of homes in that 800k – 950k range last year.
As we saw in Benzie county, this reason is actually is going to trigger a drop in the median sold price of homes sold for a million dollars or more thanks to the increase in lower-end luxury inventory, but savvy market-watchers know, this isn’t anything to be concerned about.
Bringing It All Together
The Brick & Corbett team is the leader in luxury listings and sales in Northern Michigan. Our team has been buying and selling high-end homes for decades; if you have questions about your property (regardless of the price), we’d love to help.
Here on our team, we are obsessive about numbers. We analyze the market like this so we can better understand how to best serve our clients both now and in the future. This obsession with numbers doesn’t stop at market studies. Our clients experience white-glove service, constantly receiving updates about the market and how their listing or attempt to buy is fairing.
If you want an A+, data-driven approach to buying or selling a house with one of the most qualified teams in the state of Michigan, we’d love to help. Reach out and contact the Brick & Corbett team today!