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    Numbers Don’t Lie: The Northern Michigan Real Estate Market is Actually Stronger This Summer Than in 2019

    Remember the summer of 2019? I know, we’re having a hard time remembering it too, but just to put things in perspective; most of us in Northern Michigan were pretty preoccupied with the Cherry Festival (Styx was playing!), there was this new thing called “vaping” we all needed to worry about, and of course, one of the hottest real estate markets many of us in the business could ever remember was happening around us.

    Fast forward one year, and we find ourselves in a very different time. Most of the events we know as summer staples in Northern Michigan have been canceled, we’ve been stuck indoors since there was snow on the ground (yes, we started this pandemic still putting snow pants on the kids), and much of life as we know it seems to still be on hold. 

    Much of life, but strangely, not the real estate market in Northern Michigan. 

    Yes, the Northern Michigan real estate market is actually stronger than it was this time in 2019. The statistics bear this out, and while there is definitely room for interpretation in the numbers, we think we’ve got a pretty strong case for the fact that the summer market in Northern Michigan is actually hotter than it was in 2019. 


    What Statistics We Measured

    We took a look at the volume of sold property in Grand Traverse, Benzie, Antrim, and Leelanau counties for the months of March, April, May, and June; both for 2019 and for 2020. We looked at things like the number of properties sold, the average and median sale prices, the average days on market for a sold property, as well as the average list-to-sale ratio (a number that measures how closely an accepted offer gets to the asking price of the property).

    We also looked at all of the above data but isolated homes in the above four counties that had deeded waterfront access, just to see if (typically) higher value homes were affected differently than the general population of homes. 

    Here’s what we found:

     

    The Number of Properties Sold Took a Major Dip This Spring

    OK, before we get to the surprising things, let’s get some not-so-surprising things out of the way. The number of homes sold in the months of March, April, May, and June dropped significantly in these four counties between 2019 and 2020. In 2019, there were a total of 952 closed sales during those four months. In 2020, that dropped to just 658, just 69.11% of the previous year’s total.

    This was definitely expected; there were chunks of time during these four months that agents couldn’t show homes, that closings were very difficult to conduct; it was just a generally challenging time to buy or sell a home. 

    Likewise, waterfront homes saw a similar drop in sold volume (64.76%), which verifies the initial hypothesis that this drop is correlated to the overall market activity (or lack thereof). This really hit home in the month of May, where the overall market in 2020 saw just 38.19% of the 2019 volume, and the waterfront market saw just 37.88% of the market volume. 

    However, that is where the non-surprising statistics stop. 

     

    Sales in June Came Roaring Back

    In the month of June, that insane drop from May rebounded back to 74.32% of the 2019 activity for the entire market, and back to 81.13% of the waterfront activity for the same time period. As soon as people were able to get back into homes, the market picked back up, nearly doubling activity from May to June.

     

    It’s always hard to guess on these things, but the early July 2020 indicators suggest we’re going to be back very close to pre-pandemic levels for closed sales very soon.

    Median Sale Prices Are Actually Up for 2020

    We know, it’s hard to believe, but this is what the numbers tell us. For the months of March, April, May, and June; the median sale price for a home bought in the four counties we’re measuring actually rose 2.41%. In fact, the only month where we saw a dip in the median sale price was the month of May, and that dip was only to 95.32% of the 2019 May median sale price. 

    Waterfront property had a much more drastic dip in the month of May (74.57% of May 2019 numbers – ouch), but overall the median sale prices for these homes rose by 10.12% during these four months. 

    Most Homes Sat on the Market a Little Longer – But Not Waterfront Homes

    Days-On-Market, or DOM, is an important measure for the real estate industry. It helps analysts determine the number of months of inventory on the market and goes a long way to determining a market’s health and direction. As expected, the DOM for all homes in Antrim, Benzie, Grand Traverse, and Leelanau counties rose between March and June 2020 compared to 2019, but not nearly as much as you would expect. In fact, on average, the DOM was only 7.03% higher. 

     

    Waterfront homes furthered this line of thinking by posting shorter DOM averages for March, April, and May. June showed a puzzling spike of nearly twice the amount of time on the market than in 2019, most likely due to outliers that were on the market for a long time finally selling. 

    Homes Are Selling For Closer to Asking Price

    Another important measure for real estate professionals is a list-to-sale ratio. This number helps analysts understand how close a typically accepted offer is to the listed price of a home, thereby offering a measure of how motivated a buyer is. Of course, there are flaws in this measure when looking at current market conditions in isolation (if a seller offers their home for sale at a certain price, gets no offers, then reduces the price by 10% and get a full-priced offer, their list-to-sale ratio is 100%, even though they’ve reduced the price), but when comparing two time periods against one another (like four months in 2020 vs four months in 2019), it can be very telling. 

    For all sold homes across the region, the list-to-sale ratio for the months of March, April, May, and June went up by .22% from 96.95% to 97.17% year-over-year, meaning that a home listed for $200,000 in 2019 would have typically gotten a final price of $193,900 vs 2020 grossing $194,340. 

    This difference was even more pronounced in waterfront homes who had a 2019 average of 95.70% and a 2020 average of 97%. With an average sale price for waterfront homes during these months in 2020 being just shy of $461k, this means that on average, waterfront sellers were pulling in close to $6,000 more per sale. 

     

    Hold On, If The Market is So Strong, Why Are Sales Down?

    You may be asking yourself, “if the market is so strong (median sale prices are up, typical days on market is down, homes are selling for closer to their asking price), why are sales down?” 

    We can attribute a part of the answer here to the shutdown. There was a period of time that we were unable to show homes, unable to close deals, and just unable to do much in general. 

    But, that is only part of the answer. 

    The other part of the answer seems like it has to be inventory levels. Remember, real estate is a two-party business. In order for a transaction to happen, you have to have a buyer (something we’ve got a lot of right now), and you have to have a seller (something we’re historically short on). The northern Michigan real estate market has been struggling with an inventory shortage for years now. It was tough going in 2018, even tougher in 2019, and if things keep moving in the direction they are going, will be even more challenging in 2020. 

    And, there are actually market conditions right now that are accelerating this shortage. 

    Consider for a second: mortgage rates. The lower they are, the more equipped buyers are to purchase a wider variety of homes. The lower the rates go, the more buyers are able to enter the lower end of the market, thereby putting pressure on the rest of the market all the way up through luxury waterfront sales. 

    There were many real estate professionals (including some on our team!) who thought that the COVID-19 pandemic would trigger a major drop in prices, a drop in demand from homebuyers, and the switch to a buyer’s market. 

    Turns out the opposite is happening – we are seeing a surge in demand from buyers who may now qualify in price ranges they couldn’t reach before (thanks to lower mortgage rates), who are motivated with a new and different set of priorities for house and home, and, maybe most importantly, are still living with the uncertainty of time – will we be stuck in our houses again this fall? This winter? For many, the time for a new house is NOW.

     

    What This Means for You

    What this means for home buyers is that competition is shaping up to be fierce this summer. If you’re going to be shopping for a home, you need to be equipped to move quickly when you find the right spot. Talk to your lender early and often, get locked in at a good rate, but be checking the rates regularly to make sure a lower rate isn’t available. Talk to someone on the Brick & Corbett team about how we can best prepare you to get the home of your dreams by going into the home buying process ready to succeed. 

    If you’re selling a home, now is the time. The market is hungry for inventory. What was once a market full of uncertainty is shaping up to be predictably hot for sellers. Talk to Brick & Corbett about getting a customized comparative market analysis so you can anticipate what your home is worth when the offers start rolling in. Make sure you’ve got a plan for the next home already in place, since it is likely that your existing home is going to sell relatively quickly. 

     

    And, of course, get in the loop with the B&C team about how we can help you sell your home safely with our comprehensive set of safety protocols that will make the listing, showing, negotiating, and closing process as seamless and sanitary as possible. 

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