Median home sales prices in metro Detroit broke the $100,000 mark in May for the first time in at least four years as suburban real estate continued to regain value lost in last decade’s crash, according to data released Monday.
The new figures from Realcomp, a Farmington Hills-based multiple listing service, showed May prices in the four-county region of Wayne, Oakland, Macomb and Livingston jumping 40% year-over-year to a $111,000 median sales price.
These levels are 70% higher than May 2011 sales prices, as well as 233% and 345% higher, respectively, from the month’s 2010 and 2009 prices.
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May home prices jump in metro Detroit
The driving force behind the sales price recovery — in high gear since the fall — is the still-dwindling supply of desirable houses and condos on the market in southeast Michigan.
While there are still plenty of vacant houses in the region, particularly in Detroit where the $11,100 median sales price is cheaper than many used cars, there are fewer move-in-ready suburban homes for middle-income buyers. The number of sales of foreclosed homes was down 30% in the metro area from a year ago.
Despite a 2% year-over-year uptick in May home listings, total inventory of available homes fell nearly 20% in Realcomp’s jurisdiction in and outside metro Detroit.
“The number of listings we received was a little bit higher this year than last year, and yet the inventory is so much less than it was last year because they’re selling so quickly,” said Realcomp CEO Karen Kage.
Tight inventories have heralded the return of bidding wars that further drive up prices. For prospective buyers the current dynamics can make an unpleasant surprise.
“We will have buyers approach us saying they’re looking for a steal or a buy,” said Luke Johnson, a Realtor with Cranbrook Associates in Birmingham. “And we will say to them, ‘In the summer of 2013, the fact that you can get a home is a buy.’ ”
Ciera Lewis and her fiance began their house hunt in November, still expecting to find a few relative deals in suburban Detroit at a mid-level price point. But they found themselves on a wearisome journey from open house to open house and got outbid on five properties in Oakland County.
In one instance, their $100,000 bid on a Southfield house listed for $99,000 was trumped at the last minute by a $115,000 offer, Lewis said. They eventually bought a condo in Farmington for the $93,000 asking price.
“The deals are all gone basically,” she said.
Despite such frustrations among prospective home buyers, David Hall, president of Troy-based Shore Mortgage, said there are still many reasons to buy now — foremost low interest rates that are starting to rise.
Mortgage giant Freddie Mac reported last week that the average rate offered on a 30-year home loan has inched up to 3.98% from 3.42% a month earlier.
“You’re financing at such a cheap rate it’s hard to lose,” Hall said. “For new guys in the industry, this is just the norm. But for dinosaurs like me, these rates are unbelievable.”
To be sure, much of the metro Detroit area’s prices are still 15% to 20% off its 2005 and 2006 price peak, according to Realtors and figures from the SP/Case-Shiller home price index .
The total number of area home sales in May rose 1% from a year ago while the number of listings was down 22% year-over-year. A typical listing was on the market for 66 days, according to Realcomp.
Johnson, the Birmingham Realtor, said he anticipates a “flood” of new listings in coming months as more homeowners who have wanted to sell but had to wait because of low prices begin stepping off the sidelines.
“I’m probably going to get 25 listings this summer from absentee landlords who now have enough equity to sell,” Johnson said. “These are sellers who never wanted to be a landlord, but had to be, and now they’re getting where they need to be to sell the homes.”