Related coverage: Top 10: Most expensive homes sold in Washtenaw County in 2013
It’s official: The Ann Arbor housing market is on a hot streak.
Significantly higher sale prices, competition among buyers and more movement in the high-end market were among real estate trends in the area last year.
For some buyers, such as Ann Arbor resident Zlato Buchs-Fagundes, the rebounding market made purchasing a home difficult. When Fagundes made his first bid on an Ann Arbor home last year, he lost out to an all-cash offer above the asking price.
“It was a very difficult time. I think the market was heating up and so this was sort of a rebound year, at least in terms of supply and demand,” he said.
Fagundes’ experience is typical of many recent Ann Arbor area homebuyers; as the housing market improved in 2013, it was common for homes to have multiple offers, sometimes above asking price, days after hitting the market.
“From the buyer’s side, it was competitive and you had to be overbidding in many instances,” said Real Estate One’s Matt Dejanovich. “For a number of my clients, they had to go through numerous houses that they wanted to buy before they could actually land one and have it work in their favor.”
Year-end data from the Ann Arbor Area Board of Realtors shows Washtenaw County’s 2013 residential market was strong. The average home sale price of $248,601 is an 18 percent increase over 2012, and a 36 percent increase over 2009 when the average sale price was $182, 287. The median sale price was up from $174,000 in 2012, to $212,000 in 2013.
Washtenaw County home sale prices have increased each year since 2009.
“Our market has been steadily improving for years,” Dejanovich said.
Ann Arbor homes — defined by those in the Ann Arbor Public Schools attendance area — gained 10.87 percent in value last year based on sales prices per square foot, according to data compiled by Realtor Martin Bouma of Keller Williams.
Of 19 Ann Arbor elementary school areas, 17 posted gains in average sale prices. The two elementary attendance areas showing drops in average sales prices from 2012 to 2013 were Angell (down 0.83 percent) and King (down 2.82 percent).
Another trend in the 2013 market was what real estate agents described as a “shockingly low” inventory of homes for sale. The tight inventory resulted in a 32 percent drop in the average number of days on market.
“(2013) was a great market, but just lack of inventory. It drove some crazy things,” Bouma said.
The number of total home sales last year increased only 1.7 percent over 2012, but total dollar volume was up nearly 20 percent, reflecting increased activity across higher price ranges.
“You’re seeing a shift into the higher price points,” said Bouma. He said the most popular price point in the Ann Arbor area is between $250,000 and $500,000, but the county is also showing increased activity in the $1 million-plus market, where some homes had multiple offers shortly after being listed.
There were 16 sales of $1 million-plus homes in 2013, with an average sale price per square foot of $269. That compares to 13 homes at $259 per square foot in 2012, and six homes at $211 per square foot in 2011.
A home at 1430 Granger in Ann Arbor sold for $1.25 million last year.
Alex Milshteyn, a Realtor with Howard Hanna, said he had multiple offers last year shortly after he listed a house for $1.25 million in Ann Arbor’s Burns Park neighborhood.
Added Marygrace Liparoto of the Charles Reinhart Company: “I had physicians that were competing for houses. It’s been a long time since $850,000 to $1.5 million homes had multiple offers.”
It’s not just the high-end market that’s improving; Milshteyn said he presented 28 offers to a seller for a small ranch home in Ann Arbor last year.
“This was the first time since probably 2006 that you were able to sell your home and not lose anything,” he said.
Local Realtors characterize the 2013 market as “fast-moving”, “fantastic”, “record-breaking” and “on fire.”
But Milshteyn said people are asking the same question over and over: Is this just a bubble?
“My response is, ‘I don’t think it’s a bubble, I think it’s a correction in our market,’” he said. “We’ve been so down for so long. …Buyers are no longer afraid to get into the market.”
518 Fairview Circle in Ypsilanti sold for $197,000 in 2013, and is in the to 5 highest sale prices in Ypsilanti last year.
Ann Arbor’s improving housing market is reflective of what’s happening nationwide. Home sales in 2013 were the highest since 2006, and median prices maintained strong growth, according to the National Association of Realtors.
“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market,” said Lawrence Yun, a chief economist for the National Association of Realtors.
The average rate on a 30-year fixed mortgage last week was 4.28 percent, an increase over the record lows roughly a year ago, but still historically low, according to mortgage buyer Freddie Mac.
“I think we’ve already seen with 4.5 percent interest rates instead of 3.5 percent interest rates, we’re still seeing significant demand in the marketplace,” Dejanovich said, regarding Ann Arbor area homebuyers.
He added: “I don’t think (home sale prices) are going to go up another 15 percent this year, but I certainly think we’re going to be back to a sustainable, long-term average appreciating market.”
High demand from homebuyers and low supply of inventory are driving new construction in Washtenaw County. For the first time in years, two new residential subdivisions are proposed in the Ann Arbor area — a 176-home subdivision on the north side of West Liberty Road about one half mile west of Wagner Road, and a 323-home subdivision on Staebler Road between Jackson and Park roads.
Liparoto said she sold five homes last year in a development on the north side of Ann Arbor before construction started.
“The project sat defunct and those five lots sat there. Then, a builder I worked with pre-recession contacted me and we had them sold before a shovel was in the ground.”
Milshteyn said he had buyers last year that wanted new construction because they didn’t have any other options.
“Prices are now in the ball park where it makes sense for builders, and we have a huge demand for new construction,” he said.
A sign on the 414 N. Main site advertises the soon-to-come luxury condominiums on the site of the former Greek Church building.
One of Ann Arbor’s hottest markets, Bouma said, is near-downtown condominiums, where inventory is “incredibly” low and sale prices are skyrocketing. Two condos sold in the building at 322 E. Liberty St. last year for about $430,000, when the highest sale price in previous years was less than $400,000.
“Those are basically breaking records,” he said. “That’s what we’re seeing downtown.”
Local builder Tom Fitzsimmons of Huron Contracting LLC said demand for his under-construction condos on North Main Street near Kerrytown far exceeded expectations. The 18 units range in size from roughly 1,400 square feet to 2,500 square feet. Unit prices range from about $500,000 to $1 million.
“We initially planned to set up a marketing campaign website…we never even got to that,” Fitzsimmons said. “We never even had the opportunity. We had reservations and presales before we were even able to kick off the campaign.”
Lizzy Alfs is a business reporter for The Ann Arbor News. Reach her at 734-623-2584, email her lizzyalfs@mlive.com or follow her on Twitter.
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