I can take this discussion in two directions.
First, I checked the sales in the MLS this morning, just like I do every morning (and again periodically through the day). In the past few days 11 houses have rented in Birmingham and Beverly Hills and 6 were sold. I would call that a landlord’s market, which is an emerging phenomenon for Metro Detroit. Those who can buy are choosing to rent in many cases. Even luxury homes are playing the game. Two Bloomfield Township homes are trying to break the $20k a month barrier. Nothing close to that monthly rent has ever been reported as a closed deal in the MLS (other than a few Rider Cup houses) but I have shown both of those homes… as rentals.
Second, it is really neither a buyer’s market or a seller’s market. It is just the market. The supply curve and the demand curve cross at a certain point and market prices are established. Sellers who understand this have a better chance of selling their home. Right now we have lots of supply and not a lot of demand. If you are a seller, price accordingly. Be in the best condition, with the best market exposure and at the best price. It might seem like a hard pill to swallow, but that is how you will get the deal done.
If you are a buyer, there are actually homes out there that are priced according to the model above. They beat the competition in EVERY way. You will see them. In spite of what everyone is whispering in your ear (or shouting), you do not have to ‘low ball’ every house you like. Some of them are priced to “steal” as is. Others certainly are not. A good Realtor with a thorough CMA will be your guide.
Two years ago we had a buyer who did not particularly care which one of 4 homes they bought. They just wanted the best deal. We got it for them, and helped them make the decision about which home was the best deal by approaching all 4 sellers and letting them do the bidding. It worked. Buyer got a great home and seller got to move on quickly.
Today, transactions are happening. Michigan homes are selling, at a rate not far off from last year. Educated buyers and sellers are at the center of those sales.
[tags]market update, birmingham mi real estate, bloomfield hills real estate, luxury home rentals, buying michigan homes[/tags]
Supply and Demand is by ChrisKazoo, who graduated from my alma mater, Kalamazoo College.
Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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{ 15 comments… read them below or add one }
moni 10.07.07 at 1:25 pm
Just last week I noticed several homes with both for sale signs and for rents signs on them. Our market has always had a low supply of rentals…not any more. Price reductions are daily and there are some great buys to be found. Perfect time to be a buyer.
Mariana - Springs Realty Scoop 10.07.07 at 2:17 pm
I love it. Educated Buyers and Sellers ARE at the center of those transactions. It IS nice to hear this coming from a MI Real Estate agent, though!
Lane Bailey 10.07.07 at 9:52 pm
I would disagree about this being a buyer’s market. It really is. You mentioned that the supply was high and the demand was low… that is the very definition. Now, the renter/landlord things is quite similar, and it might shake out sooner than the buyer/seller situation.
Because of the credit “crunch”, there are a lot of people that would love to buy but are stuck renting. Rents rise. However, since a lot of sellers don’t want to sell but need to get the payment made, that will increase supply in certain segments of the rental market and drive down prices.
It will be an interesting watch over the next year.
Gena Riede 10.08.07 at 12:03 am
Sounds as though our markets are very similar. I love the photo of the mom and baby. Great article for Buyers and Sellers to read and follow.
Debbie Cook 10.08.07 at 9:03 am
The market here is similar to yours.
I showed a house Friday, the house had been on the market for 3 weeks. When I called to make an appointment the listing agent said – Ok go ahead and show – but I have to let you know we have one offer in hand and another coming to us tonight. I have to say, I really loved hearing that!! It made the buyers I was with want to write an offer. It’s the “herd mentality” type of marketing – once one or two people start buying, other people start following the “herd”. It was nice to see a multiple offer situation again.
BTW, the house was priced right, staged and immaculate.
Kristal Kraft 10.08.07 at 9:41 am
There will always be the bottom feeders in any market looking for the “steal of deal.” Fortunately for the market there are the folks who understand a good deal when they see it and purchase.
Your rental situation at $20k a month is mind boggling. Those renters must have cash to burn!
Ginger Wilcox 10.08.07 at 6:14 pm
That picture made me laugh! It is very true, just because we have more inventory on the market doesn’t mean buyers can expect to low ball every house. Homes in my area are taking longer to sell, but they are still selling relatively close to list price. Each house is unique and a qualified professional is crucial to determine what should be offered.
We are also seeing a lot more rents for $10,000 a month.
Margaret Woda 10.08.07 at 8:50 pm
It’s probably more of a buyer’s market in the Detroit area, with the auto industry, than it is in my market, with 22,000 new jobs coming to Ft. Meade, outside of Washington, D.C. Everything is relative. Interesting concept about being a “landlord’s market”.
Marty Van Diest 10.09.07 at 12:40 am
Gulp…did you say $20,000 per month? $240,000 per year? Yikes.
With money like that around you would think the buyer’s market would dry up!
Sharon Simms 10.09.07 at 11:58 pm
Your expertise is showing – to the benefit of your buyers and sellers. Our market here in Florida is similar.
Congratulations, too, on making the Top 12 Bloggers for 2007! That’s yet another way you’re serving your clients.
Jennifer Kirby 10.10.07 at 11:37 pm
Really got a laugh from the photo as I am trying to ween my current “demand”.
Seems we always have to have a label for everything. The market is what it is. If you want a house, buy it…if you need to sell, sell it…just don’t be unrealistic about it.
Paula Henry 10.12.07 at 8:44 am
I love this photo…..too funny!
Some buyers just do not get it! If they want a house to low ball, they will need to look at the homes which have been on the market a while and picked over. The old adage, “You get what you pay for”, is especially true in real estate.
Same with sellers. If they want to sell they have to be competetively priced and their home in show condition from the start.
Sparky 10.16.07 at 12:18 pm
Well, afterall, it IS breast cancer awareness month, right?
Monica W 10.29.07 at 11:27 am
It’s sad realtors speak of potential buyers looking for a deal as low-ballers who don’t get it.
I’m sure other potential buyers like me are paying very close attention to the volatile market. And all the data and statistics say we haven’t hit bottom yet in Michigan, so why then would I pay sticker price?
It’s my feeling, as many economists have remarked, that sellers don’t get it.
Every house I investigate I do the math.
Since the difference between list and sale price in Washtenaw county is 18 per cent, then why would I offer anything more? I actually live in Canton and am looking for a home either in Canton or Plymouth.
In fact, the two or three homes my husband I have been watching keep falling in price. They’ve been on the market between three and six months and with competitive pricing they still aren’t moving.
The other thing that keeps us from upgrading (we live in a condo) is we need to rent our place as we don’t see being able to sell it. And I think the taxes are nuts. nuts. nuts.
As prices fall, the taxes haven’t. And from what I’ve been able to tell, I can’t get a tax adjustment by state law for more than a year after the property changes hands. So why do I want to pay $4,500 in taxes on a house that was once worth $300,000, but is now only going to fetch $230,000?
I figure it’s like this. You make an offer. If the seller hasn’t received one offer in months, they’d be nuts not to at least look at it.
Maureen Francis 10.29.07 at 11:44 am
Monica,
I really appreciate you taking the time to comment.
Buyers should be and are looking for a deal right now. That is to be expected. What I was trying to articulate is that some homes are actually priced well. Case in point, I know of some buyer’s right now who are paying OVER asking price because the home was underpriced for the market. The seller got 3 offers in one weekend. Each home has to be looked at individually.
Even if 18% off is average for Washtenaw county, you still have to look at each house individually. There are a few realistic sellers out there. Not all, for sure.
Make an offer. Move on if you can’t get what you want. Whatever you end up paying is the new market value of the home and it impacts all the surrounding homes.
You do not have to wait a whole year on the property taxes. Taxes are reassessed in February/March in Michigan. With a lower purchase price you have part of a very good case for a reduction in assessed value. Make sure you schedule an appointment with your board of review when the assessment comes in so you can take care of it for 2008.
Next year’s assessments should be interesting for everyone.