SWMI Housing Market –
Sales Down 61% & Selling Prices Dropped 9%
ST. JOSEPH, MI – “The housing market in May suffered the worst from the economic lockdown from March through May. House sales fell to the lowest level since 2006. Selling prices also dropped. May is normally the month the peak selling season starts. Since our market has been robust for the last three years, we are expecting this to be a temporary disruption of home sales.,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
“The number of houses sold in May dropped to 142. This is the lowest number of houses sold in the month of May in our year-over-year comparison back to 2006. Compared to May 2019, it was a 61 percent decline (142 vs. 361), and from April, it was a 27 percent decrease,” Jeffries continued.
Year-to-date, the number of houses sold fell 27 percent to 952 from 1302 sold in May 2019. The last time sales were at this level was in May 2011 (825).
The average selling price in May was $240,374 compared to $264,171 in May 2019 for a 9 percent reduction. The average selling price was the highest for the year. Year-to-date, the average selling price was within $742 ($224,160 vs. $224,902).
The median selling price in May decreased 5 percent to $173,250 from $182,000 in May 2019. Year-to-date, the median selling price rose 6 percent ($175,126 vs. $165,000). The year-to-date median selling price became the highest median selling price in the year-over-year comparison.
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
Comparing May to April, the number of houses sold fell 27 percent (142 vs. 194). The average selling price jumped 9 percent ($240,374 vs. $220,208). The median selling price dropped 7 percent ($173,250 vs.$186,000).
With fewer houses sold, the total dollar volume fell 64 percent in May ($34,133,128 vs. $95,366,067). The year-to-date total dollar volume was up down 27 percent ($213,401,102 vs. $292,823,002).
The inventory of houses for sale declined 15 percent from May 2019 (1420 vs. 1666). This level gave the market a 6.2-months supply of houses for buyers. In April 2020, the level was 4.5-months supply. For comparison, in May 2010, there were 3602 houses for sale.
The number of bank-owned or foreclosed homes as a percentage of all transactions was 6 percent in May, the same as in April. Six percentage is the lowest percentage reached in May and was obtained in May 2019 and 2017. The highest percentage in May was 34 percent in 2009.
Locally, the mortgage rate was 3.244 up slightly from 3.213 in April. Last year in May, the rate was 4.255. Nationally, the Freddie Mac mortgage rate in May was 3.15 down slightly from 3.23 in April for a 30-year conventional mortgage,
Nationally:
According to the National Association of Realtors®, – Existing-home sales fell in May, marking a three-month decline in sales as a result of the coronavirus outbreak. Each of the four major regions witnessed dips in month-over-month and year-over-year sales, with the Northeast experiencing the greatest month-over-month drop.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, slumped 9.7% from April to a seasonally-adjusted annual rate of 3.91 million in May. Overall, sales fell year-over-year, down 26.6% from a year ago (5.33 million in May 2019).
“Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lockdown and hence the cyclical low point,” said Lawrence Yun, NAR’s chief economist. “Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year.”
Regionally, as was the case for the month prior, sales for May decreased in every region from the previous month’s levels. Median home prices grew in three of the four major regions from one year ago, falling marginally in the West.
Existing-home sales decreased 10.0% in the Midwest to an annual rate of 990,000 in May, down 20.2% from a year ago. The median price in the Midwest was $227,400, a 3.0% increase from May 2019.
The median existing-home price for all housing types May was $284,600, up 2.3% from May 2019 ($278,200), as prices increased in every region. May’s national price increase marks 99 straight months of year-over-year gains.
First-time buyers were responsible for 34% of sales in May, down from 36% in April 2020 and up from 32% in May 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 2019 – revealed that the annual share of first-time buyers was 33%.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in May, up from 10% in April 2020, and from 13% in May 2019. All-cash sales accounted for 17% of transactions in May, up from 15% in April 2020 and down from 19% in May 2019.
Nationally, the total housing inventory at the end of May totaled 1.55 million units, up 6.2% from April, and down 18.8% from one year ago (1.91 million). Unsold inventory sits at a 4.8-month supply at the current sales pace, up from 4.0 months in April and up from the 4.3-month figure recorded in May 2019.
“New home construction needs to robustly ramp up in order to meet rising housing demand,” Yun said. “Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
“Although the real estate industry faced some very challenging circumstances over the last several months, we’re seeing signs of improvement and growth, and I’m hopeful the worst is behind us,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “NAR, along with our partners and 1.4 million members, are already working to reignite America’s real estate industry, which will be a key driver in our nation’s economic recovery.”
“Relatively better performance of single-family homes in relation to multifamily condominium properties clearly suggest migration from the city centers to the suburbs,” Yun said. “After witnessing several consecutive years of urban revival, the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home.”
This relocating trend can be examined further in the buying behaviors of millennials, outlined in a recent NAR report identifying the top 10 markets with opportunities for millennial homebuyers. Among other factors, the report analyzes current housing affordability and job market conditions for millennials during the pandemic. The markets – listed in alphabetical order – are Austin-Round Rock, Texas; Dallas-Fort Worth-Arlington, Texas; Des Moines-West Des Moines, Iowa; Durham-Chapel Hill-Raleigh, N.C.; Houston-The Woodlands, Texas; Indianapolis-Carmel-Anderson, Ind.; Omaha, Nebraska/Council Bluffs, Iowa; Phoenix-Mesa-Scottsdale, Ariz.; Portland, Oregon/Vancouver, Wash.; and Salt Lake City, Utah.
The numbers reported for local sales include residential property in Allegan, Berrien, Cass, and the westerly 2/3 of Van Buren Counties and should not be used to determine the market value of any individual property. If you want to know the market value of your property, please contact your local REALTOR®.
About
The Southwestern Michigan Association of REALTORS®, Inc. is a professional trade association for real estate licensees who are members of the National Association of REALTORS® and ancillary service providers for the real estate industry in Allegan, Berrien, Cass, and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at www.swmar.com.
The National Association of Realtors®, “That’s Who We R,” is America’s largest trade association, representing more than 1,401,418 million members involved in all aspects of the residential and commercial real estate industries.
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