Flat terrain: Home sales stagnant, often down in 2006
April 1, 2007
BY SUZETTE HACKNEY
FREE PRESS STAFF WRITER
Metro Detroiters experienced a significant drop in the market value of their homes last year, another sign that the real estate market is unable to help buoy the struggling economy in southeast Michigan.
But there is a significant upside. Because homes are now selling for less, potential buyers are able to purchase their dream home loaded with amenities unavailable at even year-ago prices. The challenge comes when potential buyers looking to move up are unable to sell their existing homes.
A Free Press analysis of the 2006 metro Detroit real estate market compared with the previous year shows the number of home sales and the value of homes continued to decline in nearly every community in Wayne, Oakland, Macomb and Livingston counties.
Only Macomb County experienced an overall uptick -- though minimal at 0.9% -- in the number of houses sold, with strong sales in Mt. Clemens, Clinton Township, Fraser, St. Clair Shores and New Haven.
The market is saturated with "for sale" signs as the spring home buying season begins, and there's little doubt even more will crop up. The motivations differ -- a new job outside Michigan, the need for more space -- but tens of thousands of metro Detroiters are trying to sell their homes at the same time.
"I bought this house before I was married," said John Naperkowski, 31, who put his Sterling Heights home on the market in January. "We like our house. We're not stuck somewhere we don't want to be, and we like our neighbors. But this was our starter home, and now that we have a child we need more room.
"When we put it on the market we said to ourselves that we weren't going to get our hopes up, but we are hopeful we can sell," said Naperkowski, who already has reduced his asking price from $169,800 to $167,000. "We know it's probably going to take some time. We know the average time on the market here is roughly nine months."
Naperkowski said that during the six years he has lived in his three-bedroom ranch with a finished basement, which he bought for $150,000, he has updated the windows, countertops, hardwood floors, fixtures and appliances at a cost of $15,000.
Market correction
Naperkowski can take some comfort in knowing that the real estate market in Sterling Heights fared relatively well last year. The median sale price dropped 5%, from $185,000 to $176,500, and home sales were down only 3.8%.
Not all communities were as fortunate.
Overall, Livingston County experienced the biggest regional slide in home sales, at 24.9%. Oakland County wasn't far behind, dipping 21.3%, with historically marketable towns such as Rochester, Ferndale, Huntington Woods, Royal Oak, West Bloomfield, Pleasant Ridge and Lathrup Village experiencing big declines in the pace of sales.
Overall, Wayne County finished second behind Macomb County, experiencing only a 3.7% dip in sales compared with 2005. Much of the county's success can be attributed to the Grosse Pointes, which experienced a phenomenal percentage growth in sales over 2005. The median sale price also made a modest jump in Grosse Pointe Park and an astronomical one for this market -- a $290,000 bump -- in Grosse Pointe Shores.
David Elya, president of the Metropolitan Consolidated Association of Realtors, said the reduction in asking prices, especially in desirable neighborhoods and school districts such as the Pointes, is pushing people into larger homes they can truly afford.
Acknowledging that the market is saturated, Elya maintains that the inventory that is not moving is overpriced or in need of many updates.
"There's been a correction in home prices, whether it was voluntary or the reality of our times," Elya said. "Because of this correction, now is the best time to buy real estate in Michigan."
Elya said the first quarter of 2007 has been busy for sellers and agents, and he anticipates a bustling spring and summer. In general, if people have lived in their homes for four to five years, they'll likely break even or make a small profit, he said, but those who have owned their homes for only a year or two will have little equity, and thus can expect to lose money.
April 1, 2007
BY SUZETTE HACKNEY
FREE PRESS STAFF WRITER
Metro Detroiters experienced a significant drop in the market value of their homes last year, another sign that the real estate market is unable to help buoy the struggling economy in southeast Michigan.
But there is a significant upside. Because homes are now selling for less, potential buyers are able to purchase their dream home loaded with amenities unavailable at even year-ago prices. The challenge comes when potential buyers looking to move up are unable to sell their existing homes.
A Free Press analysis of the 2006 metro Detroit real estate market compared with the previous year shows the number of home sales and the value of homes continued to decline in nearly every community in Wayne, Oakland, Macomb and Livingston counties.
Only Macomb County experienced an overall uptick -- though minimal at 0.9% -- in the number of houses sold, with strong sales in Mt. Clemens, Clinton Township, Fraser, St. Clair Shores and New Haven.
The market is saturated with "for sale" signs as the spring home buying season begins, and there's little doubt even more will crop up. The motivations differ -- a new job outside Michigan, the need for more space -- but tens of thousands of metro Detroiters are trying to sell their homes at the same time.
"I bought this house before I was married," said John Naperkowski, 31, who put his Sterling Heights home on the market in January. "We like our house. We're not stuck somewhere we don't want to be, and we like our neighbors. But this was our starter home, and now that we have a child we need more room.
"When we put it on the market we said to ourselves that we weren't going to get our hopes up, but we are hopeful we can sell," said Naperkowski, who already has reduced his asking price from $169,800 to $167,000. "We know it's probably going to take some time. We know the average time on the market here is roughly nine months."
Naperkowski said that during the six years he has lived in his three-bedroom ranch with a finished basement, which he bought for $150,000, he has updated the windows, countertops, hardwood floors, fixtures and appliances at a cost of $15,000.
Market correction
Naperkowski can take some comfort in knowing that the real estate market in Sterling Heights fared relatively well last year. The median sale price dropped 5%, from $185,000 to $176,500, and home sales were down only 3.8%.
Not all communities were as fortunate.
Overall, Livingston County experienced the biggest regional slide in home sales, at 24.9%. Oakland County wasn't far behind, dipping 21.3%, with historically marketable towns such as Rochester, Ferndale, Huntington Woods, Royal Oak, West Bloomfield, Pleasant Ridge and Lathrup Village experiencing big declines in the pace of sales.
Overall, Wayne County finished second behind Macomb County, experiencing only a 3.7% dip in sales compared with 2005. Much of the county's success can be attributed to the Grosse Pointes, which experienced a phenomenal percentage growth in sales over 2005. The median sale price also made a modest jump in Grosse Pointe Park and an astronomical one for this market -- a $290,000 bump -- in Grosse Pointe Shores.
David Elya, president of the Metropolitan Consolidated Association of Realtors, said the reduction in asking prices, especially in desirable neighborhoods and school districts such as the Pointes, is pushing people into larger homes they can truly afford.
Acknowledging that the market is saturated, Elya maintains that the inventory that is not moving is overpriced or in need of many updates.
"There's been a correction in home prices, whether it was voluntary or the reality of our times," Elya said. "Because of this correction, now is the best time to buy real estate in Michigan."
Elya said the first quarter of 2007 has been busy for sellers and agents, and he anticipates a bustling spring and summer. In general, if people have lived in their homes for four to five years, they'll likely break even or make a small profit, he said, but those who have owned their homes for only a year or two will have little equity, and thus can expect to lose money.
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