The Metro Detroit residential real estate market still faces challenges, but one of the reasons is new: Not enough attractive properties on the market.
The four-county region’s home sales declined 4.3 percent in May from the same time a year ago, while the median price dropped 13.3 percent to $65,000, according to a Monday report by Realcomp II Ltd., a Farmington Hills real estate information company.
The decline is due to an inventory that plunged to 23,974 houses and condominiums in May, a 15.3 percent drop from the same period a year ago, according to Realcomp. It’s a trend that started several months ago.
“I’d never thought I say this again, but, we need more inventory,” said Realcomp Chief Executive Karen Kage. “That’s what I keep hearing from Realtors, no matter what market or area.”
The lack of inventory is hindering such efforts as the Live Midtown campaign, which is the financial incentive program aimed at getting employees at Detroit Medical Center, Henry Ford Health System and Wayne State University to buy or rent in the Midtown neighborhood, said Ryan Cooley, a real estate agent and founder of the Detroit office of O’Connor Real Estate Development.
“We have a lot of people interested in that program but aren’t satisfied with what’s available now,” Cooley said. “And when there is a condo that was in the $100,000 range and now in foreclosure for $50,000, there is a mad scramble.”
Home sales in May were up in Livingston and Macomb counties, while Oakland County experienced an 11.6 percent decline and Wayne County a nearly 3 percent fall. All four counties saw a median price decline, with Macomb experiencing the largest fall with a 16.3 percent decline to $67,000 from $80,000.
It’s a reversal from the past four years, when the housing crash that began in 2007 resulted in a market flooded with homes and condominiums. At the height of the housing crisis in July 2007, inventory hit about 76,000 residential units in Metro Detroit, which is 52,000 more than this past May, according to Realcomp.
In the pre-crash years of 2005 and 2006, inventory hovered around 42,000, which is 18,000 more than current levels, Kage said. In May 2005, the median sale price for Metro Detroit homes and condos was $171,000, more than double May’s median price, according to Realcomp.
“We need more good-quality homes on the market. There are a lot of people who are interested, but many homeowners don’t want to put their homes on the market because they are underwater,” Cooley said.
There may be a sign of better things to come, according to Realcomp. Pending sales — homes that have been sold but the transaction still hasn’t been closed — are up by 6.7 percent in May.
By Louis Aguilar, The Detroit News