The Current Real Estate Trend

I don't know if you saw the article in Monday's Detroit News entitled "2008 may be brutal again for Michigan real estate," but there were some interesting points made in the article, which was written by Nathan Hurst.

According to Realcomp, which is the multiple listing service most used by Southeast Michigan agents, home sales in our area have fallen 14.4 percent since 2004. But the even bigger news is the average sales price of a home in Southeast Michigan fell 17.3 percent over that same time span, 2004 to 2007. So if your home was worth 200,000 in 2004, today it would be worth 165,400. Yet, as an agent, I'm seeing homeowners and their agents, still trying to list that home for 200,000! The problem with that, is the eventual appraisal. If someone puts an offer in on that home for say 190,000 for the sake of argument and the seller accepts, within a couple of weeks, the appraiser for the buyers mortgage company is going to visit the home. That appraiser will go back 6 months to check recent sales prices in the neighborhood and they'll see that similar homes in that sub have been selling for 165 to 170,000 and they won't be able to appraise that 200,000 listing for it's 190,000 sales price. Thus, the mortgage company won't give the buyer a mortgage and THE DEAL IS OFF!!!! Sellers seem to forget the appraisal process when they price their homes and this was a good example of what COULD happen.

The Detroit News article goes on to say that new home construction in our area is at it's lowest level in 40 years. The article also says 2007 foreclosures were up 65% over 2006 figures.
But there are great bargains out there and of course, if you're a buyer, I'd love to show them to you. They are everywhere and with the Fed cutting interest rates 3/4's of a point on Monday, expect the interest rates on 30 year fixed rate mortgages to fall even further, to record lows, closer to 5% interest than to 6%.

If you'd like to learn more, give me a call at my office number, 248-526-2193 and I'd love to chat with you about the opportunities in today's real estate market.