As inventory drops, Greater Lansing real estate market swings to the seller’s side
On the most recent installment of the mid-Michigan real estate drama, “As the Market Turns,” house hunters in the corridors of Ingham, Clinton and Eaton counties are finding inventory significantly tighter compared to a year ago.
Which, if you’re a seller, tighter inventory can be a great thing. Buyers on the other hand are faced with fewer options in their price range and longer searches for the types of homes that fit their requirements.
Whether you’re looking to buy or sell a home in 2018 — or find the perfect rental — it helps to know what you’re up against. According to a recent report in U.S. News, real estate experts say timing will be paramount for homebuyers in the coming months, while sellers will likely have an easier time making a successful deal.
Meanwhile, renters may find more amenities and negotiating power.
Mary Jo DeHaven, a licensed realtor for almost 25 years that is currently an agent with Coldwell Banker Hubbell BriarWood (CBHB), has lived in the Greater Lansing area for most of her life and is familiar with how the local market ebbs and flows.
“Prices are inching up, which is great for sellers as it provides equity for the purchase of their next home — whether they are moving up or downsizing,” said DeHaven. “For the homebuyer, the Lansing area is still one of the most affordable in the country, and interest rates remain low.
“The only negative in the market is the low inventory. We have buyers looking and they cannot find what they want. That pushes those that can afford it to new construction, which is on the rise as well.”
CBHB’s 2017 market report for the fourth quarter in Greater Lansing provided a stark contrast, for example, when compared with housing numbers from 12 months ago:
- Units sold: 1,443 (2017); 1,395 (2016)
- Value sold: $225,996,888 (2017); $201,436,605 (2016)
- Average days on market: 44 (2017); 52 (2016)
- Average sold price: $156,616 (2017); $144,399 (2016)
- Median sold price: $143,163 (2017); $132,401 (2016)
- List price vs. sold price: 81.09 percent (2017); 84.36 percent (2016)
- Average pended list price vs. sold price: 97.71 percent (2017); 97.59 percent (2016)
- Available listings: 1,045 (2017); 1,556 (2016)
- Market surplus 1.17 months (2017); 2.35 months (2016)
“I’d say, it is very safe to buy and begin gaining equity for yourself, rather than your landlord,” DeHaven added.
With tight seller’s markets being the leading narrative on homebuying over the past few years, Michigan residents — like many Americans — are unsure about their ability to buy a home, according to a recent survey of 2,000 adults published by Trulia, a real estate information company. According to the U.S. News report, only 25 percent of those who responded believe that 2018 will be a better time to buy a home than 2017.
High rents hinder would-be first-time buyers’ opportunities to save, while interest rates are expected to rise, and home prices continue to swell in midlevel housing throughout the U.S.
“It’s difficult to save up for a down payment,” Ralph McLaughlin, chief economist for Trulia, told U.S. News.
Lisa Ramont, agent for The Lisas with Coldwell Banker Hubbell BriarWood, believes it makes sense to buy if you are in a financial position to do so.
“Renters typically pay a quarter of their income in rent,” Ramont said. “It’s simply more expensive with no tangible payoff. The current market is safe for buyers, but timing is going to be paramount when buying this year. Buyers must be diligent and keep a close eye out for new properties coming out on the market.”
Trulia anticipates the homeownership rate —nearly 65 percent as of 2017’s third quarter, according to the U.S. Census Bureau — to continue the slight upward trend. Interested buyers will have to keep a close eye on new properties coming to the market. It will also be imperative for buyers to have their financing in order and tap attentive real estate agents, to help make an appealing offer on a house, as there will likely be more than one offer on available homes in many markets.
Meghan Webber, CEO of the Greater Lansing Association of Realtors (GLAR), agrees with DeHaven that inventory continues to be an issue across all three counties.
“A balanced supply, meaning it doesn’t favor a seller or a buyer, lasts around seven months,” Webber said. “We are at around a two- to three-month supply. It is an extremely favorable seller’s market.”
Webber cited the following GLAR housing numbers from 2017:
- In Ingham County, sales volume was up 5.5 percent, and prices increased by 6.3 percent. The price per square foot was up nearly 9 percent, while month supply dropped by 41 percent, indicating a more favorable seller’s market.
- In Clinton County, sales volume dropped 10.6 percent, while prices increased by 7 percent. The price per square foot showed a healthy increase of 24.4 percent, while month supply fell 3.3 percent — also a more favorable seller’s market.
- In Eaton County, sales volume and price per square foot were flat, though prices rose by 3.6 percent. Month supply dropped by nearly 11 percent.
“In the first quarter of 2018, inventory continues to remain extremely low, so sellers are in a good position,” Webber said. “Low interest rates continue to be an advantage for buyers. I think it’s safe to say that most sellers will be in a positive-equity position, but there are always exceptions and pocket areas in each county that have not seen property values return to early 2000 values.
“It appears, at least for the first half of this year, that inventory (for existing homes) will remain low, and new construction will struggle to keep up with demand,” said Webber.