December 10, 2018

The State of the Market Up North

Limited inventory, hungry buyers
By Ross Boissoneau | May 5, 2018

Back in the early 2000s, the real estate market was exploding. Lenders were eager to provide money to buyers and property values were appreciating yearly. Then the recession hit, the bubble burst, and the values started to tumble.

If you’ve been paying attention, you probably know the real estate market has come roaring back. But how does it compare with past years? And to what can you attribute the differences (or similarities)?

This year started off strong. In fact, last month’s statistics from the Northern Michigan MLS provided by Emmet Association of Realtors show sales increased over last year, from 81 homes to 93. “The market is hot,” said Mark Knapp, the sales manager for the Charlevoix office of Coldwell Banker Schmidt Realtors. 

But wait — further south, the five-county region served by TAAR (Traverse Area Association of Realtors) shows 176 sales in March. That’s down from 237 last year. In fact, that’s more than only three other of the past nine years, two of which were when the industry was still struggling to bounce back from the recession.

Was weather a factor? Probably. According to Accuweather, temperatures in March for the most part lagged behind the averages for both highs and lows. The late-season snowfalls which persisted into April may have played a part as well.

But that doesn’t explain the disparity between the two regions. Knapp provides both proof of the strength of the market and a reason sales are down in some places and up (though maybe hitting a wall) in others. “We have a shortage of listings, and we’re getting multiple offers.”

Thus one can make the argument that the decreasing numbers for this year reflect the relative strength of the market, not the opposite. A smaller inventory will obviously yield a smaller number of sales. 

In 2017, there were 1,101 units on the market in the counties served by the Emmet Association; last month there were 893. Knapp said that pressure on the market is what is leading to multiple offers, and for some properties go sell for more than the list price.

So perhaps a better indicator than actual homes sold is how much they are selling for. While prices and values took a nose-dive in the face of the recession, they’ve been steadily climbing the past few years. For March of 2018, the Emmet Association average selling price was $329,220; a year earlier it was $278,092. This year’s March average was $265,745 for TAAR; last year it was $253,031. That pattern persists throughout the years. In 2013, the average price for a home sold in the five-county region served by TAAR failed to reach $200,000, at $197,003. In 2009, as the recession was ending, it was nearly $50,000 less, at $147,652.

Carolyn Collins, an agent with Century 21 Northland in Traverse City, agreed with Knapp’s assessment. ”It’s a tough time. We have a shortage of inventory.” She said that’s universal throughout the region. “Everyone is looking for listings. Everyone has a slew of buyers. We’re all waiting for a new listing.”

She said that’s particularly true for homes priced below $300,000. And if it’s below that, even more so. “Under 200,000 is impossible (to find). If it’s in decent shape you’ll have multiple offers.” She said she recently listed a home for sale and within no time had three offers for it. “It went under contract almost immediately.”

Another statistic demonstrating the heat of the current market is the number of days a property is listed for before selling. The average days on market (DOM) for TAAR counties (Grand Traverse, Leelanau, Benzie, Kalkaska and Antrim) was 151 this year. Again, that is more than a year ago, when it was 140. But less than every other year going back to 2009, when it was a whopping 201.

As to where the hottest market is, there’s one answer throughout the region, and it’s a bit different than when everyone wanted to be directly on the water. Now it’s enough that the water is nearby, because where they really want want to be is downtown, whether that’s Traverse City, Petoskey or Beulah. “Everybody wants to be downtown,” said Perry Pentiuk, president of Venture Properties in Traverse City, who works primarily with properties in Grand Traverse and Leelanau Counties. 

“They sure like to be near the villages. People like to park their car and walk,” said John Martin, president of the Martin Company in Glen Arbor.

Debra Knapp, an agent and office manager at Berkshire Hathaway in Petoskey, agreed. “People want to be downtown for sure. I hear more frequently, ‘We want to be able to walk to the library, the pub, the store.’” She added that in her area there’s a bonus: “It’s a beautiful thing that Petoskey, Harbor Springs and Charlevoix are all on the water.” 

Knapp provides a word of warning for those who might look to take too much advantage of the market. “If you price it well and it’s ready it will sell. But don’t overprice because the market is good,” he said. One reason: If it’s listed beyond what a typical comparable is priced at, even if it could theoretically fetch that much, it may not get the eyeballs necessary. Better to price it comparably and let competition drive the price up.

Collins provided another reality check. Sellers often become buyers, and while the first step may be easy, it’s actually proof the next may not be. “You have to think about a plan,” she said of sellers. “You better have a place to go.”

 

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