The beginning of a new year is the natural time for the national experts to weigh-in on upcoming Real Estate Market Trends. We thought it would be interesting to look at a few of the 2017 National Real Estate predictions and see how they might relate to the local Midland Real Estate Market.
Improved Credit Availability
On a national level, Forbes Magazine predicts that credit availability may improve as the new administration in Washington has suggested a desire to reverse some of the regulations put in place after the financial crisis of the last decade. According to the Washington Post, this loosening of regulations may translate into more home buyers entering the market. Naturally, an increased number of buyers should lead to an increased number of sales.
Although changing regulations have not had an opportunity to make an impact yet, home sales in Midland County Michigan are off to a good start this year. The number of homes sold in January 2017 rose 6.8% as compared to January 2016. In the last five years, Midland County has seen over a 21% increase in the annual number of homes sold per year.
Who are these new buyers entering the market? A recent article from Zillow, suggests that nationally nearly 50% of new buyers will be Millennials, or people born after 1980. It has traditionally been reported that Millennials have put off home buying due to high debt, lack of affordable options, and the desire for mobility in an ever-shifting job market. As the Millennial generation ages, they have had time to stabilize their careers and even save significantly for home ownership. In fact, MarketWatch.com suggests that many Millennial home buyers may enter the market at a ‘move-up’ level and skip the starter home or condo purchase.
The average home price in Midland County Michigan is around $150,000. Starter homes in our area typically sell for $125,000 and under, while the ‘move-up’ homes would sell from $125,000 to $225,000. In the last 5 years in Midland County Michigan, the number of starter homes sold increased by 1.3%, while the number of ‘move-up’ homes sold increased by 36.3%. Since our MLS data doesn’t track buyer demographics, it’s impossible to say if these increases are due to Millennial buyers. However, it is an interesting trend to note and track.
Even though Millennial buyers may be skipping the starter home, Forbes Magazine is predicting a shortage of low to moderately priced homes. In fact, a recent article in the Washington Post suggested that there will be fewer homes on the market overall, and this will likely lead to faster sales.
In Midland County Michigan, year-to-date home listings fell over 26% from 2016 to 2017, while sales during the same period rose by only about 1%. These numbers indicate housing inventory in Midland County is decreasing. Homes are also selling nearly 30% faster year-to-date in 2017 than in 2016. In January 2016, 61 homes sold with an average days-on-market of 111. In 2017, 66 homes sold with an average days-on-market of just 79.
Rising Home Prices
If, in fact, housing inventory continues to decrease, it is only natural that home prices will start to rise. Forbes Magazine believes this will be a slow increase, while Zillow is indicating prices may increase, on average, 3.6%.
In the last 5 years, the average sold price for single family homes in Midland County has increased 12.3%. In 2016, the average sales price was $157,000. If Midland experiences the rise in prices suggested by Zillow, the average sales price could rise to nearly $163,000 for 2017.
Volatile Mortgage Rates
Although mortgage rates are still at historically low levels, Forbes Magazine predicts that there will be an overall increase in rates, but the actual rate will ‘bump-around’ during its climb.
Rising rates tend to have an interesting effect on home sales in Midland, Michigan. Logically it seems home sales would start to decline. In reality, the threat of rising rates often pushes potential buyers into action.
If you are planning on buying or selling a home in 2017, consider calling on the expertise of the agents at Park Place Homes. We offer exceptional insight into the Real Estate Market and make it our goal to become a trusted advisor to our clients.