Random Clapper

We watch the news and hear about all the homes for sale, just like our clients do.  We go to work as Realtors, we prospect and perform at top level, we attract qualified buyers, counsel them to look at the homes we are sending them, pick out their favorites and then go show the properties to them.  But wait, where are the new listings, where is the "glut" of quality homes for sale?  In Metro-Detroit and Ann Arbor area, with prices still compressed, Realtors are finding it hard to find homes suitable for their clients.  Since the beginning of 2010, a well appointed home hits the market, and if priced to "today's market" you will find yourself in multiple offer situations, with sale prices often times exceeding the asking price.  It is occurring in all price ranges, (although 600k and up is experiencing this less) and all forms of sales; short sales, bank owned and human owned (with equity).  Despite the lack of quality inventory, which is down over 45% from beginning of 2008, and the multiple offers on homes, the appraisal still comes in below sale price. 

In terms of market frustration, it creates a perfect storm.  Lower than expected inventory, appraisal guidelines from the lenders that discourages value growth, and a buyer market that has a new found appetite for purchasing homes.  In a normal situation this would create healthy, moderate, incremental price increases.  In this market, because Sellers are unable to put their homes into the mix due to high loan balances, the renewed buyer interest is not met with Seller interest in selling.  Sellers are not even teased by slightly increasing values, because appraisers (through lender guidelines) are squashing that natural occurrence.  I can only speak to my experiences in Southeastern Michigan, but I bet it is not that unique.

The National media has often reported that there is a glut of bank owned properties being held off the market.  Well, in Metro-Detroit and Ann Arbor, we have been through at least 3 waves of bank foreclosures since the beginning of 2005.  I have talked with many in banking and the waves of foreclosures seem to be worse in other states.  Michigan has already been raked over the recession coals for longer than any other state, so it makes perfect sense that we are ahead of the curve in getting rid of our foreclosure inventory.  That said, if the banks have property in the hopper, now is the time to release it.  Why wait until interest rates go up, put it out there now.  We have buyers who need a home now, or are you afraid your appraisers won't give you the value?  Ah, just kidding, kind of.   

John McArdle

John is the Broker of Remerica Hometown One in Plymouth and Canton Michigan.  John is active at the local, State and National level of real estate issues and is a member of the National Association of Realtors.