On Marlin Avenue in Royal Oak two weeks ago, a small, two-bedroom house sold in just five days — for $5,000 more than its $140,000 asking price.
David Elya, who sold the 775-square-foot house south of 12 Mile Road on April 11, said that is just one example of how the area’s supply of for-sale homes simply isn’t keeping pace with buyer demand.
“That wouldn’t have been possible back in the foreclosure days, when they (for-sale homes) were a dime a dozen,” said Elya, broker/owner of Rochester-based Brookview Realty.
Case in point: Since January 2013, the for-sale inventory in the four-county metro region has fallen by 16.3 percent, from 15,537 listings in Wayne, Oakland, Macomb and Livingston counties down to 12,997 in March, according to Farmington Hills-based Realcomp Ltd. II.
Demand among homebuyers is starting to outstrip supply locally:
52 days
(Average time homes stay on the market. It was 78 days three years ago.)
13,000
Inventory of homes for sale — it’s down and still falling. (Inventory was about 30,000 in the depths of the foreclosure crisis.)
That’s one of the reasons median sale prices have increased 85 percent in that period, from $80,000 to $148,000, according to Realcomp.
Although there has been a sharp decline in on-market inventory, that brings the market in line to where it has been traditionally in terms of homes for sale, said Ann Peterson, broker/owner of Rochester-based Ann Peterson Realty Services LLC.
“We always held between 10,000 and 13,000 homes on the market,” she said. “There are still a lot of homes.”
“We’ve gotten somewhat back to pre-recession numbers,” said Joe Sabatini, vice president and regional director of Re/Max of Southeastern Michigan in Troy.
During the foreclosure crisis, 30,000 or more homes were up for grabs at any one time. Buyers either couldn’t get financing, couldn’t sell their own house or were skittish about making such a large financial commitment during a time of economic upheaval.
Now that has reversed.
The average property — a for-sale home or condominium — spent 78 days on the market in January 2013. Last month it was 52 days, according to Realcomp.
“I used to sarcastically tell people five years ago that when they said their house had been for sale for a year that they were just getting started,” said Frank Tarala, broker and franchisor for Principal Brokers Network in Sterling Heights.
The current market conditions are the result of a slew of factors.
First, people who bought their homes at the height of the real estate market in the early to mid-2000s remain underwater or upside down, owing more on mortgages than their home is worth. That makes them reluctant to put them on the market, leading to fewer homes for sale.
Re/Max of Southeastern Michigan’s Sabatini said people who want to move will generally have no problem selling their home. “The problem is, where do they go?”
The disparity between supply and demand is particularly pronounced for homes selling for less than $250,000, according to data from Southfield-based Real Estate One.
The number of for-sale homes up to $150,000 fell 14.65 percent from 7,115 to 6,072 in Wayne, Oakland, Macomb, Livingston and St. Clair counties from March 2015 to last month, while it fell 19.74 percent, from 2,746 to 2,204, in the same region for homes $150,000 to $250,000, according to Real Estate One.
“Under $250,000 is where you bunch up all the starter homes for Gen X and Gen Y buyers,” said Dan Elsea, president of brokerage services for Real Estate One. “That’s bigger than the group that’s selling them. You have, therefore, demographically an excess of demand over supply, and builders don’t build new houses in that price range.”
In addition, with an improving economy, those who had been sitting on the sidelines during the recession are now in the market to buy.
By KIRK PINHO, Crain’s Detroit Business
