Pulse of the market as of 12/16/13
What is happening in the general Ann Arbor school district market? Below is a brief analysis of sales exposed through the Ann Arbor Area Board of Realtors MLS (A2BR for short), excluding any distress sales and excluding listings offered in Realcomp and the Great Lakes Repository. These are excluded because the other MLS tend to create a lot of duplicates and that skews the data, and also excluding distress sales compares apples to apples as far as pricing/activity statistics.
In each segment one years’ worth of data is included at a time. This is done so as to avoid seasonal changes as it is typical to slow-down during the winter months and increase in number of sales and prices in the peak spring and summer selling seasons.
A brief analysis of each of these charts is noted below.
Number of sales – in the year 2011 the exposure of arm’s length sales through the A2BR was 805, and by 12/1/13 had climbed to 1,067 sales. This is an increase of 32.55% in number of sales from 1/1/12 to the most recent period in 2013.
The increasing number of sales indicates market optimism as more sellers are able to market and sell their properties and more buyers move into the market.
List price to sales price ratio – this is a good measure related to the degree of negotiating that occurs in the market over time. For the last three periods, the median sales price has exceeded the median list price slightly. In most of 2012 the sales price to list price ratio was in the 95.11% – 96.58% range, increasing to 96.23% to 100.72% in 2013 with the period from 10/1/13 to present showing slightly over 100% for the median sales price over list price. This provides an indication of less negotiation that is occurring in the market at present compared to recent historic data.
Median Sales Price – relates specifically to the median sales price regardless of differences in size. Since there have been a large number of sales in this dataset, and no distress sales are included, the price increases appear to be mainly due to improving market conditions. A drop in median prices did occur from the beginning of the study up through mid-2012, but then a steady increase in prices is noted after 4/1/13. Comparing 1/1/13 data with a median price of $258,000 to 12/1/13 at $286,000 means that the non-distress sales, as a whole, have risen 10.85%.
What about the change on price per square foot? What happens if median size increases or declines; does that affect the change in median price? Typically as size decreases, price per square foot increases for a property. The reason is that there is the underlying land value to a property, as well as the economy of scale of building a larger house. It is conceivable that a change in the median price can be tied to changes in size. As such, it is important to also look at the changing price per square foot. In this dataset prices show as almost steadily increasing, even during the period that the median price slipped somewhat. This is due to a decline in size on the median from 1,944 to 1,842 (5.25% smaller), which would logically equate to a drop in the median sales price.
From January 2013 to December 2013 the median price per square foot has increased from $141.60 to $152.13 or 7.44% compared to 10.85% if looking at median prices without regard to changing size.
In addition to this information, what is currently on the market and currently under contract also plays a role in the tone of the market. As of 12/16/13 there were a total of 292 houses on the market in the Ann Arbor school district, as described above. Of these, 99 were under contract. That contract-to-listing ratio is 32.90% which is a moving number that changes every day depending on how many houses go to contract, close, or deals fall through. The current contract-to-listing ratio is significantly lower than in the summer months but is still fairly active, indicating there is still good demand. In addition, this data also suggests that there are 193 active listings that are not under contract, and with the most recent period showing 1,067 sales in a year (88.92 per month) indicates that there is just over a two month supply of active listings based on the most recent sales data.
This data relates to all of the Ann Arbor school district, and each submarket within the area could be different with some increasing in price at a greater rate while others remain stagnant, or possibly even declining in price.
Markets are also subject to change quite rapidly, and the data above is a snapshot of the market in time. Interest rate volatility; increased supply; change of jobs forecasting, etc. can all play into a rapidly changing real estate market. As such, my recommendation is always to use a local appraiser who knows the market well and is able to analyze the market whenever you have any valuation needs.
If you have any questions, please feel free to comment on my blog or send me a message. I will do my best to answer whatever questions you may have.