The boomerang

Condominium developments offer a perfect opportunity to measure what has occurred in the market over time. Ann Arbor has four condominium developments that are adjacent to each other, built in rapid succession between 1991 and 2000 by the same builder. They have largely similar floor plans and amenities. Although the properties within the developments vary somewhat, they are not too varied for comparison purposes. The only exception to this being properties that have attached garages. The units on that street were eliminated from the study to retain better consistency. In total, 506 sales were used to conduct this market study.

In short, this particular market has boomeranged and is now higher than it was at the apex pre-crash.

The Ann Arbor Area Board of Realtors MLS retains data robustly to 2005/06 at this point, but there is still information available online in some instances as early as 1998. Running a map search of the developments turned up sales as far back as 1998, which offered an ideal dataset to show trends in this market over a longer period of time than normal.

The data above shows that the number of listings retained do increase in 2005, but there were sufficient sales prior to that to show the run up in prices between 1998 and the peak around 2004 for these condominium units. The trend towards declining prices is clear by 2006, and the lowest point of the market is between 2010 and 2011.

If sales are arrayed by average and median price per year, the differences become much starker. Bear in mind, that the data up through 2002 was spotty, but trends can still be determined, showing the height of this market in 2004, starting a decline in 2005, and then rising again starting in 2012. The blue bar is the average price and orange bar the median prices. While the mortgage crises were largely said to have started in 2008, in the Ann Arbor market, the decline was evident much earlier, easily seen with the data below.

This is another example of why national trends cannot be used uniformly, and why each market has to be looked at on a local basis, even hyper-local. This is because condominium properties do not necessarily move at the same rate as single unit properties. Different price ranges may have different market trends, and different property types different market trends. Trends can also reverse quite quickly, therefore paying close attention to current activity is important.

There are currently 11 condominium units on the market in these developments, with three under contract. The average asking price of the units available is currently $200,025 while the median asking price is $196,950. The average asking price of the units under contract is $194,617 while the median is $194,000. This indicates preference to the lower prices in general.

What is particularly interesting in this data, is that only three of eleven are under contract, meaning the contract-to-listing ratio is 27.27%. That is stable market activity. In the past twelve months there were 30 sales (excluding the garage unit street), meaning that there were 2.5 sales per month, so the eight remaining units not under contract would be expected to absorb in 3.2 months, again a balanced market. The interesting piece of this puzzle is that the average sales price of these 30 sales was $202,037 and median sales price was $195,500, with list prices a fraction higher.

If the units that are under contract have lower asking prices than the previous twelve months sales, are we starting to see a shift occur again? After all, the properties on the market, and particularly those under contract, are leading indicators of where the market is going. Couple that with supply of over three months, and normal contract-to-listing ratios, and the market could be showing softness above the normal autumn slow-down.