Washtenaw County market activity as of 3/1/19
Hello Ann Arbor area Realtors! In some of our markets, it is evident spring has sprung and agents are busy and the market hopping. In other markets, there does seem to be less activity, but overall, we are off to a great start of the year. Since I started keeping track of the supply and demand factors on residential single-unit housing six months ago, I now have enough information that I can start to run trend to see whether we have change occurring, and that information was run on one of the markets, that of Ann Arbor as a whole, and presented later in this narrative.
The chart below is today’s snapshot of how many houses sold through the Ann Arbor Area Board of Realtors MLS in the past year in each major market, compared to how many are available (not under contract). That provides the supply based on a one-year history. Additionally, the contract to listing ratio (CTLR) provides a snapshot of how many properties are under contract compared to the total number of listings in each major market. These contracted properties are bellwethers of the coming months sales and are meaningful in understanding how active a market is.
Across the board, supply is fairly low. The exception is Saline, but this is really related to many offerings of “to be built” properties that are not truly on the market. Saline does seem to have the most robust new construction activity at present. Many of our markets are showing inventory below two months supply, and the remaining, other than Saline, show close to that two-month mark. This is an undersupplied market.
Contract-to-listing-ratios are showing the greatest activity currently in Ypsilanti, followed by Manchester and Ann Arbor. Ann Arbor is normally busy, and Manchester is rather unusual at the moment as it has not routinely had this high a CTLR. Ypsilanti has been “hot” since I started measuring monthly for the area agents.
The data that follows below are charts showing activity month-to-month in the Ann Arbor school district. It is apparent that the number of sales has been declining over the past six-months. The declining sales in larger part appear related to lack of inventory. We simply have a problem with sufficient properties coming on the market to satisfy demand.
The next graph shows inventory compared to the last years sales each month. As the number of sales declined, supply could normalize by a similar number of properties being available for sale, but it appears that the supply is also dropping. Lack of choice, coupled with high demand most often causes increasing activity and prices.
The contract-to-listing ratio has been firmly in seller’s market territory since I began measuring this monthly for the area agents. Using a trendline, it shows as increasing, meaning as spring emerges, we are having more properties on the market under contract.
I wish I had a crystal ball on where we will be in a few months. We definitely have a problem with inventory, and based on agents responses when asked about the shortage, it does not appear an easy fix. The inventory shortage is really concentrated in the lower priced, starter markets, and normally new building can ease some of the shortage. The problem is related to costs of development and the inability to bring on lower priced new construction on a larger scale in the market to meet the demand. There may be projects in the offing, but that does not solve the problem at hand today.