market change Archives - annarborappraisal

April 1, 2019 Washtenaw County market snapshot

4/1/19

Mixing up my monthly run related to how the market is doing (not looking at prices, only supply and absorption).

The current monthly stats, run today, show most markets with limited inventory compared to the past 12-months sales, with only Dexter and Saline running over three months’ worth of inventory. Both of these markets have an abundance of new construction and that is considered to be partly to blame for the higher supply levels. Since I started running the information including “to be built” properties months ago, I have decided to keep running this particular data in the same manner for consistencies sake.

Below is a snapshot of how this Washtenaw County market looks right now, with a shortage particularly in Whitmore Lake, Milan, Lincoln and Ypsilanti, and very high absorption (firmly in a seller’s market) for Chelsea, Whitmore Lake, Lincoln, Milan, Ypsilanti and Ann Arbor.

The next image is that of comparison of month to month, color coded to show where activity has been since I started tracking this on 9/1/18. Green is go, meaning seller’s market. Orange is slowing down, in a buyer’s market, and yellow is in between, what I would consider “balanced”. Looking at this color chart, it looks like spring is shaping up to be very active again, but as we tip towards more inventory, could reverse, such as what is currently seen in Dexter.

Of course, within each of these areas there are market segments, and the information provided only shows the entire school district sales and listing activity, for residential single-unit properties. I could run this on condominiums and in market segments as well, but since what I am looking for on a monthly basis, is the broader overview, this works well for me, and I hope for you.

Hope you all find this useful, and remember, if you have any appraisal referrals for people who need a valuation for estate, probate, divorce, asset division, relocation, cash sale, or any other reason that is outside of mortgage lending, please think of me.

Happy Spring!

Ann Arbor snapshot

So many ways to measure

Markets are rarely identical and what happens as a nation isn’t necessarily what happens in a county, or what happens in an area, or even a submarket.

We hear a lot about the improving market conditions that are occurring nationally, but as in all things real estate, the market really is fundamentally local. I live and work in the Ann Arbor market. Not all markets within this area are moving in the same direction, or at the same pace. Even within Ann Arbor there are differences, and the data below represents current information comparing the Ann Arbor school district as a whole to one area within Ann Arbor, area 82, which encompasses a wide market but is the west side of town as well as into the western suburbs and rural area within the Ann Arbor school district.

How can you go about measuring the market? There are a number of different ways, but what I am doing now (and I do change things up as I learn of new techniques) is taking one years’ worth of data at a time, run on a monthly basis and compare and measure how markets change. The data is run as one year periods because it neutralizes the seasonality that you see happening in this area. It is almost clock-work to see our local market start to slow after Labor Day, and to start to pick up in February or March, depending on the weather. In addition to measuring year to year, I have also eliminated from the data below distress sales and “to-be-built” properties because including them skews data. This is addressed in a previous blog post. Depending on the market, it might make sense to include the distress sales but Ann Arbor hasn’t had a lot in general (Thank You University of Michigan) and if they are included the market actually looks like it is picked up more steam than it truly has. Apples-to-Apples with the data below.

My findings are in graphic formats below with a small explanation underneath the graph.

Number of sales

We are seeing an increasing number of sales in both the entire market and area 82. For instance, the one year period of 2011 showed 805 arm’s length sales, and in 2012 there were 939 sales, 2013 had 1,054 sales for the year. Clearly the numbers of sales are increasing. In area 82 our market jumped from 210 sales in 2011 to 260 in 2012 and 299 in 2012. Based on this information the expectation is around 88 sales per month for the entire market and 25 per month for area 82. As there are 139 available properties in the MLS for the entire school district today (2/9/14) and 36 in area 82, there is about a 1.6-month supply for the overall market and 1.45-month supply for area 82. Looks like an undersupply of properties, doesn’t it?

Days on market

The chart above shows the differences in days on the market in both the wider Ann Arbor market and area 82. Area 82 consistently has had quicker absorption than Ann Arbor as a whole, but take a look at how the market dipped in both segments to a low point in June/July 2013 and has been increasing steadily since that time. My take on this is that as inventory has increased (as evidenced by the number of sales above) that there are more options and therefore houses are not selling quite as quickly as they were at the peak in 2013. At this time days on market is still very short with the most recent reading showing 43 as a whole and 35 in area 82. Surprisingly close to the expected absorption rate addressed in the graph above.

There are more graphs and charts that I will examine, but I am going to save that for the next blog post, so as to keep you interested and coming back J. These other indicators include the list price to sales price ratios, median price over time, and median price per square foot. They also include my favorite, the contract-to-listing ratio which some of you are aware of from previous blog posts.

Hope you enjoy this information and find it useful. As always, if you have questions about the market from the perspective of the local appraisal expert, call or write. I am always happy to field whatever calls or emails that I can.

Data above is culled from the Ann Arbor Board of Realtors MLS

Rachel Massey, SRA, AI-RRS www.annarborappraisal.com

Measuring market change

Measuring market change

Most of the measurements we see reported in the MLS relate to median price change over time, not price per square foot. As house sizes rise, the price per square foot falls and does so because price per square foot includes not only the gross living area, as well as the garage, basement, improvements to the house, decks, patios, and other site improvements, and even more importantly, the site itself.

Since there is a diminishing return as house sizes increase, it is easy to see how a shift upward in house size could make the market look like it is improving at a higher rate than it actually is. Conversely, if house sizes are shifting downward, then the market may look like prices are going down when they are not.

In this first graph, it looks like the market dropped in early 2012 to late 2012 and then had a meteoric rise in mid to late 2013:

In the second graph, the market shows only a slight leveling of price increases in 2012 and then another slight leveling in early 2013 followed by a much steadier price increase towards the end of 2013.

Which of these graphs better represent the market? How about a blending of the data? If houses decrease in size in general, the price per square foot rises at a greater rate, and by looking at both measures, I feel the read of the market is more realistic and I have accounted for the change of buyer preferences. Sometimes one indicator is more reliable than another, and in those cases market change is best measured by the one that makes most sense.

The next chart is what I used for my graphs. Statistics are run on a yearly basis but one month at a time. The data presents one year of data for each segment and is a nuanced way to measure market change. As an appraiser I am tracking the number of sales, the list-price-to sales-price ratio, and the median sales price, the median sales price per square foot and days on market cumulatively.

The data below comes from information culled from the Ann Arbor Area Board of Realtors MLS and excludes distress sales and duplicate listings.

The presentation above is just one way to look at changing market perceptions over time. I will continue to present data about my local market as I see it. Check back often, as markets are fluid and are subject to change rapidly. Forces that cause market change include, but are not limited to, change in interest rates, change in inventory levels, introduction or withholding of distress inventory, tightening of the money market, catastrophic events, local employment, etc.

As always, if you are in need of a local expert in the Washtenaw County market, go straight to the local residential appraiser expert, Rachel Massey, SRA.