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!

Is the sky falling?

Is the sky falling?

 

As an official geek, I really like looking at what is going on in the market by numbers. One simple way to look at this is through a one-year data run that moves forward one month at a time. This is an annualized monthly trend, and it helps to eliminate the seasonality that is seen through analyzing data presented one month at a time. That method is also valid, in particular in measuring when the market is most active.

 

Take a look at the information that follows. The columns refer to the date range, number of sales, median list and sales price, median size, and price per square foot. This is useful in showing how much a market has changed and is one way an appraiser may base a market conditions adjustment they make, or don’t make, on an appraisal report.

 

 

This chart is the Saline market, Ann Arbor Area Board of Realtors MLS data with all sales exposed through this source only. The to be built and new construction properties are excluded. I excluded these new houses, as the trends did seem to be a bit skewed due to the number of new houses that are being placed in the MLS at this time, many of them not immediately available for occupancy.

 

January 1, 2016 through January 1, 2017 there were 310 sales with median sales price of $335,000 and median price per square foot of $152.13. One year later the median sales price was $358,875 and price per square foot median was $162.46.  This means that in this one-year period, the market increased 7.13% in price, and 6.79% in price per square foot. The change from 2016 to 2017 in this market could be easily measured through this method, and correlated anywhere between that 6.79% and 7.13% range. Of course, markets do not move on a straight-line basis, therefore depending on where a sale fell in that period, the appraiser could use that information for an adjustment.

 

Between January 1, 2018 to January 1, 2019 the market showed a median sales price of $360,000 and median price per square foot of $168.86.  Based on the previous years data, this means the median sales price increased 0.31% and the median price per square foot increased 3.94%. Neither of these shows much of an increase, in particular as the median size of the most recent period is 3.49% lower than the previous year. Because smaller houses tend to sell at a higher price per square foot due to the cost of land and development, and diminishing returns, this means there could be little to no movement in price. If the 2018 inflation rate is 1.9% (based on the US inflation calculator), did properties even increase at a rate equal to inflation? What about the current sales price median lower than the last eleven months?  Even the past three months before showed a lower median price. Are we seeing a correction?

 

Considering there are 18 properties under contract with a median asking price of $364,950, it is in line with the last four months asking prices, but the median size has jumped by 11.30%!  To me this indicates the market is not going up in general, and could be pointing downward. Hard to tell until the contracted properties sell, but it is worth watching.

 

 

 

Market snapshot – Ann Arbor/Saline

Market snapshot – comparing Ann Arbor and Saline

Prologue

I admit it; I am a data junkie. There is something about graphs and charts that I just get all-geeked out about. Maybe it is simply having too much time on my hands, or maybe it is a thirst for knowledge (hoping for the latter, but with understanding it may be the former).

Without further ado, I offer my recent take on the comparison of two markets, because they often compete with each other.

The data below is run as one years’ worth of data at a time, but compared month over month (so if you see a comparison from June 2012 to June 2013 each of those sets has an entire years’ worth of data leading up to the date.  In this first graph, I have compared the cumulative days on the market of sales in Ann Arbor school district, as exposed through the Ann Arbor Area Board of Realtors MLS, compared to the same in Saline. I took all sales and looked at the median. In both segments, days on market declined to a low point in May/June 2013, and have since risen and then stabilized. Saline had longer median days on market but shows as stable compared to Ann Arbor, which is slightly increased over the past couple of months.

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What about price?  On the median price, Saline is ahead of Ann Arbor. On median price per square foot, Ann Arbor is ahead of Saline. Why is this? It is related to median size. The median size of a house in the Saline market is greater than the median size of a house in the Ann Arbor market. As price per square foot is normally higher as size declines, it makes sense that you would see that.

If you compare month to month, for the past five months, the closed sales in the Ann Arbor market show as flat (although that is changing now) whereas Saline has been rising. If you skip down to the price per square foot, the rising prices in Saline are at a slower rate than just by the median price.

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Inventory levels as of 4/8/14: Ann Arbor had 152 active offerings in total, compared to 1,176 sales the year before, or 1.55-months’ worth of inventory (not much). Saline had 50 offerings compared to 297 sales in the year prior, or 2.02 months’ worth of supply. In both instances, supply was quite limited, and this limited supply does appear to be driving many multiple offer situations.  In both markets, the contract-to-listing ratio shows as favoring seller’s, with Ann Arbor at 40.16% and Saline at 41.18% as of the 4/8/14 run date.

When the contract-to-listing ratio and low inventory favor sellers, prices typically increase. When they favor buyers, prices typically decrease. Markets are very fluid and changeable, and what is apparent a week ago, may well change dramatically a month from now. The market is sensitive to interest rates, employment rates, income changes, and national news, among other issues.

Epilogue       

Appraisals are “opinions” of value by educated professionals. They are opinions based on factual data, but in the end of the opinion of a professional. Not all appraisers have equal qualifications and experience, and therefore not all opinions are equal. If you are shopping for an appraiser to help provide you an independent opinion of value, base your selection on the breadth and depth of that appraiser’s knowledge and experience, not the price of the appraisal assignment. After all, it is typically your largest investment, and does it make sense to be penny-wise and pound-foolish?

Rachel Massey, www.annarborappraisal.com

Another bifurcated market snapshot

Bifurcated Market Snapshot

4/1/14

In my venture to stay abreast with what is happening in Washtenaw County, I offer the latest study of differences in median sales price and number of sales for one market within the larger area.

In short, prices are up from the same time last year, but there are signs of weakness and even a possible decline in place in this market segment right now.

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The analysis relates to all sales exposed through the Ann Arbor Area Board of Realtors MLS between 1/1/11 and 4/1/14 in the one area. The data is in two graphs, one related to the number of sales and the other to median sales price. These two graphs compare arm’s length transactions to REO transactions in both categories.

This data includes everything in the MLS so there are duplicate listings.  This occurs when agents have listings in both Realcomp and the A2BR MLS. Since this data is run on the median price as opposed to average price, it should be very similar on that graph, even with duplicates.  Only the Great Lakes Repository was omitted from the search results since there are not very many of those and they tend to be triplicates as opposed to duplicates.

These sales are run on a yearly basis, but one month at a time, so that each segment includes one years’ worth of data. Doing so eliminates the seasonality that is common in Michigan and should correspond with the Board statistics (if they were to go by school district or area as opposed to the entire MLS).

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Total number of sales/arm’s length compared to REO

Here is a snapshot of the number of arm’s length sales compared to the number of REO sales. At first there were more REO sales and now there are far more arm’s length sales.  This means the distress sales have largely made their way through the market at this point, leaving far fewer available. This is a good thing and helps stabilize the market.

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Median price comparison

The graph above is the median sales price comparison between arm’s length and REO. In the past five months, there has been stability to a slight decline in arm’s length sale prices, and stability in the REO market for the past three months. With this data, you can see the ebb and flow as to prices rising, declining, rising and then stabilizing to dipping just slightly in the past couple months. This could be related to the very difficult weather our area has experienced this winter.

Comparing the most recent year-to-year results in the arm’s length category there is an increase in median price of 9.41%. Comparing the same with REO sales, the increase is 49.88% for median price. Clearly, the largest increase in this market has been with the foreclosed properties, increasing as these numbers dwindle.

I find that tracking the contract-to-listing ratio a great predictor of activity. This is simply the total number of contracted listings compared to the total number of listings, and it relates to general activity levels. In the arm’s length category as of 4/3/14, it was 33.33%, which is reasonably robust, but certainly not off the charts. At this level, it is what I would consider “in balance” to slightly favoring sellers, due mainly to lack of inventory.

Inventory is low with 46 offerings not under contract (4/3/14) compared to 237 sales the year before. That equates to less than two and a half months inventory based on the previous year’s sales. Perhaps the price increases have put a damper on interest in some of these sales, and the lessening of the REO inventory means there are fewer good deals to swoop up (less than 1.5 months inventory of REOs).

Based on the data, my opinion is this market as a whole is stable in price, undersupplied, and may be feeling the effects of the price increases last year starting to put a damper on current price trends. This is the entire area market, and every submarket is unique. That means you could be looking at a market that is in an upward trajectory, or even one that is starting a downward track, and as such should always try to whittle down to the market in which your property actually competes. The data above is purposely broad.

As always, I hope that you have found my musings useful. Just remember it is the educated opinion of one appraiser. I am always available to help Realtors, attorneys and property owners alike.

Rachel Massey www.annarborappraisal.com