What’s behind Southeast Michigan’s real estate frenzy?


Winter in Michigan isn’t usually the best time to show a home, let alone sell one, even without a pandemic raging. But neither COVID-19 nor a blizzard could stop buyers from viewing Sarah Calderini and her husband’s five-bedroom Ann Arbor home in mid-February.

Confirming what many industry experts say the seller’s market has been the strongest for more than a decade, the couple received several offers within days. “We put it on the market on a Friday and it was sold on Wednesday, despite the salt and snow everywhere,” Calderini says of his 3,500 square foot old house on the shores of Barton Pond. Plus, each offer exceeded the listing price by $ 1,785,000, and most potential buyers didn’t care if the valuation was lower than the offer. They would just make up the difference.

The offer they finally accepted was not only the highest – $ 1,875,000 – but also the one with the best terms. Buyers Amy and Bryan Pritchard waived the possibility of an appraisal, included an escalation clause to beat all competing bids, and told Sarah the family could stay in the house free of charge for a month after the fencing. Plus, while waiting to see if their offer would go through, the future new owners wrote a heartfelt email to share a personal promise. “I know this is a cliché,” Amy wrote, “but this is our family’s dream home. Know that you can expect smooth sailing if you
should choose to work with us.

The Pritchards, who were moving from Chicago, both have professional real estate backgrounds and knew they had to go out of their way to get their dream home in such a hot market. Amy Pritchard, vice president of sales at Jameson Sotheby’s International Realty, and her husband Bryan, founder and CEO of real estate company Tricap Residential Group, moved from a Chicago townhouse to a rental home in Ann Arbor in June 2020 with their two sons, yearning for a lifestyle change, boosted by the pandemic and a new puppy.

“It was an amazing offer, and the email was a good idea,” Calderini says. But it was probably also necessary: ​​Calderini, who chairs the board of trustees of the University Musical Society, had also made a cash offer of $ 1,825,000.

It’s not just the high end of the market that’s on fire right now either. The median selling price of existing homes in the Detroit subway was $ 267,824 in April 2021, up 14.3% from the median price in April 2020, according to a monthly RE / MAX report from the southeast Michigan. The number of homes sold in the Detroit metro area increased nearly 55% during the same period.

“It’s the Wild West,” says Jeffrey Post, a Berkshire Hathaway real estate agent in the Metro Detroit area, who says the area only has two months of inventory, a surprising low that means it doesn’t there would be nothing left to sell if not. new listings hit the market in eight weeks. A buyer’s market, when prices are falling or not rising as quickly, would typically see a six-month inventory. “The market is so hot right now. Unless you make a very aggressive offer within the first 48 hours that a home is listed, you won’t stand a chance. There are no tire shooters there. They are serious buyers, ready to go. Offering money or more than list price is now just the norm, Post says.

real estate in southeast michigan

Part of what makes this housing market unusual is how COVID-19 has affected it. In many cases, potential sellers have refused to open doors in the age of social distancing, but it hasn’t hurt their prospects. Spending so much time at home had a double effect: Salespeople realized it was time to downsize, especially if they suffered an economic blow from a pandemic, while many people who had kept their jobs wanted more space. “People want bigger homes where they can entertain, work remotely, virtually learn and exercise,” says Post. “All
inch of space counts.

Ryan Cooley, owner of O’Connor Real Estate and Development in Detroit, sees a similar trend: Condominium sales are cooling while single-family home sales are on the rise. “Single-family homes have gone up in value, but we have very little inventory,” Cooley says. “In fact, it’s not a fun way to sell real estate. There is very little to buy and you see how difficult it is for people to be successful in this market. “

One problem Cooley faces in the Detroit market in particular is that the market has been so slow for so long that there are often few comparable home sales on which to base a price for something new on the market. Cooley knows this problem firsthand, having tried to get her own renovated Corktown home accurately assessed when there has been little turnover of repaired homes in recent years.

That started to change last winter, however, when O’Connor Real Estate sold a row of seven historic brownstones on Leverette Street in Corktown in 10 days for around $ 600,000 each, well above the asking price of 530. $ 000. Suddenly, Cooley had comparable sales figures for an appraisal of his own home. The Leverette developer has spent a lot of money on top-to-bottom renovations of two-bedroom townhouses, from kitchens with stainless steel appliances to fireplaces, floating stairs and leaded basements that can become separate apartments in the city. ‘room.

Detroit City Football Club general manager and head coach Trevor James and his wife Tiffany Ebert bought one in May after James extended his contract with the football team for three years. They made a reservation for the 2,100 square foot home they ultimately purchased following a visit that took place before renovations were completed, paying a fee to have first access to the property once it was completed. here finished. “We wanted a single-family home, and it’s so hard to find because most of the new build in Detroit is condos,” says Ebert. “Detroit is a unique real estate market, and we were so lucky we got there early and didn’t have to fight other buyers. ”

That’s no longer the case, says Cooley. In April, he sold a three-bedroom house in Corktown that had been vacant for 30 years before its owners, an interior designer, made an extreme makeover that included adding a powder room, a laundry room, a cloakroom and a porch. . It went on the market for $ 385,000 and sold four days later after 13 offers and 40 showings for $ 478,000.

More diverse suburbs like Ypsilanti, where few homes are on the market, are experiencing a similar fad. “I’ve been in the business for 28 years and have sold over 5,000 homes for a total of over $ 1 billion, and Ypsi is the most popular it has ever been,” says David Mueller , who runs DMA Real Estate in Washtenaw County. A house priced at $ 249,500 received 49 offers and was ultimately sold for $ 300,000 in cash, he says. “The last three houses I sold cost 20-25% more than asked. “

real estate in southeast michigan

To find more inventory, Mueller put hundreds of postcards into letterboxes in zip codes in the Ypsilanti area, asking owners if they could sell given the “extreme sellers market.” He also offered a free home appraisal. “Typically I would have 70 to 200 homes on the market at this time of year,” he says. “Instead, I only have 11.”

Unlike some competitors, he doesn’t mind that buyers are willing to make up the difference between expertise and selling price, because the price “should really be what someone is willing to pay for it.” If you have 40 bids at one price and the valuation is much lower, is it even accurate? And with interest rates so low, it looks like Monopoly money.

Birmingham real estate agent Kate Hayman of Hayman Property Group says homes in her area sell for between $ 300,000 and $ 3 million. Many home buyers, she says, are looking to buy homes with exactly what they want, rather than paying less for something to renovate. “They don’t want to spend $ 70,000 on a new kitchen when they can borrow money at such low rates to buy the house that already has that great kitchen,” she says, adding that the space of outdoor entertainment is also very expensive, especially backyards. with fireplaces and swimming pools. “A buyer made a condition of purchase that the seller, who had planned to build a swimming pool this spring, respects the appointment with the contractor, because there is a backlog to install swimming pools here.

Mueller believes this seller’s market could stretch to 2023, although he is cautious about the future after suffering the real estate crash during the Great Recession. He is reassured, however, that, thanks to post-crash regulations, lenders are increasingly cautious about offering loans to clients who cannot really afford to pay them in the long term. . Unlike the 1990s and 2000s, when banks provided loans to people with poor credit, and many of these loans were designed to keep monthly payments low for a few years before they skyrocketed, most mortgages issued now involve closer examination. a buyer’s ability to pay to reduce the risk of foreclosure. “We always have new families moving here,” said Hayman, noting that housing demand is expected to remain stable for some time, especially with the expected economic recovery from the post-pandemic era.

Cooley, who focuses on the city of Detroit, is more wary, given that many parts of the city remain ravaged or stigmatized. “The news is more positive than negative with low interest rates and a moratorium on foreclosures at the moment,” he said, adding that an increase in the cost of building materials means there will be no no more influx of new properties arriving at all times. soon. “Over the past five years, downtown Detroit has grown. But much of the city has even more preconceived risks. We also don’t know what the office culture will look like. Does it come back? The good news is that we are still a destination for young people.

The hard part, as Sarah Calderini discovered, is that once you sell your old home, you have to find a new one. In April, when she spotted a two-bedroom condo for sale, she knew she “had to make an aggressive offer that day.” She offered more than the asking price of $ 399,900, added an early acceptance bonus of $ 14,000, and let the seller stay free for six weeks after closing. Shortly after her offer was accepted, she learned that there were two more competitive offers on the table.

The family was due to move into the new home on June 30. “I feel really lucky to have had a place in this crazy market,” she says. “At this age, I feel too old to couch-surf. “


About Mary Moser

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