As Michigan economy collapses, house prices skyrocket

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Michigan’s economy collapsed this spring amid the coronavirus pandemic as thousands of businesses closed and more than a million residents lost their jobs and claimed unemployment benefits.

Yet unlike in the recession of 2007-2009, home selling prices in the Detroit metro area have not collapsed so far and are in fact rising. Prices could continue to rise – or at least remain stable – until early summer.

Real estate agents attribute the situation to many potential sellers who have decided to wait for the worst of the pandemic before putting their properties up for sale. These decisions, along with Michigan’s temporary restrictions on the real estate sector in late March and April, exacerbated the low inventory situation in the housing market that has persisted for several years.

Buyer demand has remained healthy so far as, despite rising unemployment, many people still have jobs and expect the economic crisis to ease along with the virus crisis.

“I don’t think there is a recession discount because the market has been tilted to sellers for a long time,” Maureen Francis said, a broker associated with Coldwell Banker Weir Manuel in Birmingham and president of Michigan Realtors. “Buyers might think sellers are desperate and can get 20% off the house, and they find sellers are not.”

Additionally, Michigan has yet to see a flood of foreclosed homes during this downturn, thanks to various mortgage forbearance and foreclosure programs linked to the pandemic, as well as the temporary increase in the unemployment insurance by the federal government which set Michigan’s maximum benefit at $ 962 per week. , which would equate to a salary of $ 50,000 at an annualized rate.

Certainly, the outlook for the housing market could change this summer if job losses increase and other economic fallout from the pandemic worsens.

So far, realtors say they have seen many sellers get the full asking price – or better – for their homes, and homes under $ 500,000 often have multiple offers.

“It’s not always true that a recession means house prices go down,” said Mark Zawaideh, CEO of MARK Z Real estate experts. “If you look at three of the last five recessions, house prices have gone up.”

Falling sales, rising prices

Buyers and sellers had to rely almost entirely on photos and virtual displays of properties before Gov. Gretchen Whitmer lifted pandemic restrictions on the real estate industry on May 7. Since then, sales have increased with the return of in-person pitches – with new social distancing rules – and more sellers are deciding to try to list homes.

In April, the number of real estate listings on the Detroit subway fell by about 20% and sales fell 50% from the previous year, even as the median selling price of homes and condos fell. has grown by almost 16%, according to the latest data from Realcomp’s multiple. – registration service.

Figures define the Detroit Metro as Wayne, Oakland, Macomb and Livingston counties and do not include private sales or owner-sell transactions.

Following: Amid pandemic, buyers are buying Michigan homes without the knowledge

Those who work in the lending industry say there has been only a slight tightening of mortgage approval requirements, and borrowers who are still employed and have over 630 credit scores should check out. ‘get out.

However, those who forborne on their current mortgage backed by Fannie Mae or Freddie Mac may need to show a period of on-time payments before they can qualify for a new mortgage.

Masks on

There are new rules and recommended behaviors for viewing and showing homes, said Francis, president of Michigan Realtors.

Under the governor’s decree for the real estate sector, no more than four people can be present at a time during a home visit and open houses are not yet allowed.

Realtors also encourage potential buyers to wear masks and gloves when visiting properties. Vendors are asked to turn on all lights and leave interior doors, cabinets, curtains and blinds open.

No recession discount

Steven Bartley said his daughter and husband recently completed the $ 125,000 purchase of a four-bedroom house in Detroit’s LaSalle Gardens neighborhood. The property was valued at $ 115,000 at the height of the pandemic and saw several offers from people who had never entered inside.

“The sellers featured it on their Zillow ad with some really nice photos, and the photos did a really good job,” he said.

Bartley said her daughter and son-in-law relied entirely on the photos of the interior until the day before closing when they finally took a walk. The photos turned out to be fairly accurate representations, he said, and they did not come up with any unpleasant findings during the in-person visit.

Why wait?

Dr Molly O’Shea Gallucci and her husband Tony use high-definition 360-degree virtual tours to sell their Bloomfield Hills home, which quoted for $ 775,000 around the beginning of May.

They considered delaying enrollment, but decided that there was no point in waiting as market demand appears to be strong and families generally like to move into a new home well before the start of a new school year.

Gallucci said they have already left the house, which alleviates virus issues for themselves and interested buyers making in-person visits. Their house had half a dozen physical screenings as of mid-May.

“I saw no benefit in waiting,” she said.

Contact JC Reindl 313-222-6631 or [email protected]. Follow him on Twitter @jcreindl. Learn more about the business and join our company newsletter.