The Truth about Whether Michigan Real Estate Values are Falling in 2011

Thursday, July 14, 2011

There’s no disputing the fact that real estate values have fallen significantly over the past 4 years all over the United States. Some markets saw falling prices earlier than others but no one has been spared. Just about every day there is some news piece that you see, hear or read that says home prices are going down. What’s the real deal?

The problem with national news reports for our area is that they focus on the “Detroit” real estate market. The city of Detroit has issues that are affecting the price of homes that are specific to the city. I’m not going to go into that. Suffice it to say that the hardest hit real estate market in the State of Michigan is in Detroit and values there are still falling in 2011 according to the Michigan Association of Realtors (MAR - average sales price for YTD 2010 compared to YTD 2011 is down by approx 9.9%).

The market area I work in is primarily Oakland and Macomb counties. Let’s take a look at this year’s figures from MAR for Oakland County. Total number of sales for the first 4 months of 2011 was 2,219 and for 2010 it was 2,358, which is a drop in the number of homes sold of 5.9% (MAR figures). Last year we had a Tax Credit for Homebuyers that really stimulated the market and that accounts for the sales drop. Actually, I think it’s quite positive that the number of sales dropped so little as many believed the expiration of the tax credit was going to have a much larger negative impact. That may actually show the strength of our market!

What I really want to focus on is the PRICES homes are selling for. The average sales price of a home in Oakland County for the first four months of 2010 was $132,314 and for the same period in 2011 the average price was $136,783 – that’s a 3.4% INCREASE in the average sales price this year over last year. Does that sound like real estate values continue to fall in Oakland County? The average sales price in Macomb County is actually up from $87,093 to $107,144 – a 23% increase!

The auto industry is enjoying an upswing (finally). This week there was a report out that the Big Three are going to be on a massive hiring spree over the next 3 years. Sure, some of those jobs don’t pay quite as well as they used to, but, it still puts people to work. In my opinion, our local economy is on the upswing and we are ready to create some real prosperity here and that bodes well for higher real estate values over the next few years. So, next time you hear some national real estate doom and gloom, ignore it!


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