August continued the trend we outlined last month in each geographic area and price range with the market continuing to improve over last year, but at a slower rate. The pace of sales and of new listings entering the market are increasing and values are improving. New buyers are still outrunning new listings, so inventories continue to fall (with the exception of Washtenaw County and Northwest Michigan, where inventories have risen slightly).
The overall Months Supply of Inventory hit another record low at two months and values have risen to a five-year high. Some select markets are approaching their peak 2005 values. This is, of course, all a result of what is really an overheated market. A market that moves too far ahead of the pace of the overall economy will eventually be headed for a fall, so the waning of this crazy pace to a more normal growth rate is good news for all.
The Fall starts the seasonal slow down for home sales so we can expect fewer multiple offers. We will still see the vast majority of homes (over 85%) sell within 90 days or less. For Buyers in a bidding war, our rule of thumb has been, “as long as the offer is at or below the peak 2005 value, the overbid is a safe bet.”
We have included two charts, Comerica’s local economic trend and the latest Case-Shiller value trend. Both show good news for housing and our local economy.
The Comerica Michigan Economic Activity Index continues to show strong growth through this summer, surpassing the prior 2007/08 high points. This represents the fuel for sustaining our local housing growth trends.
Case-Shiller shows Detroit with one of the highest year-over-year value growth rates. Although we are the only major city still below our 2000 value baseline, that is heavily influenced by the decline in values for the city of Detroit (the good news is city values are rising quickly again). The typical Southeast Michigan market is at or above 2000 values.
With Fall quickly approaching, I want to applaud all of you for another outstanding summer season. Thank you all for a wonderful month!