Eric Vance knows a good house when he sees one.
The 54-year-old contractor from Southfield, who has spent years buying and flipping homes, recently toured a property in Redford Township that immediately caught his attention.
“It was the fireplace and that kitchen,” he said. “Because I am a family man, and it put me right where I needed to be and what I needed to see.”
Buyers like Vance who are looking for a new home are navigating the housing market at a time when inventory, prices and days on the market are on the rise, even as interest rates begin to trend down. Metro Detroit’s housing market saw prices climb modestly in August, even as sales slowed, with the market heading into a seasonal slowdown.
The median sales price across Metro Detroit rose 4.4% year-over-year to $332,500 across Wayne, Oakland, Macomb and Livingston counties, according to the latest RE/MAX of Southeastern Michigan Housing Report. The supply of inventory increased to 2.8 months in August, compared with 2.6 months in July and 2.4 a year earlier, according to the report.
“We are continuing to see a bit more inventory coming into the market that is starting to be reflected in the month supply,” said Jeanette Schneider, president of RE/MAX of Southeastern Michigan. “We’re seeing that inch up a little bit. That’s a signal that we’ve got more and more inventory coming to market.”
The median sales price rose across a broader area — 18 Michigan counties — to reach $289,000 for residential and condo sales combined, according to a Realcomp August sales report, up 5.1% from $275,000 the year before. Realcomp, the state’s largest multiple listing service, looks at Genesee, Hillsdale, Huron, Jackson, Lapeer, Lenawee, Livingston, Macomb, Monroe, Montcalm, Oakland, Saginaw, Sanilac, Shiawassee, St. Clair, Tuscola, Washington and Wayne counties.
The supply of inventory across the 18 counties increased 16%, from 2.5 months to 2.9 months year over year. Pending sales decreased 4.9% from 10,345 to 9,839 year over year, while pending sales increased from 9,778 month over month by 1%. Closed sales decreased 3.7% from 10,530 to 10,138 year over year, and decreased from 10,507 month over month, a decline of 3.5%.
“As we prepare to move from summer into fall, homebuyers have more choices than they have had all year,” Karen Kage, CEO of Realcomp II Ltd., said in the report. “While median sales prices remain fairly consistent, inventory is at its highest August levels in 5 years.”
‘Holding our own’
One notable point in the data was Detroit, which saw its median sales price jump about 16% from last year to a record $111,500, according to Realcomp.
Darralyn Bowers of Bowers Realty in Southfield said the housing market remains healthy in the city and across Metro Detroit: “So far, we’re holding our own, and we’re still seeing property values go up.
“Even in Detroit, we’re seeing growth. Michigan is unique in the Midwest here. We’ve got so many positive qualities, like the water and the amenities and the desirability of Detroit and some of the things that are happening here in Detroit. I think those all accelerate to a better market.”
Nathan Boji, an agent with RE/MAX Classic in Farmington Hills, said the market varies across Metro Detroit, with Oakland County staying strong in cities like Novi, Farmington Hills and Bloomfield Hills. Livingston County properties are selling quickly, while Macomb County offers solid value. He said Wayne County remains the most affordable for entry-level buyers, with Livonia and Dearborn competitive under $400,000. Sterling Heights is also seeing steady activity.
“If it’s priced right, it’s selling,” he said. “If it’s not priced right, it’s going to sit.”
Jessica Belanger, an agent with RE/MAX Advisors in New Baltimore, said homes in the northern subdivisions in Macomb County, such as New Haven and Shelby, Washington and Macomb townships, are selling relatively quickly: “The nice houses, nice upgrades that don’t need a lot of updates and not priced hopefully over market, are still selling.”
Mortgage rate slide helps
As housing prices rise, mortgage rates continue to trend down, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 6.35% as of Thursday, down from the previous week when it averaged 6.5%. A year ago at this time, the 30-year fixed-rate mortgage averaged 6.2%.
“The 30-year fixed-rate mortgage fell 15 basis points from last week, the largest weekly drop in the past year,” Sam Khater, Freddie Mac’s chief economist, said in the report. “Mortgage rates are headed in the right direction and homebuyers have noticed, as purchase applications reached the highest year-over-year growth rate in more than four years.”
Schneider said September will be the month to watch as the Federal Reserve meets mid-month and markets look for a possible rate cut.
While mortgage rates are more closely tied to the 10-year Treasury than the Fed’s actions, she said Fed decisions can signal direction and influence buyer sentiment. Schneider added that even if rates don’t drop significantly, a Fed cut could give buyers more confidence and push some off the fence, potentially leading to more activity in the fall housing market.
“So it seems, from my perspective, the market has already kind of anticipated what the Fed is going to do, and the interest rates are already starting to kind of reflect that,” she said. “So I don’t necessarily think we’re going to see a huge drop in the mortgage interest rates, even if the Fed does a cut. But what I think a Fed cut could do is psychologically be a very positive confidence booster for buyers that have been iffy.”
While mortgage rates have eased into the mid-to-high 6% range, Boji said many consumers are still holding back: “A large percentage of the consumer still sees that as being a very high rate. They’re sort of holding their breath for a kind of a magic kind of reduction, in the sense of possibly seeing rates that we saw several years ago — 3, 4, 5%.”
Jessica Belanger, an agent with REMAX Advisors, said she’s noticing some clients becoming accustomed to the mortgage rates. “Everybody out there in general is kind of coming to that realization that those 2.5% interest rates were not a realistic expectation. It’s kind of a once-in-a-lifetime thing.”
To help prospective buyers make home ownership more affordable, Bowers said her team hosts a monthly brunch to educate them about down payment assistance and help them explore their options. She noted that some banks are offering grants up to $17,500, while others provide low- or no-interest loans, some with no income limit.
“If you had a grant of $10,000,” Bowers said, “that also is equity.”
Vance, whose budget is between $200,000 and $250,000, said he isn’t a fan of the current mortgage interest rates. But a divorce last year has prompted his move.
The father of three, including two adult children, is considering the three-bedroom home in Redford Township for its roominess. He said he could see himself building an outdoor kitchen off the back patio, a place for entertaining and spending time with loved ones.
For Vance, homeownership is about more than space: “When you are a homeowner, it means a lot. It gives you that peace of mind … a feeling of accomplishment, like you’re doing something right.”
cwilliams@detroitnews.com
