DETROIT, MI – According to a recent National Association of Realtors (NAR) report, national homes sales were up in February, but down slightly in March when compared to last year.
In the Detroit Metro area, sales through the end of March were up in every area:
This of course, is good news as our area has been hard hit with the highest unemployment in the country and for awhile, Michigan led the nation in foreclosures.
So start the party as our housing crisis is ending?
Put the champagne and party hats away.
A deeper look at the numbers, show that it’s the sales of distressed properties that are responsible for the improvement:
Now let’s look at what’s happening with the sales of homes owned by private individuals (true retail sales):
(*Note: Realcomp recently introduced fields for several distressed types of transactions, so these numbers may be somewhat suspect)
As you can see, retail sales are drastically down everywhere.
It’s obvious that first-time buyers and real estate investors are scooping up distressed properties and ignoring retail properties.
Why? Because distressed properties are cheaper and potentially better values than retail properties.
This is not good news for homeowners that have to sell. It also affects move-up buyers that would like to sell their existing home to buy a bigger home and take advantage of low home prices.
Home sales are heading in the right direction, but don’t let anyone tell you we’re in a full recovery yet. That won’t happen until retail sales at least stabilize.
For now, first-time homebuyers need to understand that there’s lots of competition out there for distressed properties. Not only from other first-time buyers, but also from real estate investors - many from out of state. These investors usually buy with cash and banks are more likely to accept a slightly lower cash offer than a higher offer that requires a mortgage. Too many mortgage applications are being declined these days due to tightened lending standards.
All this may require first-time homebuyers to settle for a good deal, rather than a great deal.
As you can see, retail sales are drastically down everywhere.
It’s obvious that first-time buyers and real estate investors are scooping up distressed properties and ignoring retail properties.
Why? Because distressed properties are cheaper and potentially better values than retail properties.
This is not good news for homeowners that have to sell. It also affects move-up buyers that would like to sell their existing home to buy a bigger home and take advantage of low home prices.
Home sales are heading in the right direction, but don’t let anyone tell you we’re in a full recovery yet. That won’t happen until retail sales at least stabilize.
For now, first-time homebuyers need to understand that there’s lots of competition out there for distressed properties. Not only from other first-time buyers, but also from real estate investors - many from out of state. These investors usually buy with cash and banks are more likely to accept a slightly lower cash offer than a higher offer that requires a mortgage. Too many mortgage applications are being declined these days due to tightened lending standards.
All this may require first-time homebuyers to settle for a good deal, rather than a great deal.
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Drew- I am new to blogs and posting on blogs but I am intrigued by your articles.
ReplyDeleteI am really interested in how principle reductions work on loan modifications. I have a friend who did a loan modification with a company called www.carrotpeel.com He claimed they did a good job and go his payment down via rate reduction and longer term but there was no talk of principle reductions. How do they work and can you get a 20% reduction that is cleared from your loan or just hidden only to surface at the sale?