July 2022 Market Update: "Housing Slow Down"

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Real Estate

Have you been noticing a change in the real estate market? Perhaps you've seen more "for sale" signs than usual. Maybe you've heard the news, your friends, or family mentioning that the market is slowing down.

I'm here to confirm that this is accurate, both nationally and locally.

Here in Plymouth, Northville, and Novi, Michigan, the real estate market started pumping the brakes right around Memorial Day Weekend. A combination or aggressively rising interest rates, inflation, and record high home prices has created a situation where housing affordability is the lowest it's been in almost 15 years. Once the holiday weekend hit and signaled the beginning of summer, a lot of burnt out buyers decided to stop looking either from bidding war fatigue or being priced out. Right around the same time, we saw more homes come on the market than we've seen since 2019, or right before the "COVID housing boom".

In short, demand fell and supply rose, which created an immediate change in the market. Some people are calling it a market "shift", but I don't like to use that word. I think it implies a shift from a seller's market to a buyer's market, but that's not the case. To quote KCM, it's more like the market was driving at 150 mph, then slowed down to 70 mph. It feels like we're going slow now, but in reality it's just a normal speed compared to what we've been experiencing. Let's look at the data:

Months of Inventory is above 2 again, and close to 3 in some local cities. For reference, 3 is an average seller's market, 7+ is a buyer's market, and we've been down near 1 for almost 2 years (crazy aggressive).

Housing supply jumped up this month, but only to where it was right before the COVID boom, which was still low.

Prices are stable, and homes are still selling quickly (less than 6 days on average).

In summary, if you're a buyer you can expect less competition. Highly sought after homes are still going to get into bidding wars, but average or less desirable homes are not. The homes that are getting into bidding wars are also getting less offers, which means that you may not have to pay as much as you did a couple months ago. If you're a seller, know that cleaning, staging, and pricing strategically are more essential now than they've been in years. A few months ago you could put your home up for sale as-is and maybe even price it a little high and still get offers, but that's not necessarily true now.

I'll see you in a month when we go over what the market is doing in August!