Despite what most would consider off-season winter months, a shortage of affordable quality homes is creating heavy buyer competition throughout Detroit area markets such as Detroit, Ferndale, Oak Park, St. Clair Shores and most of the Downriver markets.
Using St. Clair Shores as an example, 1,000 homes sold for under $145k five year ago. Last year, fewer than that sold for under $200k. Two or three years ago it was easy for buyers to find well-built 1950’s three bedroom brick ranches for around $130k. Those same homes are now selling with competing offers for around $160k.
Five years ago, 997 St. Clair Shores homes sold for under $145k. Last year, less than that sold for under $200k. That number has dropped to about half with a heavy concentration of those sales priced in a popular first-time buyer range between $145k and $160k. In that price range, heavy buyer competition is creating bidding wars where nearly two-thirds of sales are at or above full price. More specifically, 35% of sales are over asking, 28% are at full price and just 37% are less than asking price.
The over-asking price differentials were also surprisingly large. Only 11 of the 57 over-asking sales were within $1,000 while 25 of them were $5k or more and 9 were $8k or more.
As prices of Southeast Michigan homes have been on the rise for ten straight years, price increases have been outpacing income and making it difficult to find affordable move-in-ready homes. The shortage has created fierce competition with buyers bidding well over asking and often even waiving inspections (or doing mini-inspections during “highest and best offer” periods) to beat their competition.
If a new listing is amazing in the eyes of one buyer, it will probably be amazing for many. Be ready to act quickly with a strong offer.
Looking ahead, buyer competition in entry and moderate price ranges will continue to grow while supply levels continue to shrink. Buyers who are planning their first move into home ownership should consider acting sooner rather than waiting. Today’s interest rates are remarkably low and today’s prices are lower than they will be after another seasonal growth cycle begins.
Of the 57 Over-Asking Offers
- 11 were within $1k
- 25 were more than $5k over
- 9 were more than $8k over
