Here it is the beginning of 2007 and it is looking ugly for the real estate market in southeastern Michigan. There are many homes available, many vacant because we are losing people out of state. One home inspector told me 3 out 4 homes he was inspecting was vacant. So the bottom line is that we have an excess of homes and a smaller population to buy them.
There are two reasons for the smaller amount of buyers 1) Remember we are losing GM and Ford people to other states, we are losing people looking for jobs to other states, our graduating college seniors are looking out of state for better economies. (I have a son graduating from college as an engineer. I would rather him look outside of the state and outside of the auto industry to find a job. I want him to find a job that is less cyclical. I want him to enter a field that has growth potential and that is not fighting to save itself.) 2) The people that have had foreclosures are no longer in the market. (Metro Detroit has one of the highest foreclosure rates in the country) The lost their house and there is not a bank in the very short term that will loan them a 100% to buy another home.
So the bottom line is that we have less people here in Michigan ready, and financially able to buy a home. Yet we have the same amount of homes. Therefore it is a buyers market! Even if the market changes and consumers get the confidence back it will remain a buyers market for the rest of 2007.
I don't believe even with a interest rate drop to 5 1/2 or 5 1/4 could save this real estate year.
We have too many homes available for the amount of people in Michigan PERIOD. That could take 3 to 7 years to change. They say it take 3 to 7 years for area with a declining industry to replace the jobs. We need those jobs to bring back a strong demand for the real estate in Michigan. I'm not saying it is going to be a buyers market for 3-7 years. It is going to take a combination of renewed consumer confidence, a good SE Michigan economy,a growing buyer population, low interest rates, and less new homes being built to get a surge in real estate sales.
But for the time being:
Builders need to reduce their inventory of spec homes, look at every possible way to reduce costs, reduce their exposure on the number of lots they have options on, and reduce their loans to the banks.
Homeowners - 1)need to have their homes in top condition (for tips on getting your home ready to sell go to www.russravary.com and priced right to sell in this market if they are relocating, getting divorced, have a death of a parent, or moving out of state.
2) If they don't have to sell wait it out.
3) If they want to move a)Sell your home first no matter what... do not buy another home unless you can afford to wait up to a year and a half with 2 house payments. Don't let any real estate agent or friend tell you otherwise.
b)Be patient it takes the right person to buy your house in this market.
It is a great time to buy for first time home buyers, recently divorced people, or people that want to upgrade to a larger home.
May life treat you and your family well today.
