When you’re quarantined inside your home with no place to go, the walls around you take on a whole new meaning.
Many homes in Michigan are no longer just places to sleep. They’re makeshift offices, home-schools and playgrounds.
Michigan real estate agents and brokers say this new coronavirus-inspired appreciation for “home” — combined with historically low interest rates and pent up demand for new homes while the economy slumbered for two months — helped set the stage for an active and healthy real estate market this summer.
While total home sales lag statewide — down nearly 15% in June and 63% in May compared to 2019, according to data collected by the Michigan Realtors group — multiple agents or brokers MLive spoke with agree sales are brisk and expect future monthly sales figures to reflect it. Since closings frequently take up to two months, a large portions of sales made in May and June are yet to be reflected in the cumulative state data.
Through June, some communities with the largest year-to-date dips in home sales according to Michigan Realtors include: Lapeer County, -37%; Tuscola County, -32%; Livingston County, -31%; and Detroit, -31%. Other notables are Washtenaw County, -23%; Genesee County, -10%; Grand Rapids, -7%; Kalamazoo area, -14%; and Saginaw County, -15%.
After a second-quarter plummet in total home sales, the National Association of Realtors projects quarterly home sales in the U.S. to surpass those of 2020 1/4 u2032s first quarter and peak by year’s end with a minuscule decline expected in the spring of next year.
Pandemic house hunting
While the quarantine gave most homeowners extra time to complete back-burner home improvement projects and make their living space more comfortable, it gave others time to reflect on how much they wanted out.
The latter is what spurred 28-year-old Ehren Quigley and his fiancé to purchase a $120,000, 1,300-square-foot, three-bedroom home in the Detroit suburb of Hazel Park.
The couple’s former $1,200-per-month, two-bedroom Royal Oak apartment with a self-governing thermostat that created maddeningly hot confines, a shower that spit scalding 150-degree shower water and neighbors with a penchant for noise was not cutting it.
“We had been discussing and thinking about buying a house for some time now,” Quigley said. “I guess the breaking point with us was living in a pretty terrible apartment and especially with the stay-at-home orders going into effect realizing we wanted to get out of their sooner than later.
“Fortunately, the stay-at-home effect and student loans being on forbearance kind of helped us save a little money for a down payment.”
They began house hunting for places under $160,000 in Detroit, Ferndale and Hazel Park shortly after Gov. Gretchen Whitmer allowed the real estate market to reopen on May 7. It was a different experience. Homes were shown by appointment only, which meant there was less opportunity to see multiple homes in a single day, due to conflicting schedules of sellers, buyers and agents.
Safety was heightened. Booties to cover shoes and face masks were offered at front doors during showings. Lights were left on and doors open, to minimize skin contact inside of homes, and appointment-only schedules sometimes forced buyers to tour more quickly than they might have liked.
“There was a limited stock of houses,” Quigley said. “I think a lot of people were afraid to sell their houses during a pandemic. The houses that were for sale seemed to go quick.”
Most agents agree current housing demand outweighs supply, pushing this year’s average selling price up about 5%, compared to 2019, according to Michigan Realtors data.
“There was one home we actually wanted to make a full-price offer on and they had accepted a below-asking offer within 24 hours of listing, before we even got a chance to see it,” Quigley said. “It seemed like a house would get listed and it would be gone in a week. If anything was listed for more than seven days I’d be shocked.”
Quigley’s agent, Darin McLeskey of Saline who owns Denovo Real Estate in Detroit, said he expected a lull when the real estate market reopened.
“It was the exact opposite,” he said. “After the lockdown ended, people wanted to get the heck out of their rental situations, they didn’t want to live with their parents anymore, they didn’t want housemates, they didn’t want to live in a less than ideal situation,” McLeskey said. “Some people are working from home, so their home is more important than anything now, they may have additional stimulus pay … and then mortgage rates are at an all-time low.”
Average interest rates sunk to a historic 3.14% low for a 30-year mortgage this week, according to CNBC. That’s about half of what interest rates were just prior to the Great Recession of 2009.
McLeskey compared the recent economic shutdown to an “induced coma.”
“Your body needs to rest, and the coronavirus kind of forced that,” McLeskey said. “It kind of forced what would happen in a recession to happen all at once … and then the feds just slammed so much money at everything and started buying so much debt.
“It’s like, let’s put this patient in a coma and then wake them up and put them on — I don’t know — cocaine.”
He said there’s been no significant correction in the stability of the current real estate market, “it’s actually been a little bit of the opposite.”
However, one market segment has been slower to recover, McLeskey said, and that’s homes that need major renovations before they can be livable — the same houses that often attract cash offers and buyers interested in renovating and “flipping” them.
McLeskey said the “hard-money lenders” who often subsidize these sorts of purchases — and charge significantly more interest for the risk they assume — were leary.
“I actually has a couple clients who were using hard-money lenders and the lenders just said, ‘Hey, no, we’re not lending until further notice,’” McLeskey said.
Even with a total shutdown between late March and early May, homes continued to sell with the help of technology. In some cases, all it took was a few unprofessional cell phone photos. Other times, sellers used sophisticated software programs allowing for three-dimensional virtual showings.
“I sold houses where the buyer didn’t enter that home until they got the keys, which is pretty amazing,” Francis said. People perused homes online and sometimes that was all it took in low-supply, high-demand markets.
Jill Kingsbury, a Realtor with Five Star Real Estate who works in the still-thriving real estate markets of Grand Rapids and Kalamazoo — both of which reflect June closings that were up 12% and 15% respectively, compared to 2019 — said some sellers conducted live-stream showings with interested buyers so they could answer questions in real time.
“It was amazing to me how many people put their homes on the market during COVID,” Kingsbury said, “They took pictures themselves, they showed it themselves.”
As safety concerns over COVID-19 persist, Kingsbury said agents have continued offering sellers the option of showings solely through virtual tours with no physical contact.
While virtual viewing isn’t optimal, the sharp demand and low home supply in Grand Rapids and Kalamazoo means houses are selling extremely quickly. Open houses are on the decline, Kingsbury said, not only because of concerns over the pandemic, but because homes are rarely on the market long enough to schedule them.
Kingsbury said a housing shortage existed prior to the pandemic, but coronavirus concerns and very low interest rates compounded the issue.
“I think low interest rates have people refinancing the homes that they’re currently in and just staying put,” Kingsbury said. “The lenders are just slammed with re-fi’s”
Kingsbury said sales in May, June and July have made up for any downturn during the shutdown period.
Ann Arbor, with the University of Michigan as its engine, is one of Michigan’s most competitive real estate markets in the state and property is “moving like crazy right now,” said Ann Arbor Board of Realtors President Chrissie George. Despite being a seller’s market, average sales prices were down about 5%.
George attributes the sales price decrease to the anomaly created by the coronavirus pandemic.
“It made it seem like some of those homes may have had deferred maintenance or other issues that made them less desirable, but really they just sat there for 60 days not being able to do anything,” she said. “I expect July’s numbers to be a lot higher … This is going to be more of a blip, unless we have to shut down again.
“Our county and specifically Ann Arbor has just rebounded so quickly.”
Ann Arbor home sales for the month of May sunk 61%, this year compared to last, from 482 closings to 184. The market recouped some in June but still ended with about 15% fewer sales.
Maureen Francis, director of Michigan Realtors and an associate broker with Coldwell Banker Weir Manuel in Birmingham, said she’s noticed a slight shift in what buyers are looking for, possibly due to a new perspective revealed during quarantine.
“They’re not as interested in the urban core as they were before,” she said. “They want to have a little more yard and be a little more distant from each other. Pools are a big thing now, vacation properties are a much bigger thing that they were. The real estate economy is really good on the residential side.”
“People are recognizing the importance of home more because they are leaving it less.”
The pandemic has also prompted some people who’ve moved away from Michigan to larger cities, like New York, Los Angeles, and Chicago, to reevaluate and being looking for houses back in Michigan “to be closer to family and in an area that they feel is likely to be safer,” she said.
Francis expects home sales for the second quarter to be a “push” with the increased sales since the market lockdown was lifted, and she expects the usually hot summer buying season to last longer than usual.
“Usually by August (sales) start going down and there’s not as many closings in September” she said, “but I think that season is going to be extended because people are not as tied to getting a home before the beginning of the school year as they once were. Now, as long as they’re staying in the same district, their kids are probably going to school at home half the time anyway.”
When travel for leisure due to COVID-19 restrictions is eliminated, an easy-to-reach cottage or vacation home becomes more attractive, said Carrie Garber, the principal broker at Harrison Realty in Harrison.
Harrison Realty makes nearly 90% of its sales to vacation-home buyers, usually large plots of acreage in the Michigan woods or lakefront homes spotted across central Michigan, mostly in Clare and Gladwin counties where sales were up 30% for June, compared to last year.
“For some reason, people are reallocating their funds,” Garber said. “What we think it is, is the people who would usually have spent their disposable income to go on a vacation somewhere can’t go to Canada for the summer or can’t go somewhere they planned because of COVID restrictions so instead they’re buying themselves another place to go.
“Our inventory is so low that we’re struggling to find homes for buyers who want to buy.”
She noted that Clare County waterfront is also in higher demand since flooding caused dams to collapse along reservoir lakes in adjacent Gladwin and Midland counties.
“It’s making Clare County waterfront so much more desirable because there’s no water there,” she said. “I’ve been here since 2003 and I’ve never witnessed a market as competitive for buyers.”
COVID-19 PREVENTION TIPS:
In addition to washing hands regularly and not touching your face, officials recommend practicing social distancing, assuming anyone may be carrying the virus.
Health officials say you should be staying at least 6 feet away from others and working from home, if possible.
Use disinfecting wipes or disinfecting spray cleaners on frequently-touched surfaces in your home (door handles, faucets, countertops) and carry hand sanitizer with you when you go into places like stores.
Michigan Gov. Gretchen Whitmer has also issued executive orders requiring people to wear face coverings over their mouth and nosewhile in public indoor and crowded outdoor spaces. See an explanation of what that means here.
Additional information is available at Michigan.gov/Coronavirus and CDC.gov/Coronavirus.
For more data on COVID-19 in Michigan, visit https://www.mlive.com/coronavirus/data/.
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