“At the end of 2020, the housing market in SWMI had celebrated four straight years of peak sales and selling prices. In 2021, the COVID shutdown ended in April. However, homebuyers were not sitting on the sidelines. For the first half of the year, home sales were higher each month than in 2020. Then in July, the shrinking inventory took over, and for the second half of the year, sales each month fell below that in 2020,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
Jeffries continued, “For most of 2021, sellers saw monthly selling prices rising above prices in 2020. Buyers benefited from lending rates holding fairly steady throughout the year, ranging from 2.73 to 3.18 for a Freddie Mac mortgage for a 30-year conventional mortgage.”
Looking forward to 2022, “The Real estate market should stay strong in 2022. Low inventory and low-interest rates will continue to fuel the real estate prices in Southwest Michigan,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
In December 2021, the number of houses sold was down 19 percent compared to December 2020 (296 vs. 367). Sales in December 2020 at 367 were the highest in the year-over-year comparison dating back to 2006. Year-to-date sales in 2021 came close to the record-setting number of sales in 2020 (3889 vs. 3924).
The average selling price in December 2021 was $377,156, which was 18 percent higher than the average selling price of $318,807 in December 2020, the previous highest selling price. The $377,156 average selling price was also the highest in the year-over-year comparison for December and all of 2021.
The year-to-date average selling price of $325,972 was up 7 percent over 2020 and set a new record in the year-over-year comparison.
The median selling price for December 2021 was $245,000, soaring 19 percent above the $205,500 median selling price for December 2020. The $245,000 median selling price set a new record in the year-over-year comparison and was the highest in all of 2021.
The year-to-date median selling price of $226,100 was a 5 percent increase over $215,000 in 2021 and set a new record in the year-over-year comparison.
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
Additional market highlights include that the number of houses sold each year has stayed above 3000 for the last nine years. Since 2015, the average selling price in SWMI has increased 63 percent.
The yearly total dollar volume in 2021 increased 6 percent ($1,267,707,045 vs. $1,193,213,037).
The dark cloud over the market is the dwindling inventory of houses for sale, which ranged from a 48 percent drop in February to the lowest drop of 20 percent in September. At the end of 2021, there were just 514 houses for sale compared to 717 in 2020. At 514 houses, the market ended the year with just a 2.0-months supply of homes for sale compared to 2.7 in November and 2.8 in December 2020. The 2.0-months supply inventory level was the lowest in the year-over-year comparison. In 2010, there were 3160 houses on the market or a 15.8-months supply. The number of listings for sale includes homes across Allegan, Berrien, Cass, and the westerly 2/3 of Van Buren counties.
There was one bank-owned or foreclosed home as part of all transactions in December, which was less than 1 percent. In January 2021, the rate was 4 percent, the highest rate for the year. The previous lowest percentage in December was 3 percent in 2020, and the highest percentage in December was 45 percent in 2009.
Nationally in December, the Freddie Mac mortgage rate was 3.11, up from 3.1 in November for a 30-year conventional mortgage.
According to the National Association of Realtors®, existing-home sales declined in December, snapping a streak of three straight months of gains. Each of the four major U.S. regions witnessed sales fall in December from both a month-over-month and a year-over-year basis. Despite the drop, overall sales for 2021 increased 8.5%.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, dropped 4.6% from November to a seasonally adjusted annual rate of 6.18 million in December. From a year-over-year perspective, sales waned 7.1% (6.65 million in December 2020).
“December saw sales retreat, but the pullback was more a sign of supply constraints than an indication of a weakened demand for housing,” said Lawrence Yun, NAR’s chief economist. “Sales for the entire year finished strong, reaching the highest annual level since 2006.”
Yun, however, expects existing-home sales to slow slightly in the coming months due to higher mortgage rates but noted that recent employment gains and stricter underwriting standards ensure home sales are in no danger of crashing. He forecasts rates to remain below 4% by year-end and wages to hold firm due to a tight labor market.
“This year, consumers should prepare to endure some increases in mortgage rates,” Yun cautioned. “I also expect home prices to grow more moderately by 3% to 5% in 2022, and then similarly in 2023 as more supply reaches the market.”
The median existing-home price for all housing types in December was $358,000, up 15.8% from December 2020 ($309,200), as prices rose in each region. The South witnessed the highest pace of appreciation. This marks 118 straight months of year-over-year increases, the longest-running streak on record.
Existing-home sales in the Midwest slid 1.3% to an annual rate of 1,500,000 in December, a 2.6% decline from a year ago. The median price in the Midwest was $256,900, a 10.0% climb from December 2020.
“We wrapped up the year witnessing home sales exceed the previous year’s total and saw millions of families secure housing,” said NAR President Leslie Rouda Smith, a Realtor® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “I think the positive momentum will continue as the market prepares to finally see more supply in the coming months, meaning more buyers will be able to land their dream home.”
First-time buyers accounted for 30% of sales in December, up from 26% in November and down from 31% in December 2020. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 2021 – revealed that the annual share of first-time buyers was 34%.
“There was a significant surge in first-time buyers at the end of the year,” Yun said. “With mortgage rates expected to rise in 2022, it’s likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”
Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in December, up from 15% in November and up from 14% in December 2020. All-cash sales accounted for 23% of transactions in December, down from 24% in November and up from 19% in December 2020.
Total housing inventory at the end of December amounted to 910,000 units, down 18.0% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.
“We saw inventory numbers hit an all-time low in December,” Yun said. “Homebuilders have already made strides in 2022 to increase supply, but reversing gaps like the ones we’ve seen recently will take years to correct.”
According to realtor.com®’s Market Trends Report, December shows that the greatest year-over-year median list price growth occurred in Las Vegas (+32.4%), Austin (+28.8%), and Tampa (+25.4%). Austin also registered the highest growth in the number of homes that had their prices reduced compared to last year (+3.4 percentage points), followed by Pittsburgh (+3.2 percentage points) and Buffalo (+2.1 percentage points).
The numbers reported for local sales include residential property in Allegan, Berrien, Cass, and the westerly 2/3 of Van Buren Counties. They should not be used to determine the market value of any individual property. If you want to know the market value of your property, please contact your local REALTOR®.
The Southwestern Michigan Association of REALTORS®, Inc. is a professional trade association for real estate licensees who are members of the National Association of REALTORS® and ancillary service providers for the real estate industry in Allegan, Berrien, Cass, and Van Buren Counties. The Association can be contacted at 269-983-6375 or through their website at www.swmar.com.
The National Association of Realtors®, “That’s Who We R,” is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.