“From 2016 until 2020, the housing market in SWMI experienced a rush of peak sales and selling prices. At the end of 2020, the market had celebrated four straight years of peak prices and sales. In 2021, the COVID shutdown ended in April, and homebuyers swept up the available inventory. At the start of 2022, the inventory had shrunk to a historically low level of 1.9-months supply, and the year ended with 3.3-months supply. Mortgage rates rose from 3.55 in January and, at the end of the year, were 6.42. The number of houses sold each month in 2022 was lower than the same month in 2021. Average and median selling prices each month in 2022 were higher than the same month in 2021, except for July and December,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
Jeffries continued, “In December 2022, the number of houses sold was down 44 percent compared to December 2021 (167 vs. 296). At 167, the number of sales dropped back to the level before the peak years. Year-to-date sales in 2022 fell 16 percent from the record-setting number of sales in 2021 (3262 vs. 3889).”
2023 may be the year of change, “It looks like the market in 2023 will continue correcting itself as to prices. real estate sales may continue to dip through 2023 depending on interest rates and inventory. The real estate market is going through the denial stage right now with regard to interest rates but should adjust to the acceptance stage in the first half of 2023. Low inventory will continue to be an issue until new housing units can be built or property owners decide to start selling,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
The average selling price in December 2022 at $299,574 was 21 percent lower than the average selling price of $377,156 in December 2021, the previous highest selling price in the year-over-year comparison.
The year-to-date average selling price of $338,495 was up 4 percent over 2021 ($325,972) and set a new record in the year-over-year comparison.
The median selling price for December 2022 was $219,000, which tumbled 11 percent below the $245,000 median selling price for December 2021.
The year-to-date median selling price of $245,000 was an 8 percent increase over $226,100 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 the number of houses sold each year has stayed above 3000 for the last ten years. Since 2015, the average selling price in SWMI has increased 61 percent, down from a 63 percent increase in 2021.
The yearly total dollar volume in 2022 decreased 13 percent ($1,104,172,661vs. $1,267,707,045).
The dark cloud over the market has been the dwindling inventory of houses for sale. At the end of 2022, the market showed signs of growth with 662 houses for sale across Allegan, Berrien, Cass, and the westerly 2/3 of Van Buren Counties, which was up 29 percent from that at the end of 2021 when the number of houses for sale was 514. The December 2021 level (514) was the lowest in the year-over-year comparison.
At 662 houses, the market ended the year with just a 3.3-months supply of homes for sale compared to 2.0 in December 2021 and 3.7 in November. 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 were two bank-owned or foreclosed homes as part of all transactions in December, which was 1 percent. For six months, the rate was 1 percent in 2022. The highest rate was 3 percent in February. The previous lowest percentage was 0 percent for three months, and the percentage was 2 percent for two months.
Nationally in December, the Freddie Mac mortgage rate was 6.42, up from 3.11 in December 2021 and down from 6.49 in November 2022 for a 30-year conventional mortgage.
According to the National Association of Realtors®, existing-home sales retreated for the eleventh consecutive month in December. Three of the four major U.S. regions recorded month-over-month drops, while sales in the West were unchanged. All regions experienced year-over-year declines.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, decreased 1.5% from November to a seasonally adjusted annual rate of 4.02 million in December. Year-over-year, sales sagged 34.0% (down from 6.09 million in December 2021).
“December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates,” said NAR Chief Economist Lawrence Yun. “However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.”
The median existing-home price for all housing types in December was $366,900, an increase of 2.3% from December 2021 ($358,800), as prices rose in all regions. This marks 130 consecutive months of year-over-year increases, the longest-running streak on record.
Existing-home sales in the Midwest fell 1.0% from the previous month to an annual rate of 1.01 million in December, falling 30.3% from one year ago. The median price in the Midwest was $262,000, up 2.9% from December 2021.
“Home prices nationwide are still positive, though mildly,” Yun added. “Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year.”
“Realtors® helped millions of Americans achieve the dream of homeownership in the midst of a housing market that experienced some tough headwinds last year,” said NAR President Kenny Parcell, a Realtor® from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. “In 2023, we’ll continue to work with legislators and real estate leaders at all levels to address inventory shortages and increase access to homeownership.”
First-time buyers accounted for 31% of sales in December, up from 28% in November and from 30% in December 2021. NAR’s 2022 Profile of Home Buyers and Sellers – released in late 2022 – revealed that the annual share of first-time buyers was 26%.%, the lowest since NAR began tracking the data.
All-cash sales accounted for 28% of transactions in December, up from 26% in November and 23% in December 2021.
“Cash buyers are unaffected by fluctuations in mortgage rates and were able to take advantage of lower prices in some areas,” Yun said.
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in December, up from 14% in November but down from 17% in December 2021.
Total housing inventory at the end of December was 970,000 units, which was down 13.4% from November but up 10.2% from one year ago (880,000). Unsold inventory sits at a 2.9-month supply at the current sales pace, down from 3.3 months in November but up from 1.7 months in December 2021.
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.