“The lack of inventory and record-breaking selling prices has kept the SWMI housing market behind in housing sales for the first five months of 2022 compared to 2021. However, selling prices rose 10 percent in May and set records in the year-over-year comparison since 2006. Mortgage rates in May were consistent with rates in April,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
Jeffries continued, “In May, the SWMI housing market grew modestly from sales in April (313 vs. 263). The average selling price in May decreased 8 percent from April (336,015 vs. 364,201). The median selling price dropped 1 percent in May to 250,000 from 252,650 in April..”
“Looking at the market year-to-year, the number of houses sold in May 2022 fell 11 percent from May 2021 (313 vs. 352). Year-to-date, in May 2022, 1198 houses were sold compared to 1395 in May 2021, a 14 percent drop from the record high in the market’s year-over-year comparison,” Jeffries said.
The inventory of houses for sale, already at a very low level, fell 3 percent to 721 from 743 in May 2021. This brought the inventory of houses for sale down to 3.1-months supply of inventory available for buyers, which was up from the 2.5-months supply in May 2021. For comparison, in May 2010, there were 3602 houses for sale and 16.4-months supply of inventory.
Selling prices set new record levels in the year-over-year comparison that dates back to 2006. The average selling price in May 2022 was $336,015 compared to $306,666 in May 2021 for a 10 percent increase. The year-to-date average selling price in May 2022 rose 9 percent over May 2021 ($339,743 vs. $310,262).
The median selling price in May 2022 increased 11 percent to $250,000 from $225,000 in May 2021. Year-to-date, the median selling price climbed 11 percent ($235,000 vs. $212,400). The median selling price and year-to-date median selling price also set new record prices in the month of May 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.
The total dollar volume fell 3 percent in May 2022 ($105,172,830 vs. $107,946,451). The year-to-date total dollar volume at the end of May 2022 dipped 9 percent ($395,033,091 vs. $432,816,050).
The number of bank-owned or foreclosed homes as a percentage of all transactions stayed at 1 percent in May, the same as in April. In January, the rate was 0 percent, the lowest in 2022. The previous lowest percentage was also 1 percent in May 2021. The highest percentage in May was 34 percent in 2009 and 2011.
Nationally, in May, the Freddie Mac mortgage rate was 5.10, the same as in April for a 30-year conventional mortgage.
Existing-home sales retreated for the fourth consecutive month in May, according to the National Association of Realtors®. Month-over-month sales declined in three out of four major U.S. regions, while year-over-year sales slipped in all four regions.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, fell 3.4% from April to a seasonally adjusted annual rate of 5.41 million in May. Year-over-year, sales receded 8.6% (5.92 million in May 2021).
“Home sales have essentially returned to the levels seen in 2019 – prior to the pandemic – after two years of gangbuster performance,” said NAR Chief Economist Lawrence Yun. “Also, the market movements of single-family and condominium sales are nearly equal, possibly implying that the preference towards suburban living over city life that had been present over the past two years is fading with a return to pre-pandemic conditions.”
“Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Yun added. ”Nonetheless, homes priced appropriately are selling quickly, and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers,”
“Moreover, an increasing number of buyers with short tenure expectations could opt for 5-year adjustable-rate mortgages, thereby assuring fixed payments over five years because of the rate reset,” he added. “The cash buyers, not impacted by mortgage rate changes, remain elevated.”
The median existing-home price for all housing types in May was $407,600, up 14.8% from May 2021 ($355,000), as prices increased in all regions. This marks 123 consecutive months of year-over-year increases, the longest-running streak on record.
Regionally, existing-home sales in the Northeast climbed 1.5% in May to an annual rate of 680,000, falling 9.3% from May 2021. The median price in the Northeast was $409,700, a 6.7% rise from one year ago.
Existing-home sales in Midwest dropped 5.3% from the previous month to an annual rate of 1,240,000 in May, slumping 7.5% from May 2021. The median price in the Midwest was $294,500, up 9.5% from one year before.
First-time buyers were responsible for 7% of sales in May, down from 28% in April and down from 31% in May 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 2021 – reported that the annual share of first-time buyers was 34%.
All-cash sales accounted for 25% of transactions in May, down from 26% in April and up from 23% recorded in May 2021.
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in May, down from 17% in April and 17% in May 2021.
Nationally, the total housing inventory registered at the end of May was 1,160,000 units, an increase of 12.6% from April and a 4.1% decline from the previous year (1.21 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, up from 2.2 months in April and 2.5 months in May 2021.
Realtor.com®‘s Market Trends Report May shows that the largest year-over-year median list price growth occurred in Miami (+45.9%), Nashville (+32.5%), and Orlando (+32.4%). Austin reported the highest growth in the share of homes that had their prices reduced compared to last year (+14.7 percentage points), followed by Las Vegas (+12.3 percentage points) and Phoenix (+11.6 percentage points).
“Declining home purchases means more people are renting, and the resulting rent price escalation may spur more institutional investors to buy single-family homes and turn them into rental properties – placing additional financial strain on prospective first-time homebuyers,” said NAR President Leslie Rouda Smith, a Realtor® from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “To counter this trend, policymakers should consider incentivizing an inventory release to the market by temporarily lowering capital gains taxes for mom-and-pop investors to sell to first-time buyers.”
The numbers reported for local sales include residential property in Allegan, Berrien, Cass, and the westerly two-thirds of Van Buren counties and 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.