“Since June, we have used many descriptive words to describe the SWMI housing market. June, after a disappointing slow start, lifted the market back up. July was astonishing. August was continued frantic pace, and September was jaw-dropping. October’s numbers crushed it. The number of houses sold, selling prices, and total dollar volume rolled over results set in October 2019. October 2020 became the new peak month in our year-over-year comparison dating back to 2006,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
Jeffries continued, “While not able to match September’s all-time record of 518 number of houses sold, October had 477 houses sold, keeping sales above 450 for four straight months. In October 2020, sales were 38 percent higher than in October 2019 (345). Year-to-date, the number of houses sold was up to 3198 from 3076 sold in October 2019.”
The average selling price at $358,144 was 36 percent higher than the $262,720 average selling price in October 2019. The year-to-date, average selling price increased 24 percent ($297,786 vs. $240,229).
The median selling price jumped to $245,660 from $190,000 in October 2019 for a 29 percent increase. Year-to-date, the median selling price rose 19 percent ($215,000 vs. $179,950).
Compared to September selling prices, the October average selling price was 13 percent higher ($358,144 vs. $316,525) and the median selling price was 12 percent higher ($245,660 vs. $220,000).
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
With the number of sales at 30-plus percent higher selling prices, the total dollar volume soared 88 percent in October ($170,834,881 vs. $90,638,587). The year-to-date total dollar volume increased 29 percent ($952,320,913 vs. $738,947,310).
The inventory of houses for sale has dropped over 30 percent each month for the last three months. At the end of October, the local market had 1034 houses for sale, which was a 38 percent decline from 1675 houses in October 2019. This gave the market a 4.3-months supply of houses for potential homebuyers. For comparison, in October 2010, there were 3385 houses for sale. The number of listings for sale includes homes for sale across Allegan, Berrien, Cass, and the westerly 2/3 of Van Buren counties.
Since June, the number of bank-owned or foreclosed homes as a percentage of all transactions has held steady at 1 percent. In October, the percentage was 2 percent, which was the same percentage in October 2019. The highest percentage in previously in October was 37 percent in 2009.
Locally, the mortgage rate was 3.021, down slightly from 3.113 in September. Last year in October, the rate was 3.871. Nationally, the Freddie Mac mortgage rate in October was 2.81, down from 2.88 in September for a 30-year conventional mortgage.
According to the National Association of Realtors®, – Existing-home sales continued to trend upward in October, marking five consecutive months of month-over-month gains. All four major regions reported both month-over-month and year-over-year growth, with the Midwest experiencing the greatest monthly increases.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, increased 4.3% from September to a seasonally-adjusted annual rate of 6.85 million in October. Overall, sales rose year-over-year, up 26.6% from a year ago (5.41 million in October 2019).
“Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year,” said Lawrence Yun, NAR’s chief economist.
While coronavirus-induced shutdowns hindered virtually all markets, Yun says the housing industry has mounted an impressive rebound.
“The surge in sales in recent months has now offset the spring market losses,” he said. “With news that a COVID-19 vaccine will soon be available, and with mortgage rates projected to hover around 3% in 2021, I expect the market’s growth to continue into 2021.” Yun forecasts existing-home sales to rise by 10% to 6 million in 2021.
The median existing-home price for all housing types in October was $313,000, up 15.5% from October 2019 ($271,100), as prices increased in every region. October’s national price increase marks 104 straight months of year-over-year gains.
Median home prices increased at double-digit rates in each of the four major regions from one year ago.
Existing-home sales jumped 8.6% in the Midwest to an annual rate of 1,640,000 in October, up 28.1% from a year ago. The median price in the Midwest was $243,500, a 16.7% increase from October 2019.
First-time buyers were responsible for 32% of sales in October, up from 31% in both September 2020 and October 2019. NAR’s 2020 Profile of Home Buyers and Sellers – released in late 2019 – revealed that the annual share of first-time buyers was 31%.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in October, a small increase from the 12% figure recorded in September 2020 and equal to October 2019. All-cash sales accounted for 19% of transactions in October, up from 18% in September but unchanged from October 2019.
Nationally, the total housing inventory at the end of October totaled 1.42 million units, down 2.7% from September and down 19.8% from one year ago (1.77 million). Unsold inventory sits at an all-time low 2.5-month supply at the current sales pace, down from 2.7 months in September and down from the 3.9-month figure recorded in October 2019.
“Homebuilders’ confidence has soared even though the actual production has not,” Yun said. “All measures, such as reduction to lumber tariffs and expansion of vocational training, need to be considered to significantly boost supply and construct new housing.”
Yun’s call for an increase in newly built homes comes on the heels of NAR’s quarterly Metropolitan Median Area Prices and Affordability report, which found that single-family existing-home prices rose in all of the 181 metropolitan areas NAR tracks. Sixty-five percent of those metros show double-digit price increases. Yun says replenishing the short supply of homes would help decelerate rising costs and improve market affordability.
“Faced with many uncertainties in 2020, the real estate industry has been able to meet surprisingly strong homebuying demand and help lead our country’s economic recovery,” said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and broker/owner of Prominent Properties Sotheby’s International Realty. “As we continue to help consumers secure housing and property, we will also remain vigilant in working to expand housing options, equality and affordability for all who are entering the marketplace.”
The numbers reported for local sales include residential property in Allegan, Berrien, Cass, and the westerly 2/3 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, Van Buren, 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 1,401,418 million members involved in all aspects of the residential and commercial real estate industries.