ST. JOSEPH, MI – “The August 2020 SWMI housing market continued the frantic pace started in June. While the summer months are typically referred to as ‘the peak selling season’, the number of sales from June through August has accounted for 57 percent of year-to-date home sales. August sales, selling prices, and total dollar volume escalated well past previous peak year records dating back to 2006.,” stated Alan Jeffries, Association Executive, Southwestern Michigan Association of REALTORS®, Inc.
Jeffries continued, “Homebuyers continued to struggle with the shrinking inventory of houses for sale that dropped 31 percent from August 2019 (1285 vs. 1864). For comparison, in August 2010, there were 3757 houses for sale. The market at the end of August had a 5.9-months supply of 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.”
The number of houses sold increased by15 percent from August 2019 (455 vs. 397). At 455 houses, August 2020 rocketed past the previous record of 418 set in August 2017.
Year-to-date, the number of houses sold was down 8 percent to 2203 from 2383 sold in August 2019.
Average, median, and year-to-date selling prices continued their astonishing climb becoming the new record prices in our year-over-year comparison for August prices.
The average selling price at $324,302 was 35 percent higher than the $239,639 average selling price in August 2019. The year-to-date, average selling price increased 18 percent ($280,370 vs. $236,772).
The median selling price soared to $235,000 from $189,900 in August 2019 for a 24 percent increase. Year-to-date, the median selling price rose 15 percent ($206,000 vs. $175,000).
The median price is the price at which 50% of the homes sold were above that price, and 50% were below.
With the record-setting selling prices, the total dollar volume sky-rocketed 55 percent in August ($147,557,780 vs. $95,136,922). The year-to-date total dollar volume increased 10 percent ($617,655,862 vs. $564,229,898).
Since June, the number of bank-owned or foreclosed homes as a percentage of all transactions has held steady at 1 percent for the last three months. This was the lowest percentage reached since 2009. The highest percentage in previously in August was 36 percent in 2009.
Locally, the mortgage rate was 3.104, down slightly from 3.108 in July. Last year in August, the rate was 3.692. Nationally, the Freddie Mac mortgage rate in August was 2.91 down from 2.99 in July for a 30-year conventional mortgage.
According to the National Association of Realtors®, – Existing-home sales hit the highest level since December 2006. Existing-home sales continued to climb in August, marking three consecutive months of positive sales gains. Each of the four major regions experienced both month-over-month and year-over-year growth, with the Northeast seeing the greatest improvement from the prior month.
Total existing-home sales, which were completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose 2.4% from July to a seasonally-adjusted annual rate of 6.00 million in August. Sales as a whole rose year-over-year, up 10.5 percent from a year ago (5.43 million in August 2019).
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” said Lawrence Yun, NAR’s chief economist. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”
The median existing-home price for all housing types in August was $310,600, up 11.4% from August 2019 ($278,800), as prices rose in every region. August’s national price increase marks 102 straight months of year-over-year gains.
For three straight months, home sales have climbed in every region compared to the previous month. Median home prices grew at double-digit rates in each of the four major regions from one year ago.
Existing-home sales increased 1.4% in the Midwest to an annual rate of 1,410,000 in August, up 9.3% from a year ago. The median price in the Midwest was $246,300, a 10.7% increase from August 2019.
First-time buyers were responsible for 33% of sales in August, down from 34% in July 2020 but up from 31% in August 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 2019 – revealed that the annual share of first-time buyers was 33%.
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in August, a small change from July’s figure of 15%, and equal to the August 2019 rate of 14%. All-cash sales accounted for 18% of transactions in August, up from 16% in July 2020 and down from 19% in August 2019.
Nationally, the total housing inventory at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in July and down from the 4.0-month figure recorded in August 2019.
Scarce inventory has been problematic for the past few years, according to Yun, an issue he says has worsened in the past month due to the dramatic surge in lumber prices and the dearth of lumber resulting from California wildfires.
“Over recent months, we have seen lumber prices surge dramatically,” Yun said. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
Yun says the need for housing will grow even further, especially in areas that are attractive to those who can work from home. As highlighted in NAR’s August study, the 2020 Work From Home Counties report, remote work opportunities are likely to become a growing part of the nation’s workforce culture. Yun believes this reality will endure, even after a coronavirus vaccine is available.
“Housing demand is robust, but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” he said. “To assure broad gains in homeownership, more new homes need to be constructed.”
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.