When you think of hot real estate markets, the first areas that usually come to mind are San Francisco, New York and Miami. But nestled in the Midwest is Ann Arbor, Mich., one of the hottest real estate markets in that state.
Real estate agents in Washtenaw County, including Ann Arbor, are witnessing rising property values and dwindling new residential listings for middle class clients.
According to the Ann Arbor Board of Realtors, the average home listing price in Washtenaw County in April was $320,335, an increase of 10.6 percent over April 2016. According to the board, Ann Arbor’s average listing price for a residential property in April was $478,871.
Topping off the rising prices, in an ongoing trend, the number of new single-family homes for sale in Washtenaw County in April was down 18 percent compared to the same time in 2016.
As a result, agents in the Ann Arbor are seeing low inventory start to translate into fewer sales, according to the board of realtors. Houses also are selling faster today than they did a year ago. The average number of days for a residential listing to sell was 36 days in April, compared to 52 days a year ago.
“We have more jobs, so not only do we have a lower inventory, it’s compounded by the fact that we have more opportunities for work in Washtenaw County,” said Ed Ridha, associate broker with Charles Reinhart Realtors and president of the Ann Arbor Area Board of Realtors. “That just expounds our challenges of dealing with multiple offers on many homes in Washtenaw County.”
Agents are now seeing a renewed strength in the real estate market in the Ann Arbor area.
Caitlin Phillips, with Keller Williams Realty in Ann Arbor, has seen bidding wars over properties. Last year, a client made a $700,000 cash bid on a house only to lose out on the property.
The Ann Arbor market has bloomed for sellers each spring for the last five years, leaving potential buyers scratching their heads.
Phillips recently did some analysis on the market for a $200,000 house on the west side of Ann Arbor. She found that eight similar properties all sold for about $30,000 over their asking price last year during the months of April through July.
“Every spring we have more demand than we have supply,” Phillips told the Detroit Free-Press. “It will be seven offers for every house.”
Given Washtenaw County’s competitive housing market, there’s been recent discussion among city and state officials concerned people are being priced out of the area – especially in the city of Ann Arbor.
Lawmakers participating in a recent legislative forum suggested giving city governments more power to require a certain percentage of new development include affordable housing or offering more tax breaks for developers that commit to affordable housing.
However, Paul Krutko, president and CEO of Ann Arbor SPARK, explained that affordability may be a relative issue. While Washtenaw County’s housing market is the most unaffordable in Michigan, the cost of housing ranks fifth-most affordable when compared to 11 other markets across the country.
“People coming from the coasts say, ‘Wow, the housing is really affordable here,’” he said.
One typical tradeoff, according to Krutko, is an increase in commute time to attain lower-cost housing.
Agents in the Ann Arbor area may find success with some clients by seeking housing options along public transit routes to make it more convenient for people to live outside the city and work in Ann Arbor.
One demographic finding the Ann Arbor housing market difficult are millennials, according to Matt Miller, an associate broker with Charles Reinhart Realtors and immediate past president of the Ann Arbor Board of Realtors.
“There are a lot of buyers that are very frustrated with the market right now, particularly that first-time buyer segment and millennials,” Miller said. “People using small percentage down payments, it’s hard for them to compete right now.”
Ultimately, the market conditions are ripe for agents to gain clients in prospective buyers who can benefit from their experience and know how to make an offer that will get the attention of a seller in a multiple-offer situation.