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Low inventory, seller's market fueling bidding wars & increase in metro Detroit home prices

Pending Home Sales
Posted at 8:44 AM, Mar 24, 2021
and last updated 2021-03-24 08:44:22-04

(WXYZ) — The housing inventory in metro Detroit hit a new record low in February, according to a report released by RE/MAX of Southeastern Michigan.

According to the report, the number of home sales is down in the last year, only due to low inventory, but prices are up and the number of days on the market is down.

There are a variety of things at play when it comes to housing in metro Detroit, according to RE/MAX Southeast Michigan Executive Vice President Jeanette Schneider.

The COVID-19 pandemic, according to Schneider, is contributing to the lack of inventory. Some people, she said, don't think it would be a good time to sell a home and have people come check it out. Others are refinancing with the low interest rates, and others may have some financial uncertainty.

"It's definitely a seller market. Historically, if you have a roughly six-month supply of inventory, that's normal market condition," Schenider said. "When you start to skew toward less than six months, it's more favoring the sellers."

When looking at inventory, the months' supply means the number of months it would take for the current inventory of homes on the market to sell. As of mid-March, that's less than a month.

According to the report, the number of days on the market is down immensely for all counties in metro Detroit, and only up slightly in the city of Detroit.

In Macomb County, for instance, the report found the average number of days a home would be on the market was 52 in February 2020. In February 2021, it was down more than 40% to 31.

There are several reasons for that, according to Schneider. She said it's not uncommon for buyers to lose out on a couple of deals, so once that happens, buyers are ready to take quick action.

"When a home comes on the market, they're getting in there as quickly as possible," she said. "They're not waiting, and can't wait until Saturday if a home goes on the market Tuesday."

Schneider said that there will also likely be dozens of people looking at a single home, and sellers may schedule tours every 15 minutes.

"If it goes on the market by Thursday, they could get several offers by Friday, and then tell people to put in their max offer by Saturday and it'll go," she added.

Median prices are also up between 8% and nearly 20% from February 2020 to February 2021, according to the report.

Macomb County saw the median price at $177,900 last year and it's up to nearly $210,000 this year.

Because of the aggressive market, there are bidding wars happening on homes, as people are trying to outbid the competition and get their offer accepted.

According to Schneider, the market hasn't really ever been like this.

"We truly haven't seen something quite like we're seeing right now," she said.

Schneider said that the area is starting to see some movement with more homes coming on the market, and more people are likely to list their home if they see more options to buy.