Home sales drop nearly 6% in September. Is the boom over?

Steve Pepple | Detroit Free Press

The extended boom in residential real estate sales in metro Detroit may be peaking if newly released September sales numbers are any indication, though experts say it remains a seller's market.

The number of houses sold in southeastern Michigan was down 5.7 percent in September compared with the same month last year, while the median sale price climbed by 5.5 percent to $169,900.

In the tri-county metro Detroit area, Oakland County felt the biggest pinch, with residential homes sales down 8.9 percent to 1,399 last month, compared with 1,529 in September 2017, according to numbers provided by RealComp, a Farmington Hills-based multiple listing service.

The median sale price of homes in Oakland County climbed 1.8 percent, far less than the regional average, to $235,000. The number of listings were down 13.6 percent to 5,209.

So is the boom coming to an end?

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“The decline in home sales during September is a combination of the seasonality of the market along with buyers taking in rising home prices and watching where interest rates are heading,” said Jeanette Schneider, vice president of RE/MAX of Southeastern Michigan, in a news release. “Even with fewer sales, we still have a tight supply of homes and that keeps pricing rising in a market that favors sellers.”

RE/MAX noted that national housing trends show year-over-year sales down by 11.6 percent, although the median sales price was up 5.6 percent. The New York Times reported in September that the housing market was slowing across the U.S. as prices were outpacing growth in wages and mortgage rates rose.

The average rate last month on a 30-year fixed rate mortgage was 4.9 percent, up from 3.9 percent during the same week in 2017, according to mortgage giant Freddie Mac.

In the 18 counties of southwestern Michigan, the number of listings dropped drastically in September from the previous year. There were 23,832 homes on the market last month, 15 percent less than September 2017, according to RealComp.

In releasing the latest numbers, RealComp noted that some economic observers "are pointing to 2018 as the final period in a long string of sentences touting several happy years of buyer demand."

"Although residential real estate should continue along a mostly positive line for the rest of the year, rising prices and interest rates coupled with salary stagnation and a generational trend toward home purchase delay or even disinterest could create an environment of declining sales," the listing service said.

A random check by the Free Press of 10 Zillow listings for homes for sale in Royal Oak in the $250,000 to $300,000 price range, showed six of them had reduced the original asking price.

Drew Mahar, a listing agent at Jim Shaffer and Associates in Royal Oak, said he's not surprised. He said the median sale price numbers can be misleading because they are based on closing of houses that sold before the market shifted.

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He said houses in desirable neighborhoods or that are close to downtown Royal Oak and priced right are "going to fall off the market in the first week with multiple offers." But houses in other areas are sitting on the market a little longer, he said.

"It's definitely an interesting market that we are in right now," Mahar said, adding that he believes rising mortgage rates "is pushing the market the way it is."

Still, Mahar said he believes a pent-up demand remains for houses among younger people in metro Detroit, especially as Detroit continues to attract new businesses to the area and educated professionals to fill the jobs. He says his firm is forecasting home sales will continue to rise next year, with a 4 percent year-over-year increase next September.

Here's how the year-over-year numbers looked for metro Detroit for September, according to RealComp:

City of Detroit: 397 home sales, up 10.9 percent. Median sale price of $37,500, up 13.6 percent. Five-year rise in median sale price was 257 percent. Number of listing, 2,013.

Macomb County: 1,214 home sales, down 2.3 percent. Median sale price of $166,000, up 2.5 percent. Five-year rise in median sale price was 44.35 percent. Number of listings, 2,842.

Oakland County: 1,687 home sales, down 8.9 percent. Median sale price of $235,000, up 2.5 percent. Five-year rise in median sale price was 30.56 percent. Number of listings, 5,209

Wayne County: 1,807 home sales, down 4.5 percent. Median sale price of $130,000, up 1.6 percent. Five-year rise in median sale price was 68.83 percent. Number of listings, 5,246.