We sussed out national trends and checked in with Matt Hodges, board president of Aspire North Realtors (an alliance of area Realtors focused on professional advancement), for a sense of what the housing market realities are now—and what they mean for Northern Michigan home buyers and sellers.
1. IT’S STILL A GOOD TIME TO SELL. AND TO BUY.
Wait, what? For sellers, markets are white hot with record appreciation, buyer demand and fast-moving deals. That may seem like a no-brainer, but it’s also a good time to buy.
Here’s why: “The market is slowing but not softening,” Hodges says. “There is less inventory, but the values continue to rise.” And Fannie Mae is forecasting housing prices to increase 10.8 percent this year—that’s a slowdown from last year’s record 18.8 percent, but it’s still a record-breaking increase. If you can get in the market now, these continued rising prices lead to increased equity right out of the gate. And with the shortage of rental properties, homeownership means fixed housing costs.
“Don’t wait,” Hodges adds. “The prices are going to continue to rise, and in my opinion, it’s going to take something catastrophic to move us off the trajectory we’re on.” So, his advice? If you’re a buyer, hang in there. “There is opportunity. If you’re overpaying today, you’re setting the new comp and creating the new level of value. Don’t be afraid of overpaying for your primary home … Buy it today, stay in it, and you’ll be happy tomorrow, you’ll be happy next year. You’ll still see added value.”
2. IN NORTHERN MICHIGAN, THINGS AREN’T COOLING OFF ANYTIME SOON.
Despite the fact that interest rates have shot up two points or more in the last few months, and the stock market is all over the place, prices continue to climb. “I don’t see things slowing down,” says Hodges. Paired with low inventory and a ton of buyer demand, there’s not a real slowing, and he adds that at the moment, the interest rates aren’t affecting that market.
3. OUT-OF-STATE BUYERS ARE (STILL) CHANGING THE GAME.
“I think the Midwest is one of the most desirable areas in the country,” Hodges says. “We don’t have fires, floods, tornadoes, hurricanes … There are people flocking to this region.” Hodges adds that tracking buyer zip codes has led to some interesting revelations: more and more buyers are coming from California, Texas, Maryland and New York—hyper-expensive markets creating sellers who walk with major amounts of cash, and turn their eyes to the affordable Midwest.
4. CASH DEALS ARE STILL A THING.
The fiercely competitive market means buyers need to bring their best offer to the table—and that often means buying with cash. According to a report from Redfin, homebuyers last year were four times more likely to win a bidding war by making an all-cash offer, and an all-cash offer improved a competitive offer’s success by a whopping 334 percent. “We are seeing buyers using retirement or other funds to buy with cash, then pulling some of those funds back out with delayed financing,” Hodges says.
5. THE RIGHT RENOVATIONS WILL PAY OFF, BUT DON’T OVERDO IT.
The most recent State of Home Spending report states home improvement spending rose 25 percent year-over-year to $10,341. Homeowners who invested in home improvements did an average of 3.7 projects, up from 2.7 in 2020.
Improvements like garage doors (nearly 100 per- cent of costs recouped) and decks (70 percent of costs recouped) have some of the best return on investment (ROI), and don’t overlook the value of a good paint refresh: According to a 2019 National Association of Realtors survey, 66 percent of Realtors recommended interior and exterior painting, with a 107 percent ROI for interior paint jobs, and 55 percent for exterior.
But be cautious with full-tilt renos on your way out the door—two in five buyers surveyed were willing to do their own renovations. And with high demand for contractors and labor, something like a major kitchen remodel could not only set you back a lot of money, but a good deal of time as well— not worth missing a great seller’s window.