Federal Reserve released their Beige Book. It’s their report based on observations and comments from business insiders on the state of the economy.

Regarding comments in the report for Real Estate and Construction citing real estate market remains weak, agents in the New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco Districts reported an increase in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market……

1. It’s no surprise that declining house prices are improving home sales. There are so many steals to be had, this is fueling our market.
2. Tax credits for first time home buyers expire December 1, 2009. If you are a first time buyer and haven’t at least started thinking about buying a home or at least talking to a lender about getting preapproved and starting to look for a house. We are seeing many of these buyers writing offers.
3. Interest rates are cited as one of the factors that are encouraging residential sales during this period. What will be a very telling is what effect the bump in interest rates will have on purchases. First time home buyers won’t be affected as much as the trade up buyers looking at moving up who might find it more expensive if the rates rise.

The average sale price of single-family homes for the area was up more than 8 percent over May of 2008, according to the Ann Arbor Area Board of Realtors®. The average home in Washtenaw County sold for $236,897 in May, compared to $217,849 in the same time period last year.

It was an improvement from April when the average sale price was $145,611 vs.$222,798 in April 2008. Trends are more important than a slight blip. I have posted the Housing Trends for Ann Arbor Real Estate Market and will be posting those for some of the other areas in Washtenaw County.

Consumers can buy homes listed by banks, for-sale-by-owner and government departments, like HUD. So inventory may actually be up – in the most distressed markets of the country where shadow inventory isn’t represented by REALTORS®. Fannie Mae and Freddie Mac, among the biggest owners of foreclosed homes, typically have only about 35% to 50% of those homes listed for sale at any given time, according to industry estimates.” How many is that? If Fannie Mae only has 1000 foreclosed homes, then 350-500 of them on the market isn’t a problem, is it? Unless the Government Sponsored Entities actually own a million foreclosed homes, which means the real fun hasn’t even started, with or without improvements in listed inventory. So here is my table for absorption for several key areas in the Washtenaw County Real Estate Market that I track.

1.    Months supply decreased for Dexter, Chelsea and Saline while Ann Arbor months supply increased slightly.  Without actual sales data, or sold pricing trends, inventory data is pretty much meaningless. It’s like saying that because there are less Michigan cherries at the grocer’s today, things are improving in the cherry business, when in fact, the reason there are less cherries today is that they were all rotten yesterday. The grocer threw them out to reduce his inventory; he didn’t sell them. So without analyzing sold data, the decreases in inventory may have come from homes leaving the market un-sold. Now I want to bake a cherry pie. Do you want a slice?

Search all listings in Michigan with pictures and tours…Free!

Kathy Toth & Team: Ann Arbor Area Real Estate Experts

www.KathyToth.com

Keller Williams Realty

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.