Depends on the situation, say local Realtors

By Christa Buchanan
C & G Staff Writer

It’s no secret that the housing market has been volatile in recent years, making for a straight-up buyer’s market.

Once the bail-out money for banks to loosen restrictions on loans and mortgages was coupled with the now expired federal tax credits for buyers — not to mention all-time low interest rates and a huge housing stock at rock-bottom prices — the housing market’s become a whole new game, with more players: Traditional buyers now face stiff competition from both each other and investors, while traditional sellers now must compete with both short sales and foreclosures.

Realtors across metro Detroit agree that while it is still technically a buyer’s market, there are a few caveats to that statement.

“It totally depends on the situation. It depends on what’s going on with that particular house — you can’t generalize anymore and strictly say, ‘This is a buyer’s market,’” said Realtor Joanna Darmanin of Century 21 Town & Country in Royal Oak. “It’s tough to call nowadays because it’s such a tough market.”

Bidding wars on foreclosures, short sales, and even in some cases, traditional sellers’ homes in prime condition and location are some of the components that make this a hard market to call, as is the amount of inventory of homes in various price ranges.

“Because of shrinking inventory and a lack of quality homes on the market, if a house is priced reasonably and in good condition it will sell,” said Realtor David Reese of Real Estate One in Troy.

Reese noted that despite recent news articles stating that property values in the metro Detroit area are expected to continue plummeting for the next few years, he and other local Realtors are beginning to see the market stabilize — “as long as the banks continue to hold back inventory,” he added.

Kelly Sweeney, CEO of Coldwell Banker Weir Manuel Realtors in Birmingham concurred: “We’ve been seeing the market stabilize for over a year now as inventory continues to fall — three to four years ago, inventory was at about 70,000, and now it’s at about 30,000-32,000, so we’re getting closer to a healthy market, which is at around 20,000.”

With declining inventory comes more competition, which has helped stabilize home values, depending on the price range and condition of the home.

“Even with a recent bump in home values, prices are still relatively low compared to where they were seven-10 years ago. Coupled with mortgage interest rates lower than they have been in decades, you have an incredible buying opportunity for homebuyers,” said Realtor Brian Powers of Keller Williams Macomb-St. Clair Market Center in Chesterfield. “But, the caveat to those conditions that favor the buyers is the underlying issue of inventory. Listing inventory continues to decline, and the quality of listings available to buyers leaves a lot to be desired in some of the more popular areas. The result can be several buyers competing over a single listing — in that case, shifting the advantage on an individual listing to the seller.”

That said, the market across the board is still not on solid ground, as short sales and foreclosures still make up more than half the homes on the market — with another wave expected. In these cases, it’s theoretically the banks’ market, as these transactions require third-party approval.

“With a short sale (or foreclosure) the bank does, of course, have the final say. A lot of agents were hoping that HAFA, the Home Affordable Foreclosure Alternatives program, would help reduce the timeline to complete a short sale in 30 days, but that really hasn’t picked up any speed, yet. It’s still taking a long time — 60 to 120 days or more,” Reese said.

Another problem buyers face in these situations, said Darmanin, is that even if an offer is accepted, the bank can cancel the purchase agreement at any time for myriad reasons. Basically, she said, the buyer has to abide by the lengthy purchase agreement issued by the bank and can’t make any changes, such as switching lenders, or the bank will cancel the deal.

“In those transactions, it’s definitely the seller who’s in charge, because the bank got 20 offers the first time around, so they don’t care — they can just find another buyer,” Darmanin said.

Powers agreed: “Banks are taking advantage of favorable buyer conditions and lower inventory levels by pricing many of their listings at a price that will induce multiple offers from buyers. In some cases they are literally getting buyers into a bidding war over a single listing and driving the price up above asking price.”

Although buyers are at the mercy of the banks when it comes to purchasing foreclosures and short sales, which can literally take months before a buyer finds out if an offer has been accepted, it is still technically a buyer’s market — especially for investors.

“It’s a great time to be an investor. Cash offers are generally viewed more favorably by sellers — both private and institutional — as cash offers avoid a buyer having to deal with ever-changing underwriting guidelines and appraisal issues that can slow down a home purchase,” Powers said.

Due to the complications involved with purchasing bank-owned properties, things are looking up for traditional sellers.

“Everything’s a buyer’s market right now, but having said that, we are finding there’s more demand for the traditional seller because the distressed market isn’t for everyone,” said Sweeney, citing the extensive amount of time it takes and repairs that may be needed as a reason many people are opting to go the traditional route.

Overall, the Realtors say, this market is complicated and can be anyone’s game, but with professional help to guide both buyers and sellers through the sales process, opportunities abound across the board.

Century 21 Town & Country in Royal Oak can be reached at (248) 642-8100; Coldwell Banker Weir Manuel, Birmingham, at (248) 644-6300; Real Estate One in Troy at (248) 813-4900; and Keller Williams Macomb-St. Clair at (586) 421-1631.