Realtors: Strong demand, tight inventories make for upward home price trend in Northern Michigan
Realtors tended to see basic laws of supply and demand on clear display in Northern Michigan’s residential real estate market through the first half of 2018, with median transaction prices holding fairly steady or rising year-to-year as a trend of tight home inventories continued.
“The demand is really high and the supply has just gotten gobbled up,” said Jeff Wellman, broker-owner at North Harbor Real Estate in Boyne City, noting strong buyer interest in primary as well as second homes.
Multiple Listing Service data showed a median price of $200,000 for residential sales handled by Realtors in Charlevoix County during the January-June period in 2018, compared to $164,900 for those months in 2017. The county’s residential transaction count decreased slightly year-to-year, from 253 in 2017 to 249 in 2018.
Otsego County’s median residential price during the first half of 2018 was $130,000, compared to $121,000 during the same time frame in the previous year. The number of residential properties sold in Otsego showed a slight year-to-year decrease, from 205 in January-June 2017 to 189 during those months a year later.
Emmet County’s median residential price for the first six months of 2018, at $205,000, showed a slight decrease from the $210,000 calculated for that period in 2017. Emmet’s residential transaction count also edged downward, from 317 in January-June 2017 to 295 for those months in 2018.
Rather than a reversal of the longer-term growth trend for home values, Cynthia Zumbaugh, executive at the Emmet Association of Realtors, said the county’s year-to-year dip in price statistics may reflect some unusually strong sales activity at the high end of the market in early 2017 which did not repeat itself this year. When July numbers were inserted in the calculation, she noted that Emmet County’s 2018-to-date median price exceeded the figure shown for the first seven months of last year.
Bill Dickson, Northern Michigan regional manager for Berkshire Hathaway HomeServices Michigan Real Estate, said that company saw year-to-year increases in residential dollar volume during the past few months in the Petoskey market. He said it hasn’t been unusual this year for realistically priced homes to draw multiple showings and offers within a few days’ time on the market.
“The residential market has been very healthy this year, let’s put it that way,” Dickson said.
Dickson sees the region’s relatively slow pace of home construction in the past decade as a factor limiting the current supply of available properties. During and immediately after the late-2000s recession, some consumers who might otherwise have been interested in a new home may not have moved forward with the purchase because they were upside down on an existing mortgage, and developers sometimes found it difficult in those years to secure financing for new projects. More recently, high costs associated with home construction — involving materials as well as labor — have reined in the pace of building.
“Nobody built, so now we have a housing shortage,” Dickson said.
Dickson said entry-level to mid-priced homebuyers have accounted for sizable shares of sales traffic in the Petoskey area as of late. At one point earlier this year, he noted that a couple of months’ supply existed in the market for homes in lower price tiers, while the quantity of listings available in the $1 million-plus price category would normally take about a year to deplete.
Berkshire Hathaway HomeServices Michigan Real Estate also has an office in Gaylord. While real estate pricing in that market historically has been somewhat more moderate than around Petoskey, Dickson sees some factors helping boost housing demand and pricing there, such as Gaylord’s recent commercial growth and the availability of lakefront property at prices more attainable than in some other parts of the region.
In Boyne City, North Harbor Real Estate’s Wellman sees potential for the area’s strong home sales pace to continue in the months ahead. He pointed to mortgage interest rates that remain in a range that’s favorable for buyers, and the relatively good value for the money that existing homes continue to provide. Wellman noted that the area’s property values have not yet fully regained the ground lost in the last recession, and that existing homes still tend to be less expensive in per-square-foot terms than new construction.
“There’s still a strong demand,” he said.
Year-to year comparison
A look at how several area counties’ median residential real estate transaction prices for the first half of 2018 compare with those from the same period a year ago.
Area Median price, January-July 2018 Median price, January-July 2017
Charlevoix County $200,000 $164,900
Emmet County $205,000 $210,000
Otsego County $130,000 $121,000
Source: Multiple Listing Service data reported by the Emmet Association of Realtors and Water Wonderland Board of Realtors