Rising prices, transaction counts shape Northern Michigan home sales trend
Petoskey News-Review
Realtors around four Northern Michigan counties saw year-to-year growth in the number of homes sold during the first half of 2021, along with double-digit percentage increases in the median sale prices compared with the same period in 2020.
Multiple Listing Service data showed Realtors handling more residential transactions in Charlevoix, Cheboygan, Emmet and Otsego counties for the January-through-June period this year compared with those months in 2020. Median sale prices climbed at rates ranging from 11 percent in Otsego County to 31 percent in Emmet County (see accompanying chart for additional details).
Home sales trends for four Northern Michigan counties
County January-June 2020 January-June 2021
Charlevoix
Number of sales 189 259
Median price $225,000 $265,000
Cheboygan
Number of sales 117 183
Median price $142,800 $172,500
Emmet
Number of sales 214 323
Median price $245,000 $320,000
Otsego
Number of sales 181 193
Median price $149,000 $166,000
Source: Multiple Listing Service data reported by Emmet Association of Realtors and Water Wonderland Board of Realtors
Rik Lobenherz, associate broker and owner at Berkshire Hathaway HomeServices Michigan Real Estate in Charlevoix, said his agency was among those seeing the upward trends.
“it’s been a surprisingly brisk market for us year to date, and it doesn’t seem to be letting up,” he said.
Lobenherz said he’s noticed especially strong market activity for second homes, whether for buyers’ own use or to be offered up as short-term rentals.
More:Hot housing market fuels a rise in homeowners’ equity
More:Michigan’s Up North cottage market is red-hot amid pandemic, recession
A trend in which more jobs offer options for working remotely — a phenomenon which became more noticeable amid the COVID-19 pandemic — may be opening up opportunities for some newcomers to pursue home purchases in the region, Lobenherz said, adding some seem to be viewing Northern Michigan as an appealing alternative to the weather extremes, crowded environs and higher crime rates found in some metro areas elsewhere.
Kurt Jacobs, owner of Alpine Realty Group — which has offices in Petoskey, Gaylord and Indian River — said that agency also has been on a strong transaction pace recently.
“We continue to see very brisk sales in Petoskey, Gaylord, Harbor Springs, Charlevoix, Boyne City, Cheboygan and Indian River,” he said in an email. “Demand for in-town homes and lakefront continue to be very strong. The same can be said for vacant parcels with a stronger than expected surge in both hunting lands and residential build sites.”
From Alpine Realty’s vantage point, Jacobs said some of the strongest recent demand has been for lakefront homes and for properties in the $125,000-225,000 range sought by first-time buyers.
As for the selection of available properties, Lobenherz said the local trend of inventory tightness has intensified as of late.
For example, he pointed to the Charlevoix Country Club development, which includes about 100 homes and condominiums. There, he said it was common to see three to seven properties for sale at a time in the not-too-distant past. This year, however, it’s rare to see more than one property available at a given point, and they tend to sell quickly.
Although limited inventories can sometimes pose a constraint on the sales pace, Lobenherz said the year-to-year rise in transaction counts in part may reflect the limited activity in the real estate market during the first half of 2020 — when agents were subject to Michigan’s pandemic-related business restrictions for a large share of the spring months. At the same time, the prices which homes are commanding amid the strong demand may have helped entice some sellers into the market, he added.
The slow pace of new home construction in the region since the Great Recession hit in the late 2000s is among the factors seen limiting the area’s supply of available homes.
As community leaders around Emmet and Charlevoix counties have engaged in conversations about housing affordability and availability concerns for the local workforce, the region’s high construction costs have been among the factors identified that can make new projects challenging. Along with the tight availability of skilled labor seen in the region’s building industry through the past decade or so, price spikes for various building materials is another factor which can make a new home a costlier proposition.
Even so, “We are also seeing strong demand for new home builds despite the barrier of high material costs,” Jacobs said. “We represent a builder who is putting in a subdivision west of Gaylord. We have sold four brand new builds over the last year and the demand continues to be strong.”
Given the quick pace at which properties often sell once listed, Lobenherz said it can be helpful for buyers to work with an experienced, full-time real estate agent who’s familiar with local trends and able to help them move quickly with an offer. Jacobs noted a couple of steps which Alpine Realty has been encouraging among prospective purchasers to potentially boost the likelihood of securing a desired property.
“Cash sales are very prevalent and account for 50% of our sales,” he said. “For those that have been financed, we are encouraging our buyers to guarantee that they will make up the difference between appraisal price and the sales price if the appraisal price comes in below the agreed upon purchase price.
“We have also been encouraging our buyers to write offers with escalation clauses where they will, for instance, if another offer comes in that is higher than our client’s offer our clients will increase their bid by $1,000 over the highest offer.”
As for the future, “how long the upward trends will continue is anyone’s guess,” Jacobs said. “When inflation (spikes), the Federal Reserve tends to try to pump the brakes of the economy by raising interest rates which in turn increases the costs of borrowing. Personally, I feel the inflation is much higher than the June rates announced by the Fed of 5.4%, which is still the highest since 2008.
“If people are considering selling, this could be an excellent time — and the party may end sooner than later.”