Fewer homes on the market as more owners opt to stay put

May 26 2008 - Inventories of unsold homes in metro Detroit fell nearly 14% to an 11.1-month supply in the first quarter compared with the same period a year ago.

And they fell 41.3% from the 18.9-month supply in the five county metro area reported during the fourth quarter of 2007, according to data compiled by Real Estate One in Southfield.

While sales picked up for the three months ended March 31 as the spring buying season approached, there are other factors at play in reducing local inventories to near the national rate of a 9.9-month supply, said Dan Elsea, president of brokerage services at Real Estate One.

“Homeowners are taking their homes off the market,” Elsea said. “The rate of sales is up as well. Both of those things are core factors in reducing inventory. Also the rate of homes being listed for sale is down.”

Still, the large inventory of unsold homes on the market makes the vast majority of the metro area a buyer’s market. That could further erode home prices, which have fallen 16.5% through February compared with last year, according to the S&P/Case-Shiller Home Price index.

Metro Detroit has been hit by high unemployment and continued cutbacks by Detroit’s automakers. The area also led the nation last year in the rate of foreclosures, which pushed up inventory and hurt home values.

Many people deciding to hold their homes off the market now are hoping prices will start to climb again soon.

There were 51,915 homes for sale in Livingston, Macomb, Oakland, Washtenaw and Wayne counties in the first quarter. That’s down from 58,198 homes on the market in the first quarter of 2007, according to the Real Estate One data compiled from local multiple listing services.

A buyer’s market is defined as more than six months of inventory. A normal market would have a three- to six-month supply of homes for sale and a seller’s market would have under three months of supply.

In metro Detroit, most of the seller’s markets are in the under-$100,000 price range in communities like Beverly Hills, Highland Township, Clawson, Milford, Canton, Woodhaven, Bruce Township, Ann Arbor, Milan and Hartland.

The Franklin/Bingham Farms area had one of the highest inventories of unsold homes in the first quarter with a 29.4-month supply. Manchester in Washtenaw County had a 32-month supply and Bloomfield Hills had a 28.1-month supply.

Detroit, which had a 51.1-month inventory of unsold homes in the fourth quarter, saw its inventory plummet to a 7.3-month supply in the first quarter as the many auctions and bulk buys of foreclosure properties by investors are now being reflected in the supply numbers.

Fewer homes on the market as more owners opt to stay put
by GRETA GUEST | FREE PRESS