Traverse City has often found its name in Headlines across the nation, mostly for “Best Beaches in the U.S.” or “Best Little Town in the U.S.”, and as residents, we couldn’t agree more! Since 2014 those Headlines have increased greatly. Along with the nature and beauty that surrounds us, we are now known for our amazing restaurants and the plethora of wineries and breweries that seem to be on every corner these days. Through these headlines and word of mouth, people are discovering that this incredible little town exists, and they want to see it for themselves. As a local Realtor, I get to see firsthand the impact tourism has on our population growth and demographics. While this growth has been slow and steady since 2010, just after the recessions, it has undoubtedly only gone in one direction…North. Whether it is a second home or a permanent move, people are making their way into our area because once they visit, they don’t want to leave!
As you can imagine, one of the biggest impacts our growing population has had on our economy is in the housing market. Local real estate has been extremely active these last few years. Home prices have been on the rise since 2011 and with an average home value increase of 8%+ year-over-year since the end of 2015, it’s been a great time to sell. Thus many people throwing around the term “sellers’ market”. But I ask, has it really been a seller’s market? The answer could be yes and no. While seller’s have been averaging around 96% or higher of their asking prices, the offset to a full-blown sellers’ market is that they find themselves in the same pool as buyers. This pool consists of higher prices, steep competition, multiple offer situations, rising interest rates, uncapped property taxes and because of these factors not a whole lot of inventory to choose from. Unless there is a need to move, many sellers have been choosing to stay put. However, as of late, we are starting to find that sellers are gaining more confidence in the market and we are starting to see an increase in some inventory.
To give you an idea of how things are shaping up in Grand Traverse County as of Q3 2018, I’ve taken a few key points from our Real Estate One Northwest Michigan Report.
- Waterfront Inventory is down -18% from last year
- The average sales price is $499,000 and is up 12% from last year
- Waterfront inventory has been down especially in the over $500k price ranges.
- Non-waterfront inventory is up 9% from last year
- YTD average sales price is $245,000 and is up 3% from last year
- While sales activity in the upper price ranges have been slowing in most markets, they continue to be strong in Grand Traverse County. Upper-end values, however, are showing signs of flattening with both third quarter and YTD average price and price per square foot down slightly from last year.
The statistics above are showing YOY from October 2018 versus the same time last year in 2017. To get a better idea of what is happening right now, I will compare October 2018 to the previous month in September. Here’s what things are looking like:
- The median sales price is down 6.14%. Homes for sale are down 1.31%. Homes sold are down 8.87%. Average days on the market is down 2.29%.
So, where are we going to go from here? No one can quite answer that as we can’t predict the future but one thing we know is that interest rates will have an impact on our market. Bill Holmes, Vice President of Front Street Mortgage shared with me the average interest rate from the last 3 years as well as some other insights. In 2016 the average rate was 3.65%, in 2017 it was 4.10% and currently in 2018 it averages 4.38%. Recently, they crossed the 5% mark for the first time since 2011, marking a new era for a generation of Americans raised on super-low borrowing rates. Rising rates highlight the downside of a burgeoning national economy. As of last week (November 1st, 2018) rates were showing just under 5%. This shouldn’t be a cause for panic. From 1971 through early October 2008, the average rate for a 30-year mortgage was 8.1%. The day before Halloween 1981, the number spiked at 18.44%, according to Freddie Mac. And people bought and sold homes readily!
Will they continue to rise? Great question, and the answer is most likely, yes. From 2009 until October 2017 the Fed purchased and then re-invested the profits from Mortgage-backed securities it had purchased allowing interest rates to remain low. As of October 2018, the Fed stopped both purchasing and re-investing in the same. As they were the largest purchaser of these instruments there has been no entity stepping in to fill the void. Thus, mortgage rates have risen and we are seeing a lot of volatility as of late. This event, coupled with a strong economy and low unemployment have contributed to the rise in mortgage rates. So, all this information is important to understanding how the economy operates and runs and with our real estate purchases and sales being some of the most important investments we will make in our lifetime, it’s smart to stay educated in your local market. That is what I am here for! Whether you are ready to buy or sell now or sometime in your foreseeable future, please feel free to reach out anytime to discuss your current situation and to get my input to help you make a positive decision with your real estate goals and needs. But at the very least, let’s remember that we do live in one of “America’s Best Little Towns” and I suggest you grab some friends or family and go have some great conversation over at those amazing restaurants, wineries and breweries that are just outside your door!
Contact Erika Nita for your real estate needs by heading over to her website.
MICAPITAL is a boutique private wealth planning firm specializing in serving an exclusive group of affluent and HNW individuals and families.