Michigan homes continued to sell at eye-popping prices last month. The median home sale price rose 0.9% year-over-year from $208,800 to $228,000 in January. The number of homes sold increased by 6,420 homes to 6,466.
Interest rates are at 7.28%, but is Michigan still a seller’s market? Let’s look at the facts.
Homes in Grand Rapids sold for a median sale price of $279,900, a 16.6% increase year-over-year. Interest rates are at record highs, with few home buyers. But the inventory is so low that 25% of homes sold above the list price!
- If You Are A Home Buyer: You can avoid bidding wars and avail seller concessions if you buy a home now. The around 7.28% interest rate and mortgage payments are significant, but rates are unlikely to drop in the next few months. If they do, you can refi.
- If You Are A Home Seller: You can lock in Michigan’s high home prices. Homes listed on MLS sell faster and for 17.5% more than off-MLS homes. That could be thousands of dollars in additional proceeds if you sell via Houzeo.
The current Michigan real estate market statistics don’t reflect the national trend of high demand and low supply. Home sales and property prices in Michigan increased despite 2023’s slow market.
So, How is the Real Estate Market in Michigan?
Swell! Home values in Michigan rose by 45.6% in the last 5 years. Home sales increased by 9.2% in January 2024 YoY despite the mortgage rate climbing to 7.28%! So, Michigan’s housing market is strong, if not bullish.
Even if mortgage rates continue to increase alarmingly, home sales will not falter. So, if you want to sell a Michigan property, now is the right time to list it on MLS.
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Michigan Real Estate Market Statistics
- Average Home Prices: The average median home price in Michigan is $228,000, up by 9.2% YoY. In 2024, experts predict the median sale price will increase due to the tight inventory. Currently, the sale-to-list price ratio is at 97.5%, with an increase of 0.3% pt YoY compared to January 2024.
- Home Sales: As per January 2024 data, home sales increased by 0.9% YoY! In January 2024, 6,466 homes were sold, up from 6,420 in January 2023.
- Average Rent Prices: Rental costs vary statewide. An average tenant in Detroit pays $680, while the one living in Sterling Heights pays $1,201.
- Median Days on Market: The median days on the market for homes for sale was 38 days, down by 3 days YoY.
- Pending Sales: The number of homes for sale dropped by 10.9% YoY compared to 2023. Currently, there are 23.8K homes for sale in Michigan.
- Months of Supply: The average month of supply is 2 months. Michigan’s inventory isn’t as squeezed as the national housing market.
Michigan Housing Market Predictions 2024
Michiganians have survived the shockwaves of skyrocketing mortgage rates and rising home prices of 2023. Here’s what we predict for Michigan’s housing market:
- Home Sellers Will Return to the Market in 2024: Sellers who chose the sidelines in 2023 will come back. Especially those who can’t avoid new jobs or want to move to a cheap place. Whitney, the analyst who predicted the 2008 financial crisis accurately, has forecasted that baby boomers looking to downsize will also add up to 30 million housing units. Yowaza!
- Mortgage Interest Rates Will Stabilize by the 2nd Half of 2024: Mortgage rates hit 7.79% in October 2023. However, the value soon dropped to 7.29% in November due to the softening labor market and slowing economy. Even the annual inflation rate went from 3.7% to 3.2%. We think the rates will remain above 6%, but they will stabilize in the second half.
- The Number of Home Buyers Will Rise: The historically high interest rates averted buyers in 2023. But mortgage demand rose after the interest rates lowered to 7.29% in November. The easing inflation and stabilizing rates will bring back house hunters.
- Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across MI YoY, reaching $228K in January 2024. Experts predict home prices will continue to rise until the low supply-high demand dynamic changes.
- New Home Constructions Sales Will Increase: 12.3% of homes purchased in September were new homes, the highest since 2022. Home builders offered $30,000 worth of concessions to attract buyers in 2023. We think builders and sellers will compete for buyers in 2024.
- iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023. Opendoor and Offerpad have lost billions of dollars in 2023. As they struggle to survive, they will make lowball offers.
Bonus Prediction: Buyer Broker Commissions Will Be Negotiable!
In a shocking turn of events, the jury in Missouri awarded more than $5 billion in damages to the Sitzer-Burnett plaintiffs. This motivated nationwide home sellers to file grievances against NAR’s Cooperative Compensation Rule.
NAR’s Cooperative Compensation Rule or Participation Rule states that listing brokers must offer competitive compensation to buyer agents if they want to list properties on a NAR-affiliated MLS.
Sitzer/Burnett v. NAR
The Bombshell Lawsuit that Could End Buyer Agent Commissions
Lawsuits like Moehrl, Gibson, Batton, Nosalek, and Batton 2 challenge the Participation Rule. They accuse NAR and other top real estate companies of colluding and conspiring to keep agent commissions high.
If the jury also finds the defendants guilty in these cases, buyer agent compensation may change. Buyer agents may become obsolete by 2025! Phew.
While buyer agents are unlikely to be obsolete in 2024, they may be open to negotiating commissions. That’s probably how they will still have some skin in the game.
When Will the Housing Market Crash in Michigan?
A housing market crash in Michigan is unlikely.
Michigan’s beautiful beaches and lakes will continue to attract buyers. The Great Lakes State is famous for being the only state surrounded by five lakes.
Detroit, also known as the car capital of the world, is the largest among the other cities of Michigan. It is the headquarters of the top 3 car companies – Ford, GM, and Chrysler.
Michigan’s job market is also strong. The unemployment rate is at 4.3%. In fact, Michigan’s private sector employment rate was 3.6% in December 2023, faster than the national average of 2.0%. And Michigan’s friendly tax policies are a cherry on the top. Living on the sandy beaches of Michigan is relatively affordable. So it is unlikely that Michigan’s housing market would crash anytime soon.
2024: Is it a Buyer’s or Seller’s Market?
2024 will be a terrific market for sellers. (And buyers, too!)
Home prices in Michigan are rising and will continue to rise till the supply-demand dynamic changes. The number of houses for sale in MI was only 23,803 in January 2024. There is very limited inventory to satiate the demand from house hunters. This also makes it the best time to sell a house in Michigan.
In November, the mortgage rate plummeted from a two-decade-high rate of 8% to 7.28%, adding more new listings on the market. This shows that those who refused to sell due to mortgage rate lock are finally acclimatizing to 7% rates. In the coming Spring of 2024, more homeowners will follow suit and list properties on Michigan MLS.
The increase in new home listings in Michigan has also brought back home shoppers who were hugging the sidelines. In fact, the recent uptick in mortgage applications shows that buyers are returning.
House hunters who could not find affordable homes in 2023 will also start shopping in 2024. The demand for Michigan houses will increase – and that’s why sellers may be able to dominate the market.
However, new builds will compete for attention from buyers. Home builders have persuaded buyers to buy new construction homes with mortgage buydowns worth $30K in 2023! Builders will continue offering concessions in 2024, and home sellers may have to wage wars against them.
Listings of new constructions, baby boomers looking to downsize, and desperate home sellers will flood the market in 2024. The properties for sale in Michigan will increase. So, whether you are looking for a condo in Jackson or a single-family primary home in Midland, you will find your dream home next spring.
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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.
Frequently Asked Questions about Michigan Real Estate Market
Is the housing market going to crash in Michigan?
Most probably, no. Here are 5 reasons why the housing market is unlikely to crash in Michigan : (1) Low months of supply. (2) Low newly constructed housing supply. (3) New buyers are entering the market. (4) Strict lending standards. (5) Fewer foreclosures.
What are the real estate housing market 2024 predictions?
The predictions for 2024's Michigan housing market are: (1) Mortgage rates may stabilize between 6% to 6.5%. (2) Number of home sales may be less. (3) Home prices may stay low. (4) Housing affordability will remain stable. (5) iBuyers are likely to buy homes for lower than the market value.
Are home prices dropping in Michigan?
No, the property prices in Michigan were up by 9.2% YOY in January 2024. However, you can still find some of the cheapest places to live in Michigan. With a 45.6% rise in the past five years, exploring budget-friendly cities is crucial amid the current scarcity of available properties in MI.
Is it a good time to buy a house in Michigan?
Yes! Currently, there are very few buyers in the market compared to the supply of homes in Michigan. The soaring interest rates has kept buyers at bay, so you can avoid bidding wars. As the mortgage rate stabilizes in 2024, more buyers will return, so we'd recommend you to buy a house now. If mortgage payments burn a hole in your pocket, you can always refinance.
» Best Time to Buy a House in Michigan: Find out the best time to buy a Michigan property & plan your finances accordingly.
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