Michigan Real Estate Market: Will it Crash in 2024?

The current median home sale price of $276,900 is stable and rising steadily at 6.6% YoY. Moreover, homes spend only 22 days on the market. This indicates that the Michigan real estate market is pretty much competitive.

The average months of home supply are 2 months YoY. A market with fewer months of supply indicates a seller’s market. The number of homes sold increased by 1.9% YoY in July. There were 10,878 homes sold in July 2024, up from 10,680 homes sold in July 2023.

Despite the competitive nature of the market, recent developments, such as the NAR settlement, have caused some hesitation among sellers. It leads to concerns about selling prices and agents’ compensation. People are anxious about the selling prices and agents’ compensation.

The NAR settlement has removed the buyers’ agent compensation and many MLSs have followed the suit. It will probably reduce the home selling prices. As a result, buyers will have improved affordability along with low mortgage rates. Here are some tips for you to sustain in the market:

• If You Are a Home Buyer: Homes for sale (34,950) are growing at 7.7%. Along with this, the expected drop in home prices can benefit you. The low interest rates at 6.37%-6.62% are now in buyers’ favor. Also, in case of low housing demand and prices, you can request for seller concessions.
• If You Are a Home Seller: You can lock in Michigan’s current high home prices. The correction in the home prices is long overdue. In the wake of the NAR settlement, home prices may drop a little more. If you’re a seller, you can still make profits on home sale before prices potentially drop.

So, How Is the Real Estate Market in Michigan?

Balanced!

The number of homes for sale increased by 18.7% in July 2024 compared to the previous year. This is the 5th consecutive month the housing market has witnessed such growth. Other important facts are:

• Median Days on Market: The median days on market for homes for sale are 22 days, up by 4 days YoY. This trend suggests a high demand in the Michigan real estate market.
• Housing Inventory and Supply: As a buyer, you have more options now as the housing inventory is up by 18.7%. There are 27,463 homes for sale in Michigan, with an average supply of 2 months.
• Average Home Prices: The median home price in Michigan is $228,000. But, it is expected to decrease due to a rise in inventory in the latter half of 2024. The sale-to-list price ratio is 99.7%, down by 0.56 pt YoY.
• Home Sales: As per July 2024 data, home sales decreased by 7.1% YoY! Only 8,229 homes were sold, compared to 8,856 last year.
• Average Rent Prices: Rental costs vary statewide. The median rent is $2,150 with month-over-month change is +$49.

Why Is Michigan a Seller’s Market Now?

Michigan real estate market has balanced inventory of homes for sale. Besides this, a steady increase in median home prices, favors home sellers. Homes spend only 22 days on the market which depicts the competitive market.

Let’s look at some more facts:

• Fewer Days on the Market: Homes are spending only 22 days on the market before going under contract. This is visible in metro cities like Detroit and Lansing where the average days on market is between 26 to 27 days.
• Multiple Offers on Homes: Seattle has got 48 and Lansing got 78 in Redfin’s Compete Score. It means the housing market in Michigan is very competitive. It shows that many homes get multiple offers, some even sold without contingencies.
• High Sale-To-List Price: The average homes sell for about 3.06% below list price. The average sale-to-list price ratio in Detroit is 96.94%.

• Homes Sell Above List Price: On average, 31.2% homes sell above list prices. However, in July, 33.4% of homes experienced price drops, compared to 25.0% last year. This trend indicates a gradual shift toward a buyer’s market.

Michigan Housing Market Predictions 2024

Here are the predictions for Michigan’s housing market in the remaining months of 2024 and 2025:

1. Number of Home Buyers Will Increase: As inventory grows and homes stay on the market, more home shoppers are expected to re-enter the market. The historically high interest rates averted buyers in 2023. But the easing inflation and stabilizing rates will bring back house hunters.
2. Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across MI YoY, reaching $228K in July 2024. Cities like Saginaw expect a surge in home prices 3.4% by March 31, 2025.
3. New Home Constructions Sales Will Increase: As per Michigan Building Permits Survey, 1,732 new private housing units were authorized. It increased by 6.3% from 2022. Michigan’s housing market’s high demand will be served with the new constructions.
4. iBuyers Will Continue to Make Lowball Offers: iBuyers like Opendoor and Offerpad, which once offered 104.1% of market value in 2021, now offer around 70%. Such lowball offers to sellers will increase opportunities for individual buyers.

Bonus Predictions: Buyer Broker Commissions Will Be Zero!

In a shocking turn of events, the NAR settlement has completely eliminated buyer agent fees from the MLS. Let’s understand its impact:

1. Buyer Agents Will Be Affected: With buyers now responsible for directly paying their agents, many may choose to find their homes on their own. This may very soon render buyer agents obsolete.
2. Seller Concession Will Increase: Without the obligation to pay buyer agent commissions, sellers might see increased requests for seller concessions and offline transactions. Additionally, builders are offering significant concessions to attract buyers, further influencing the market dynamics.
3. Builders Will Compete More: Home builders are persuading buyers to buy new construction homes with mortgage buydowns worth $30K!
4. Sellers May Offer Fees for Services: Sellers may offer at least 1%-2% fees to the buyer agents in order to sell their homes quickly. Increasing competition from builders may also cause sellers to pay extra fees to buyer agents.

Is the Housing Market in Michigan Going to Crash?

A housing market crash in Michigan is unlikely.

Michigan boasts one of the nation’s most thriving economies. MI has high household income in U.S. which is $92,835. Some top cities in Michigan are poised for home price growth.

Detroit and Lansing show a projection of 1.8% rise by March 31, 2025. Detroit has the largest population and is the home to companies like Ford Motor and General Motors of America. With a population of around 6,20,000, it’s the fastest-growing city in Michigan.

Michigan’s job market is also strong. The unemployment rate is only at 4.10% and its private-sector employment added 16,800 payroll jobs over the past 12 months. This affordability, combined with strong economy, makes a housing market crash in Michigan unlikely.

2024: Is It a Buyers’ or Sellers’ Market Now?

Michigan real estate market favors sellers in 2024. (And buyers, too!). The Michigan real estate market is expected to lean more in favor of the buyers in the latter half of 2024.

Home prices are rising slowly, and the number of homes for sale has increased by 7.7% YoY. Buyers now have more choices. With mortgage rates around 6.37%, buyers also have more purchasing power.

Consequently, more homeowners are likely to list their homes on Michigan MLS. The 7.7% increase in new active home listings in Michigan has brought back home shoppers. So, whether you are looking for a condo in Olympia or a single-family primary home in Othello, you will find your dream home in the coming months.

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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.

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