Real Estate Market Watch

Two Distinct Markets

 by Gerald Frendt       

The Port Huron Residential Real Estate Market is comprised of approximately 22,500 households in the Cities of Port Huron and Marysville, along with Port Huron, Fort Gratiot, Burtchville, Kimball and Clyde Townships. 

The National Association of Realtors defines a "Buyers Market" as a market where the supply of homes currently on the market exceeds the historical demand for homes by more than six months.  For example, if a market normally has 100 homes a month selling and there is more than 600 homes on the market, it would meet this definition.

By this definition the Port Huron Market for homes has been in a severe Buyers Market for more than three years, with an overall supply climbing from 6.3 months, in October, 2004, to 15.4 as of July 1, 2008.  The current supply of 943 homes is 41 homes less than this time last year.  Demand seems to have leveled out.   The most notable change is that there are two distinct markets - the privately owned homes and the homes owned by financial institutions.  There are two MLS systems that serve St. Clair County, and most Realtors belong to both, but not all.  In order to get accurate statistics, I combine data from both and then eliminate the duplicate properties.  MiRealSource MLS requires the broker to identify whether the home is owned privately, or a bank or government institution.  RealComp MLS does not require this information.  Therefore the following data is not a complete picture of the market, but the results are so dramatic that we don't need a perfect picture.  In St. Clair County, there is currently a 5 month supply of institutional owned homes, and a 28.1 month supply of privately owned homes.  The "blended average" for all homes is 17.4 months (MiRealSource data only).  Buyers are drawn to the "fire sale" prices being offered on foreclosed properties.  Many of these properties are selling in the first few days on the market and they are often attracting multiple offers.  Quite often buyers will bid higher prices than the listing price.  Those that don't sell right away receive regular and sizable price reductions.  Meanwhile the privately owned properties sit on the sidelines - they are not in the game.  Over the past twelve months 47% of the sales were on foreclosed properties that have been re-listed by the institutions - but that percentage has grown to 55% in the first six months of this year. In the City of Port Huron, it is more than 70%.  This trend will continue to shift.  There are roughly 1,500 homes that will sell in the county this year.  Year to date we have averaged more than 100 homes per month being sold in foreclosure sales.  These homes usually have to wait six months, sometimes a year, before being re-listed by the banks.  This means that in the next few months a bigger percentage of the homes available will be owned by banks, and the chances for a private sale will be even worse.  Sadly, many of those private homes will be next years bank owned properties.  The sellers of the private owned properties typically cannot reduce the price low enough because of their mortgage balance.  Many of the homes that do sell, are "short sales", where the bank is forgiving a portion of the mortgage debt. 

The attached study provides a more detailed look at the market.  Remember the numbers provided reflect just one MLS.  Areas 21, 22 & 23, are the areas identified in the first paragraph of this article.

There is great variation, within the market, depending on price range, location, and various other factors. Evidence indicates that those homes priced over $200,000, are competing in a more difficult market than those priced under $200,000. Our study breaks the market into twelve price ranges, and while there is great variation, all would be classified as "Buyers Markets".  

If selling, it is helpful to know how many buyers will likely "surface" during your time on the market, and how many homes you will be competing with for those buyers.  Your market strategy should take into account a price range of $10,000 to $25,000, with homes of similar location, age, size, and amenities.  Homes are still selling and the sellers who "know the market" have an advantage in attracting a buyer to their home.