Friday, September 12, 2008

Has the Real Estate Market Hit Bottom?

This intriguing question is the headline of Petoskey News Review Reporter Steve Zucker's recent article on the Northern Michigan real estate market.

While I wouldn't presume to know the answer to this question, some statistics I researched for this story show the extent to which our real estate market has weakened over the past several years.

Almost thirty percent of sales involving single family homes in the Petoskey, Harbor Springs, Boyne City and Charlevoix school districts from January 1, 2008 through September 1, 2008 were bank owned foreclosures. The number of foreclosure sales this year is up almost 500% from the same period in 2006, just two short years ago.

For the months of January through August of this year, there were 359 unit sales of homes and condominiums in the Petoskey, Harbor Springs, Boyne City and Charlevoix real estate markets, with the dollar volume of sales totalling $114,417,285, and a median sales price of $170,000.

While we may not know whether we have reached the bottom, it looks like our most recent residential market top was in 2004. From January through August of 2004, there were 536 unit sales of homes and condominiums in the Petoskey, Harbor Springs, Boyne City and Charlevoix real estate markets, with the dollar volume of sales totalling $150,604,789, and a median sales price of $192,200.

Comparing this year's sales numbers with 2004, our unit sales volume is down over 33%, our dollar volume of sales is down almost 25%, and our median sales price is down almost 12%.

According to some industry observers, subprime mortgage delinquencies appear to have peaked in December of 2007, and subprime mortgage foreclosure starts may have peaked in January of 2008. This could indicate that the flood of bank owned properties into our market may soon be nearing a peak. However, there is concern that we have not yet reached a peak in Alt-A mortgage delinquencies.

I don't beleive that we will see a meaningful improvement in our local real estate market until the overhang of bank owned properties works its way through the system, which is currently in progress. However, with so much bad news already behind us, I am cautiously optimistic that we are beginning to see some light at the end of the tunnel. Hopefully it isn't a freight train!

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1 Comments:

Anonymous Lake Home said...

I think we are no where near the bottom yet. I just hope we do not enter a depression :(

Lake House

9/17/2008 11:20:00 PM  

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