Decline in Macomb Housing Market Continues into 2011

Decreased home values were a leading concern for sellers in 2010, and local real estate agents say this theme is likely to continue in Macomb Township until the end of 2011.

"We had historically low mortgage rates, federal mandates and real estate tax credits, all intended to jump start a housing market hampered by foreclosures and short sales," said Keith Reaume, sales counselor with in Macomb Township. "Buyers and sellers had to adapt to changes beyond their control in a declining market."

According to MiRealSource, the average residential sale price in Macomb Township was $149,955 in October 2010, compared to $153,355 in October 2009, a 2 percent decline. Although new listings decreased from 163 to 147 during the same time period — an 11 percent decrease — closed listings held steady.

One highlight for 2010 was the $8,000 first-time home-buyer tax credit program for those who made a purchase by April 30. Reaume credits the program with the 20 percent boost he observed in local home sales.

"A lot of people scrambled to buy homes," he said. "It gave us the boost we needed."

The program cleared out a lot of supply, moving houses that normally would be sitting on the market.

"It got people off the fence and into houses," he said. Unfortunately, he added, at the end of the program, the market was left primarily with short-sale homes or homes so distressed that nobody wanted them.

Some homeowners that cannot sell their house to move up to another choose to lease their homes instead. They use that income to make ends meet in the hope that the market will catch up and they will be able to sell the leased house.

If the market was not challenged enough, the unpredictability of the appraisal process provides another level of angst and uncertainty.

When Jeff Nolff's offer to purchase a split-level home in the Penzien Farms subdivision in Macomb Township was accepted this summer, the bank appraised the property for 4 percent below the agreed-upon selling price.

In this case, the bank appraisal left the seller unable to get the original asking price, leaving Nolff to renegotiate the sale price to the lower, appraised value.

"About 50 percent of sales are being appraised below selling price," said Bernie Gallivan, Realtor with RE/MAX Suburban. "They're typically coming in between $5,000 and $7,000 below the agreed-upon sale price."

"Underwater" homeowners — those owing more on a house than it is worth — are another problem weighing on the market. One common solution is a short sale.

In a short sale, the seller arranges with the mortgage lender to accept a price that is less than the amount owed, and the bank forgives the remainder of the loan. In a recent short sale in Roseville that Gallivan worked on, the bank took a $100,000 hit. Short sales represent about 20 percent of his business.

Those underwater homeowners that cannot do a short sale usually face foreclosure. Gallivan said foreclosures in this area are now about 20 to 30 percent of his business.

Reaume sees a slowdown in market movement into 2011. The holidays are going to be a drag on sales for now, but he also cites foreclosures as another reason.

"I don't think we've quite hit bottom yet," Reaume said. "There are too many short sales and foreclosures, high unemployment and an uncertain political environment. It's creating a stagnant real estate environment for now."

Nevertheless, he predicts there will be an early spring home-buying market beginning in February. He projects that house values will not increase until the end of 2011.

"Then, the market will experience a modest gain of a couple percentage points," he said.

Still, experts say that house values will not return to their 2006 peak levels any time soon. According to an analyst at Moody's Economy.com, the national price level will not regain its 2006 high until 2020.