Homes Prices in Detroit Fall Harder than in any Other City; Michigan Mortgage Applicants Can Find Great Deals

If you’ve been waiting around, hoping to take advantage of lowered prices before applying for a Michigan mortgage, you’re in luck.

You’ve watched the sting of massive job and income cuts, making Metro Detroiters nervous about their futures. Then you saw the fear and caution, which kept home buyers on the sidelines and created an oversupply of homes that can sit months, even years, on the market.

As The Detroit News notes, you’ve witnessed the reasons why the region’s housing market is favoring buyers so extensively.

Now, comes home price deflation, the worst in the nation, according to a survey released this week by the National Association of Realtors. The median home price in Metro Detroit sank to $154,100 in the third quarter, down 10.5 percent from $172,100 at the same time last year. It was the largest percentage drop of U.S. cities.

“The overall feeling in Michigan is everybody’s knees are knocking a little bit,” said Nancy Warson, a Livonia Realtor.

While prices are down, at least one top mortgage broker predicts the market may be ready to rebound.

“We’re ready to turn around,” said Pat Vredevoogd Combs, National Association of Realtors president and a Grand Rapids Realtor. “What we’re seeing, we think, is that it’s bottoming out.”

The steep decline in home prices can be blamed on major losses in jobs and income in Metro Detroit, said Dana Johnson, chief economist at Comerica Bank.

Would-be homeseller Brian Kurtz knows such uncertainty well. The financial planner from Troy has dropped the price on his Sterling Heights colonial by $36,600 to $259,900 and is now paying $4,000 per month for two mortgages.
“It’s like trying to sell ice cubes to Eskimos,” said Kurtz, whose home has been on the market since August 2005.

Warson, with Real Estate One, said buyers are just not out there. One of Warson’s clients in South Lyon, who is selling their house for about $500,000, has had only one potential buyer look at it in seven months.

Those kinds of waits are reflected in the sales within the Michigan housing market, which are down 17.2 percent in the third quarter. Those kinds of waits also can quickly force down home prices, as sellers often drastically cut their asking prices so they can snag a buyer.

In a state where the jobless rate has soared above the national average, buyers are wary of getting into long-term financial commitments, Warson said. Current homeowners, such as empty nesters, are also reluctant to move or downsize, fearing they’ll take a loss on their home.

“Some are scared about their job, some are scared (because) they don’t know where the market is and they would prefer to buy at the very, very bottom, so they’re holding out - and nobody knows where the bottom is,” Warson said.