Inventory of Michigan Homes Creates “Ultimate Buyer’s Market”

If you’re a seller in the Detroit, Michigan housing market, current circumstances are pretty much your worst nightmare.

But they’re a paradise for potential home buyers.

Whether you’re a first-time buyer in the market for a starter home, a growing family looking to trade up or a baby boomer ready to take out a Michigan mortgage on a cottage up north, there may be no better time than now to buy.

Just ask 22-year-old Keith Nida of Clinton Township, who bought a house in Roseville for $50,000 below its asking price. Before he found the house, Nida put an offer on another house, but the bank foreclosed on it before his offer was approved.

“It was either bad luck or a blessing in disguise,” Nida said.

Therefore, if buying a house is on your list of things to think about in 2007, here’s what awaits you:

There’s a huge supply of homes, condos and rental housing to choose from. In 2006, there were 45,998 residential properties that went on the market in Wayne, Oakland, Macomb and Livingston counties. That compares to just more than 14,000 in 2001.

Detroit home prices are dropping. Experts predict prices will fall a bit more in 2007 before they start rebounding. With so much supply and so little demand, the median price of a Metro Detroit home declined 7.1 percent from 2005 to 2006, to $163,082.

Mortgage rates still are at historically low levels. No, you probably can’t get a 30-year fixed-rate mortgage for 5.5 percent right now, but you can get it for around 6.3 percent, still a reasonable rate.

And while you need to be a bit careful when negotiating an adjustable-rate mortgage at an even lower rate for the first few years, an ARM can be a good choice for certain buyers.

There are plenty of deals to be had. Behind most of the homes for sale is an owner who really needs to or wants to sell. Because sellers are fighting for so few buyers, almost any offer will be considered.

Sellers are throwing in a slew of incentives, too.

“The market is great if a person is looking to buy,” said Ron Simpson, president of the Detroit Association of Realtors. “Property values declined sharply in the past year. Jump in now and find your dream home.”

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