Mortgage Demand Dips Past Great Recession Levels

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According to the Mortgage Bankers Association, as Washington, D.C.-based industry trade group, the demand for mortgages has dropped lower than any time during the Great Recession over ten years ago. The severe housing shortage continues in Michigan and across the country, limiting the availability of existing homes. Soaring interest rates are also impacting the mortgage market. According to a study from Up for Growth, Michigan is almost 87,000 houses shy of where it should be. Data from Realcomp reveals record-high sale prices in Wayne, Macomb and Oakland counties, as well as in Detroit.

 

 

Hotels Offer New Perks To Business Travelers

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Hotels are experiencing a revival of leisure travel. This May marked the third consecutive month that U.S. hotel profitability exceeded 2019 levels. However, business travel isn’t rebounding as quickly and isn’t expected to reach pre-pandemic levels until 2024. Detroit and Cincinnati’s markets are experiencing losses close to 23 percent. Larger cities like New York City and Chicago are weathering losses around 50 percent. Hotels are getting creative to encourage business travel by offering “bleisure” perks (business + leisure). They’re offering incentives like co-working spaces with luxury hotel amenities, special access to exclusive local museums, one-on-one exercise training sessions with an Olympic medalist, and welcoming pet policies,

 

 

 

Suburb Home Values Outpace Urban Areas

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The suburban real estate market is winning the property value race against the urban market. Up until June 2021, urban homes were gaining dollar value more quickly. However, after July 2021, home values in the suburbs rose faster due to the shift to remote work. Urban home values have continued to accelerate, but suburban home values are edging them out.

 

Star Southfield Theater To Be Repurposed

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The Triumph Church is expecting to repurpose the shuttered Star Southfield movie theater into a new campus. The site will include a worship center, a children’s area, a student area and a community space. The church site will also provide assistance with transportation, medical, financial and rental assistance, employment skills training, a pregnancy center and counseling center.  Converting movie theater sites is often difficult due to their sloped floors and layout. The plan includes a 1,600-seat worship center, a 350-seat chapel, and a fellowship hall in the main lobby area.  In other areas of the country, repurposing of theaters has taken on many forms like medical offices, a department of motor vehicles and self-storage.

 

 

Metro Detroit’s Home Prices Highest in Decades

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Metro Detroit home prices have increased, up 14.6 percent in February when compared to last year. The increase is the highest they’ve been in decades. The managing director for S&P Dow Jones Indices has gone on record saying they’re in the top decile of growth for Detroit over 30 years of tracking. The country is also showing the highest increases on record, up 19.8 percent. Detroit metro’s median increase is 5.1 percent, higher than the 4.7 percent national median. Read estate brokers agree that home ownership is becoming out of reach for new buyers and people of color.

 

 

Metro Detroit’s Affordable Housing Shortage Continues

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High rent is pushing people to look for new homes, but buying is a challenge. Multiple offers come in over the list price and over the budgets of many of the buyers, and that’s if they can find something within their budget. Renters and first-time buyers are especially struggling. Insufficient new construction, zoning rules that limit where housing can be built as well as wage growth that hasn’t kept up with inflation contribute to keeping the supply low. Average sales prices of homes in Michigan have risen 84 percent between January 2013 and October 2021. Pre-pandemic, nearly one in five homeowners spent more than 30 percent of their income on housing. That figure worsened over the pandemic.

 

 

Adaptive Real Estate Trend Is On The Rise

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U.S. developers are embracing the office-to-housing conversion trend.  Between 2020 and 2021, 32,000 new apartment units were created by converting existing building spaces that had been used for other purposes. Forty-one percent were former office buildings. In the last year, Grand Rapids has approved zoning changes that allowed commercial building owners to  convert first-floor retail into residential space.  Other cities leading the adaptive real estate trend include Washington, D.C., Chicago, Los Angeles, and Cleveland.  Last year was the biggest year on record for adaptive real estate.

 

 

Rising Mortgage Rates Impact The Housing Market

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Rising mortgage rates are not dampening buyer demand. However, getting an offer accepted is no small feat. The rising mortgage rates haven’t brought down prices yet. Buyers could be feeling a sense of urgency to find a home before rates increase further.

 

U.S. Pending Home Sales Decline

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Limited home inventory is restricting the real estate market, causing U.S. pending home sales to fall 4.1 percent in February for a fourth straight month. With a limited number of properties for sale, home price tags remain elevated. When combined with 30-year fixed mortgage rates at a three-year high, homes are less affordable. The increase in home prices and rising mortgage rates can add up to another $200 to $300 in mortgage payments per month.  According to the NAR,  these factors have pushed up mortgage payments by 28 percent from February of last year.

 

Mortgage Companies Expecting Leaner Year in 2022

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The year 2022 promises to be a leaner year from mortgage companies. The mortgage industry rebounded in 2020 and 2021, propelled by rock-bottom interest rates and consumer demand. In 2022, things are changing. Mortgage rates increased to a level not seen since December 2018. The average 30-year-loan increased from 4.42 percent last week to 4.67 percent on Thursday. Rates have increased more than a percentage point and a half since the new year.  Fewer consumers in the refinance pool and the limited housing inventory are contributing to the rate increase.