Metro Detroit housing surge

Metro Detroit’s Real Estate Market Surges Until Fall

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Metro Detroit’s current real estate market surge will most likely continue into the fall. Homes continue to sell within a few days, frustrating potential buyers who can’t even schedule a showing. Farmington Hills-based Realcomp recorded the highest median sale price for the month of March in 18 years at $210,000. In the past, buyers desired turn-key ready properties, but in the current market, they’re considering homes that need work or could even be demolished and rebuilt because of low inventory. This trend is being seen nationally, too.

Supply Chain Drives Up Home Prices

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According to home builders, materials cost increases are driving new construction home prices up, as much as 14%. Lumber price spikes have been dramatic due to mills closing the Pacific northwest and the southeast United States,  tariffs imposed on Canadian softwood lumber, and increased demand for new housing. Builders are not making additional profit; the increase is entirely due to rising materials costs. That, in turn, has caused the price of an average new single-family home to increase by $24,386.

Dead Malls Repurposed In Surprising Ways

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Dead malls are the ghost of retail pasts, but they’re being repurposed in creative ways. Amazon is using old mall space as new fulfillment centers. One dead mall has become the new headquarters for Fortnite creator Epic Games. To survive, malls are bringing in non-traditional tenants like bowling alleys, gyms, and grocery stores. Turnover and vacancy are high in mall real estate right now.

Upward Retail Trend Predicted to be Short-Lived

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Even with retail businesses taking advantage of cheaper rents and ample space, UBS predicts the upward trend will be short-lived. They estimate that 80,000 retail stores across the country will be closed by 2026.  Online shopping had contributed to the downturn for retail storefronts pre-pandemic. Stimulus dollars and consumers’ focus shifting to goods over services has recently bolstered retail, with store openings outpacing store closings for the first time in years. UBS predicts that retailers that sell office supplies, sporting goods, clothing and accessories will be the hardest hit.

Texas Courts Begin to Allow Evictions

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Texas courts are indicating that they will not enforce a federal order that would stop evictions during the coronavirus pandemic. While Congress has approved billions of dollars to help people pay their rent to avoid eviction, many of those tenants have yet to receive any of that money. The Texas Supreme Court did not extend its emergency order, and the Texas Justice Court Training Center issued guidance essentially telling judges it’s not their job to enforce the CDC’s order. Legal aid attorneys are gravely concerned about the tens of thousands (and possibly more) who will be left homeless.

Mall Vacancies Set New Record

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The vacancy rate for regional malls in the United States hit a record 11.4% in the first quarter of 2021 from 10.5% in the fourth quarter of 2020, according to Moody’s Analytics’ commercial real estate division. Shopping traffic to enclosed malls has been steadily decreasing for years due to Americans spending more online. In it’s latest quarterly report, Moody’s finds that other commercial real estate sectors are showing better progress, retail is still in crisis.

Home Appraisal Gap Causing Trouble For Home Buyers

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With the quick turn around in the home market, buyers are entering into bidding wars to secure their dream homes. Homes are selling above appraisal values creating a gap for buyers to make up. Many are tapping into retirement accounts or accepting loans from family in order to purchase their homes. With many sellers waiting in line to purchase one property, buyers must be prepared to come to the table with a substantial amount of money.

Home Price Index Jumps

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According to the S&P Corelogic Case-Shiller National Home Price Index, home prices continued their acceleration in January. They jumped 11.2% year over year, the biggest gain in 15 years. Month over month, prices rose in 19 of the 20 cities tracked. Year over year, prices rose in all 20. Detroit data was included in January’s indices for the first time in a year due to interruptions in data collection due to Covid-19 shutdowns.

Mortgage Servicers Warned to Prepare for Disaster

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The Consumer Financial Protection Bureau warns that mortgage servicers should begin reaching out to affected home owners now in order to best advise them on ways they can modify their mortgage loans. The CFPB is concerned about mortgage firms that may cause harm to struggling families and homeowners. A separate compliance bulletin said that companies that are unable to successfully manage loss mitigation can expect the bureau to take enforcement or supervisory action. According to the bureau, as of January, over 2 million borrowers have postponed their payments or failed to make them for at least three months.

J.C. Penney Updates Store Closure List

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J.C. Penney has updated its store closure list. The company was one of the largest retailers to apply for Chapter 11 bankruptcy protection during the pandemic. It announced that it was closing 242 of its stores in May 2020. Since then, the retailer has delayed the closing of 15 stores that were scheduled to be shuttered in March 2021, extending the closing date into May. In doing so, the company added 18 more stores to its closure list.