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Rising Mortgage Rates Continue to Cool Housing Market

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According to a report by RE/MAX of Southeastern Michigan, metro Detroit’s home sales were down 20% in September when compared to the previous year. This year’s rising mortgage rates have slowed the home-buying craze that started in the summer of 2020. The average 30-year mortgage rate was 6.66% last week. It was just under 3% a year ago. The average home sale price over the four-county region (Wayne, Oakland, Macomb and Livingston) was 2% higher than a year ago. The slowing market appears to be normalizing things, with buyers making fewer concessions than in the previous year.

Cookie-Cutter Duplexes Could be Making a Comeback

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Remember pattern book or catalog homes? Returning to classic home patterns could increase the number of multi-family units across the state, potentially adding new housing and more density while new single-family construction slows down. The Michigan Municipal League is proposing pattern-book homes that take one back to the days of the catalog homes that were built across metro Detroit a 100 years ago. Pattern-book homes include blueprints for duplexes, triplexes and quads, creating lower-cost housing units in neighborhoods. According to the Michigan Municipal League’s program manager, pattern-book homes could fill the housing option gap. T

 

 

Detroit’s Satellite Suburbs Boom With New Home Construction

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Outer-ring suburbs are booming with new residential construction and newly paved roads despite the rising interest rates that are causing the resale home market to slow. According to census data, more than 3,000 new single-family homes were ok’d to be built from January to July of 2022. New construction in satellite suburbs of larger cities is a national trend. Rising interest rates have had an effect on the new-home market. New-home permits are down 10 to 15 percent from last year, but the demand isn’t gone. Lower lumber prices and the continued high demand for housing have helped builders.

 

 

 

 

Apartment Construction Gets A Boost Due To Mortgage Rates

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New construction of multifamily properties jumped 28 percent in August. bringing the market’s multifamily segment to its highest level since 1986. The jump is due to rising mortgage rates. Single-family home construction also increased slightly in August after a two-year low. Borrowing costs have doubled since late 2020 due to interest-rate hikes designed to tame high inflation. Last week, the average rate on a 30-year fixed mortgage surpassed 6 percent. The continued low apartment vacancy rates and low single-family inventory have given multifamily construction a boost.

 

Homeownership On The Rise In Detroit

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For the first time in a decade, the majority of Detroit residents are home owners, according to new Census data. Data from the American Community Survey shows a large increase in the number of vacant units in the city. Detroit’s homeownership peak was in 1970 when 60 percent of the city’s residents were homeowners. Thirty years later, that figure had fallen to 55 percent. Foreclosures and population loss impacted 2012 data, dropping the data to 49.9 percent. By 2014, homeownership dropped again to 46.3 percent of residents. Increasing home ownership has been one of Mayor Mike Duggan’s goals since taking office.

 

Southeast Michigan’s Housing Market Is Stabilizing

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Southeast Michigan’s housing market is becoming more stable. The number of buyers is decreasing due to growing interest rates and high home prices. Sales of homes in southeast Michigan in July were down by almost 20 percent from July of last year. Pending sales are declining rapidly, and properties are sitting longer on the market. According to the Realcomp report, the costs of buying a home is 80 percent more expensive now than three summers ago. Detroit is ahead of the rest of the region for growing housing prices. The median price of a home in Detroit has grown 38 percent since last year, having surpassed $100,000 for the first time in history.

 

Rocket Mortgage’s Issues Forecasted for Other Mortgage Lenders

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Rocket Mortgage’s struggles are evident in the earnings report released Thursday evening by Rocket Companies Inc., and they are not likely to be unique as other mortgage companies face challenges. According to Rocket CFO, Julie Booth, the rise in rates had a big impact on rate and term refinance demand. The 30-year fixed mortgage rate has experience its steepest and fasted rise in 50 years. While drastic, Rocket’s diminished earnings were not surprising. Henry Coffey, an analyst with Wedbush Securities, says the same will most likely be true for United Wholesale Mortgage and Home Point Financial when they report earnings next Tuesday and Thursday. Detroit’s Rocket Mortgage is the nation’s largest mortgage lender, generating a record $351 billion in closed loan volume in 2021.

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.

 

 

Median Home Prices Reach New Heights in Detroit

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Detroit’s median sales price for a home topped $100,000 in June. According to the CEO of Realcomp, it’s the first time values have been that high, and it’s an important benchmark. The median sales price of $100,250 in Detroit is based on June sales figures. Wayne, Macomb and Oakland county values have also reached new heights with increases ranging from 10.1 to 17.6 percent increases. While the increases benefit homeowners, it leaves many first-time buyers grasping at straws. Inflation, high demand for housing, and the scarcity of new construction have contributed to the issue.

 

Rising Mortgage Rates Cool Detroit’s Housing Market

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Rising mortgage rats have calmed metro Detroit’s housing market this summer. Inventory continues to be tight and is inhibiting a more “normal” market. According to agents, many sellers are still getting multiple offers and selling above asking price, buyers have a bit more leverage can sometimes knock a listing’s price down a bit. There has been a slight increase in the number of listings, but the number is still lower than what is needed. Bidding wars still occur, but are happening at somewhat lower prices than before.  Increasing mortgage rates are impacting buyer’s budgets. Last year, a 30-year, fixed mortgage was 2.9%. Last week the average was 5.7%. That adds more than $300 to monthly mortgage payments.