Metro Detroit's housing market kept its shape last month as low inventory and rising demand continue to push sales prices higher, according to new data released this week by Farmington Hills-based Realcomp Ltd. II.
The median sale price in November jumped 5.5 percent year over year to $169,000, a $9,000 gain. There were 4,888 homes sold, up 3.5 percent from the year prior, but the number of homes listed was down nearly 30 percent.
Homes are selling about a week faster as well, with the average number of days on the market falling to 33 days from 39 days.
Frank Tarala, president of Realcomp's board of governors, said buyers are forced to pay higher with a scarcity in home listings, which has been the trend lately because of the thousands of homes that weren't built for about five years because of the recession. He doesn't see the trend slowing down.
"We don't see where we would see a decline because it is inventory based," he said. "There's so few homes available. There is no source that we see of increase in our inventory coming."
He said housing inventory is down 27 percent from last year's inventory, which was already critically low.
Home sales took an expected decline between last October and November, when the market tends to slow in the winter season, with more than 550 fewer closings and a median sales price that slid from $175,500 to $169,000, which Tarala said is normal. Sales typically heat up in the spring.
"When we roll into the New Year, we should see that same kind of spike we've seen in the last five years in the spring market," he said. "There were only two markets with a drop in sales and price. The market times slowly keep declining. That correlates with the decline in our inventory. No market is immune from the good news in real estate today."
With tax reform legislation making its way through Washington, real estate agents are standing by to see how scrapping the mortgage interest deduction could affect the market. The White House said the legislation could lower home prices by up to 4 percent and boost sales, but the National Association of Realtors worries it could stymie demand.
In a news release, the Realtor group said doubling the standard deduction weakens the incentive to itemize mortgage interest. Tarala said buyers may feel the change in the short term, but demand will still be there in the long run.
"Eliminating the interest deduction certainly would take away some of the attractiveness in real estate as an investment, but people will still need a place to live," he said. "They're not going to say I'm not going to own a house if they take this away. They are just going to have to eat the cost."
BY THE NUMBERS