Dear friends, family, and clients,
In this month’s comprehensive overview, we explore significant trends impacting Macomb, Oakland, and St. Clair counties. The focus on decreasing affordability, rising foreclosures, inflation, interest rate hikes, and slowing housing starts provides a clear picture of the current market dynamics.
Decreasing Affordability Raises Concerns Affordability continues to decline across our region, posing significant challenges for first-time buyers and those looking to upsize. In Oakland County, we’ve seen home prices increase by 6% over the past year, a rate that significantly outstrips local income growth. Macomb and St. Clair counties are experiencing similar trends, with median home prices rising, making it increasingly difficult for many to enter the housing market.
Foreclosure Rates on the Upswing The economic pressures of the past year have led to an uptick in foreclosures. Macomb County reported a 5% increase in foreclosures this quarter, a reflection of the broader economic strains affecting homeowners. This trend may increase available inventory slightly, but it also signals larger economic issues that could affect market stability.
Navigating Inflation and Interest Rate Hikes Inflation has remained persistently high, impacting all sectors of the economy, including real estate. The increase in general price levels has led to higher construction costs, which in turn slows down new developments. Concurrently, the Federal Reserve’s response to inflation has been to raise interest rates, making mortgages more expensive. This one-two punch is complicating both buying and selling in real estate, as higher rates limit borrowing capacity and cool demand.
lowing Housing Starts Signal Supply Challenges New housing starts have decreased by 12% across the region this year, affected by both increased material costs and a shortage of skilled labor. This slowdown is most pronounced in St. Clair County, where new residential projects have reached a five-year low. The decline in housing starts is contributing to a tighter housing market, with fewer new homes available to meet the demand.
Market Implications The convergence of these factors—decreasing affordability, rising foreclosures, inflation, higher interest rates, and fewer new homes—suggests a cooling period ahead for our local market. Buyers may find themselves with fewer options and higher prices, while sellers might see a slowing in the rapid price appreciation we’ve experienced in recent years.
Strategies for Navigating Today’s Market For sellers- consider the timing of your sale to maximize returns before any significant market cooldown. For buyers- it’s crucial to assess your financial situation thoroughly—considering current mortgage rates and the total cost of homeownership is very important.
Connect with us!
Alex: (586) 201-4704
Brett: (586) 295-9550
[email protected]
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- Brett Knybel & Alex Klott