Reflect on 2016 and look forward to 2017 with an insightful market commentary from Danberry Realtors CEO Lynn Fruth.
A Look Back at 2016
Our local housing market in many ways mirrored the nation’s economy—it managed slight gains over its performance in 2015 but no records were set. Consider where the industry was in 2008—2010. Any Realtor who was in business then is very pleased with a year like 2016 and would be happy to see a repeat in 2017.
The following are some observations from 2016. Danberry services a geographic market that runs from Catawba on the east and Wauseon on the west, Findlay on the south and the 3 closest counties in Southeast Michigan on the north. The statistics that I will share in Ohio are for all of Lucas County and northern Wood County, and in Michigan the statistics represent Monroe County.
Photo Credit: 26224 Seminary Drive, Perrysburg, OH 43551
In Ohio, our unit sales increased 3%, totaling 5,893, and our sales volume increased 10% with almost $825,000,000 in total sales volume reported in the regional MLS. Danberry once again beat the market, reporting a unit increase of 6.4% and an increase of over $58,000,000 in closed sales volume — an 11.1% increase. Danberry’s total unit sales in both states totaled 3,785 and our volume exceeded $580,000,000.
In Michigan, both unit and volume numbers declined, with sales falling by 12%, totaling 1,820. Additionally, the total sales volume was $261,429,859, a drop of 11%.
Most market observers agree that sales in 2016 could have been higher had more homeowners entered the market. Inventory levels were a challenge the entire year and the new listings reported in the Northwest Ohio MLS totaled 8,386, which was 4% less than the year before. Shortages were particularly felt in the Toledo suburbs, most often in the $150,000 to $300,000 range.
In Michigan, the new listing inventory levels remained almost identical in each of the last two years, with each year having around 2,740 listings.
Photo Credit: 5701 Anchor Hills Drive, Sylvania, OH 43560
Looking Forward to 2017
Less than 50 days into the new year, it would appear that there is much optimism in the business community, including the real estate brokerage business. With the election behind us and a new president in the White House, market watchers are beginning to get a sense of the potential impact that a Trump presidency will have on the economy and on housing. It should be noted that several factors impact both the economy and housing sales much more than the policies of any president. Nonetheless, the anticipation of increased job and wage growth that will result from reduced taxes and regulations are causes for optimism.
I have listened to a half dozen economists over the last few months and all are predicting an increase in mortgage rates, which should be no surprise. Rates bottomed out in 2016 at 3.5%, averaging close to 4% most of the year. We begin 2017 around 4.25% and rates are expected to increase, perhaps going as high as 5% on a 30-year fixed rate loan. Although this will result in slightly higher monthly mortgage payments, the impact on home sales should be negligible. In fact, in the short term, the fear of rising rates often result in an increase in purchases because interest rate fence-sitters literally get off the fence and buy a home.
Demographically, the millennials emerged in 2016 as the largest home buying group. This trend should continue for years to come, as student debt is paid down and many in this group get tired of living at home in their parents’ basement.
The recent surge in the stock markets should also help move more upper-end buyers into an increase in purchases in that market segment. The “wealth effect” has proven in the past to lead to more upper-end sales.
I would conclude by saying that we live in a fragile world. If you want to worry about the future, you can find plenty of information to support your fears. If you believe that it will be a record-breaking year with tons of positive things happening, you likewise can find plenty of support for your optimism. My hunch is that 2017 will be very similar to 2016, but hopefully with much less political drama.