Southeast Michigan Housing Report June 2019
Buyers Want Move-in-Ready Homes
After years of watching made-up “shows” on HGTV, everyone becomes a “Real Estate Expert”. Passing through a major recession and with all the information and misinformation that’s available online, buyers’ interests and expectations have changed. To maximize their profit, sellers need to understand that the hot buttons which motivated them when they bought may not be the same as what today’s buyers are looking for and expect.
Past
In the late ‘90s and pre-recession 2000s, financial speculation often played a substantial role in buyer decisions. Buyers wanted the biggest home they could afford in a nice neighborhood. Ironically, the demand for fixeruppers was so high that buyers sometimes paid a premium for homes that needed work because of the perception that those properties provided the greatest sweat equity potential.
Present
While homes will always be thought of as an investment, today’s buyers are more interested in their homes being a base from which they can enjoy their busy/fun lifestyle after long days at work. The last thing they want is to come home to a property that needs work.
Today’s Housing Stock is Tired
The majority of available listings need work. Homeowners stopped investing in new kitchens and baths during the recession. Homes that needed updates 15 or 20 years ago need them even more today. Many of the roofs, windows, driveways, and furnaces in today’s listings hit retirement age yearsago. The market is flooded with homes that need updating at a time when buyers are not interested in buying someone else’s unresolved problems.
Baby-boomers and their parents had home workshops, toolboxes and time. Remember pegboards with outlined tools? They often felt a sense of accomplishment when they had a chance to use their stuff. The priorities of today’s buyers are different. Instead of tools and time, today’s buyershave smartphones for figuring out what needs to be done and who can do it best. They have busier lives. They have no interest nor time to “tinker” and do the projects that a seller never got around to.
Financing Limitations
Pre-recession home-equity loans were easily available and a popular way to finance updates. Post-recession, equity loans are harder to come by. Most buyers don’t have the cash or equity needed to finance improvement projects.
There are two primary reasons that affordable movein- ready homes are so popular and sell for so much. First, buyers don’t want the hassle of having to get the work done. Second, the cost of improvements previously completed by sellers is rolled into the price and financed through the buyer’s new mortgage.
To maximize profits, sellers need to understand that there is a shortage of move-in-ready listings. The shortage is even more extreme with entry-level properties. Move-in-ready homes are what buyers want. They sell quickly and buyers are willing to pay a premium for them.
This article is from the June 2019 Housing Report. To get more in-depth info about the Southeast Michigan housing market, Download the full report (PDF).