Real estate remains strong despite signs of slowing economy
First, the (sort of) bad news: the economy is slowing slightly from last year.
Now the good news: It shouldn’t affect the housing market in the Birmingham/Bloomfield area too negatively.
“While prices and activity are still subject to ups-and-downs like the rest of southeastern Michigan,” says Michael Stoskopf, CEO of the Home Builders Association of Southeast Michigan, “the Birmingham/Bloomfield area typically doesn’t fall as far and typically recovers sooner as a micro-market within the region.”
This is largely because of the old real estate adage “location, location, location,” he adds.
The Birmingham/Bloomfield area contains mostly well-established neighborhoods that leave little available space for new construction. This drives up the price of the available lots to a premium, he says.
When you combine this with a highly coveted downtown in Birmingham, access to high-quality schools and proximity to the Woodward Corridor, notes Stoskopf, it “results in a highly desirable residential area for families and seniors alike.”
Still, it’s important to keep an eye on the market conditions, whether you’re looking to buy, sell or keep your home.
“Overall, the economy is slowing down and that’s causing a little bit of concern for people on their house hunt,” says Alan Garbacik, senior loan originator for Luxury Mortgage Corp. in Southfield. “Recently, we’ve seen interest rates come down. Now that we’re down to that level, we’re seeing more people be a little more comfortable.”
The small drop in interest rates is leading to what Garbacik calls a “small wave” in refinancing among homeowners in the Birmingham/Bloomfield area, primarily among those who have owned their homes for three years or less.
Despite a slowdown in the economy, home values have remained stable, and even the prospect of a full-on recession should not cause homeowners or home buyers to panic.
“Recessions are a normal thing, so if we go through a recession in the next year or two, we’re not going to see a big drop in house values,” says Garbacik.
Stoskopf is similarly optimistic about home values in Birmingham/Bloomfield, which he says have seen some of the highest appreciation in the region. While this is obviously a blessing to those looking to sell, he says the price appreciation has slowed, making it likely more homeowners will be looking to sell in the next year.
“That being said, buyers should remain prepared to bring well-reasoned offers as the Birmingham/Bloomfield market is typically highly competitive, again due to the relatively limited supply,” says Stoskopf.
His advice to those looking to buy a home in the area? First, get pre-approved for a mortgage loan, and be certain that if you’re interested in buying an existing home that you ask about getting some potential remodeling costs rolled into that mortgage. That may make you more flexible when choosing a home, and could potentially open up a lot more properties for purchase.
Sellers should first consider remodeling/repairing their homes to bring them up to date to pass inspection, says Stoskopf. “Next to be considered would be updating a kitchen or bathrooms. These two areas in a home can be the most glaring when they are out-of-date, thus making a buyer have to consider if they even have the budget to complete that remodel after the purchase.”
Ultimately, he says, whether buying or selling a home, working with a licensed real estate professional “is critical to making sure that the largest investment you may ever make is done correctly and safely.”
On the mortgage lending front, meanwhile, Garbacik is noticing that this year more clients seek out alternative mortgages rather than the standard qualifying types of loans. Mortgages that use investments as collateral or bank deposits as proof of income are increasingly popular, he says.
The reason is fairly simple. More small business owners and independent professionals have much of their money in investments and don’t wish to liquidate to buy a home or refinance, says Garbacik.
“Now we’re starting to approve these mortgages,” he adds. “I think that part of the market is going to become more and more prevalent, as we see interest rates rise over the next few years, because these products but they don’t fluctuate as much so when we see the conventional interest rate going up we’re going to see more of this.”
As for how to know the best time to buy a house or refinance an existing home, Garbacik offers similar advice as Stoskopf does: Consult a professional.
“If there’s anything about your mortgage that you look at and you’re uncomfortable with it, whatever it is, you should reach out to talk to a mortgage professional,” he says. “It could be me, it could be anyone, it doesn’t cost you a dime.”
And if there’s nothing they can do at that time, they’ll let you know that as well.
“There’s a lot of us mortgage lenders who will look at you and say, just stay where you are, you’re in a good spot with your mortgage rate, just stay the course, you guys are fine.”
For more information on the Home Builders Association of Southeast Michigan, visit www.builders.org
For more information on Luxury Mortgage Corp., call toll-free at (888) 379-0303 or visit www.luxurymortgage.com.