Metro Detroit housing market strong but slowing

The housing market slowdown continued this summer in metro Detroit as sale prices dipped in July, according to a national measure, even as year-over-year prices remained among historic highs.

The S&P Case-Shiller Home Price Index, which tracks sales prices for homes sold in a month as compared to their last sale, showed metro Detroit sales were 11.4 percent higher in July than they were the year before, even as they were 0.1 percent lower than they had been in June. Nationally, prices were 15.8 percent higher; Tampa and Miami saw the largest gains, at 31.8 percent and 31.7 percent, respectively, but even they were moderating.

Higher interest rates are the cause of the deceleration, said Craig Lazzara, the managing director of S&P Dow Jones Indices, and Detroit’s shift is in line with much of the rest of the country. Lazzara said the region’s peak was in March, when prices showed a 15.5 percent year-over-year increase; the national March peak was 20.7 percent.

It’s likely the trend will continue, Lazzara said, but the slowdown is “not at all the same thing” as value drops that occurred in the Great Recession. Over the past two years, he said, prices are roughly a third higher, and now those gains are leveling off.

“When mortgage rates are 6 percent, buyers are in a different position than when mortgage rates are 2 percent,” he said. “It’s a rare one that did not decelerate.”

Steve Katsaros, a managing broker with Keller Williams Metro in Royal Oak, said the market is in the middle of a shift, from sellers to buyers. Turnkey properties in cities like Ferndale and Berkley still sell quickly and can have multiple offers, he said. But there are an increasing amount of price reductions, he said, and people’s buying power has changed.

“The brakes are pumping and interest rates are the affecting factor,” he said. “It was a nice ride, but the curve is heading downward. It’s nothing to be scared about.”

Katsaros predicted the next few months would “be a little bumpy” and lead some real estate professionals to leave the market. But he said that would mean more opportunities for others.

“Everything’s cyclical and how you ride the ride around the circle is key,” he said. “We might see more investors coming out of the woodwork now.”