More people want to buy homes in Ann Arbor than want to sell them. The “inventory”—the number of homes offered for sale divided by the number being sold is at its lowest point in at least fifteen years. There were some points in the 2017 market when inventory was as tight as it is now if both single-family homes and condominiums are counted. But break out single-family homes for resale—excluding new construction or listings of homes “to be built”—and the numbers are almost shocking.
Only thirty-nine existing single-family homes were entered into the Ann Arbor Area Board of Realtors’ Multiple Listing Service in December. Of those, just eight were still available in mid-January. Of the sixty-two listed in January, all but fifteen were under contract by mid-February.
This has created a kind of gridlock. With so few buying options, even owners who want to change homes are being forced to stay in place—often instead taking advantage of record low interest rates to rehab and modify their current homes.
Some homeowners who might otherwise sell are waiting out the pandemic before letting potential buyers into their houses. Additionally, national studies show that the length of time people are staying in their homes has increased from about seven years to more than ten. Michigan’s tax-limiting Headlee Amendment is another reason to stay put: trading homes means once again paying uncapped taxes.
Meanwhile, demand is being fanned by people working from home during the pandemic. More people can now do their work from an increasing variety of places and are no longer locked into living near an office. Changing needs within the home are also driving demand as buyers look for better home offices, larger private areas, and usable outdoor environments. These changing needs, too, are complemented by an increase in purchasing power driven by low interest rates.
In some parts of the country this combination of demand and low inventory is ratcheting up home prices and offsetting the purchasing power gained by the low interest rates. But real estate is local. And both Ann Arbor mailing addresses and the AAPS district has seen slower appreciation than in past years.
The blue chart above, developed by statistics from the Ann Arbor MLS and tabulated by TrendGraphix, highlights the dearth of inventory—especially in single-family homes.
