Home sales improve? Decline? Both are right
Realtors say numbers up, counties disagree
BY GRETA GUEST • FREE PRESS BUSINESS WRITER • JULY 13, 2008
Realtors have been reporting recently that metro Detroit home sales have moved
into positive territory, yet county government tallies indicate mostly that sales are
down compared with last year.
While somewhat confusing, both sets of data are accurate. They measure
different sales within different time frames and, for both buyers and
sellers, they are important gauges of market activity.
Figures from Realcomp, a multiple listing service based in Farmington
Hills, consist of closed sales reported by Realtors who subscribe to the
service. Sales are usually reported to Realcomp within five days of closing.
Home sales reported to county governments, on the other hand, are counts of
warranty deeds, which convey title to a property after closing and recording. The
time lag can be 30 to 90 days after the sale before a deed is recorded and counted
as a sale. Figured into the deeds report are properties transferred without the
help of a real estate agent such as bank and for-sale-by-owner transactions.
"The MLS data is recorded quicker. We are going to show it as a sale in June. The
county may show it as a sale in June, but it won't be recorded until July or
August," said Karen Kage, CEO of Realcomp. For consumers and their Realtors,
that means the MLS data will give them a faster indication of where prices are
headed in a particular neighborhood. The county numbers, on the other hand,
indicate longer-range selling and price trends for Realtors and their customers.
To show how the numbers can differ, for instance, compare March 2008 activity
in Wayne County. Realcomp reported 1,752 single-family and condo sales, which
was a rise of 17% from March 2007. Yet there were 2,694 warranty deeds
recorded in March 2008 in the county, a decline of 15% when compared with the
same month a year ago.
More data out there
Realcomp began releasing the home sales data to the public for several metro
Detroit counties in early 2006 after years of only allowing subscribers to see it.
"We made our decision in the last two years. It wasn't a matter of holding the
information so tightly; it was (that) I wanted the public to contact one of our
Realtors for that information," Kage said. "The media wanted to go to a source,
and we decided we wanted that source to be us. We felt we were in the best
position to provide reliable data."
As the southeast Michigan market has slumped, more people are hungry for
information about how it affects their neighborhoods and their largest single
investment, their house.
Metro Detroit has been hit by high unemployment and continued cutbacks by
Detroit's automakers. The area also led the nation last year in the rate of
foreclosures, which pushed up inventory and hurt home values.
Home prices in metro Detroit dropped 18% through April compared with a year
ago, according to the most recent S&P/Case-Shiller home price indices.
The housing slump and credit crunch have contributed to a slowdown in
consumer spending. Sales of new and existing homes along with home prices
have been on the decline for the past three years and a buyer's market exists in
much of Michigan.
Realcomp reported this week that June sales were up 13% in Livingston,
Macomb, Oakland and Wayne counties and parts of St. Clair. They rose 55% in
Detroit for the month, but sales in Oakland County fell by 2.7% for the month.
"The numbers are exactly what is reported. We don't do any adjusting. To see that
increase over last year is still very encouraging," Kage said. "The pending sales
are up considerably. Not all of those will close, but the majority will. Pending
sales are up 32% year over year."
Pending sales is another measure of the market and is a good indication of what
is to come. It represents signed purchase agreements, the key contract in a real
estate transaction.
Overpricing concerns
Louise O. Braun, a Clarkston real estate appraiser and expert witness in Oakland
County courts on property valuations, uses pending sales data from Realcomp for
her monthly newsletter read by attorneys and real estate brokers.
"I'm reporting pure contracts. Some of them fall apart and don't get recorded,"
Braun said. "What I feel obligated to report in this is what transactions were
signed."
Pending sales are the most timely gauge of what's happening in the market
because there is no lag in reporting.
Braun said the biggest drain on the local real estate market is property that is
overpriced and will not sell as it swells inventories.
"The biggest problem is not that the sales are down, it is that the listings are up,"
she said. "In Oakland County, when you double your amount of inventory from
2000 to 2008, but have relatively the same amount of sales it gives buyers the
impression they don't have to be in any hurry to make an offer without knowing a
lot out there is not competitively priced."
Metro Detroit had an 11.1-month supply of unsold homes at the end of March,
according to a report from Real Estate One in Southfield. A normal market is
considered a three- to six-month supply.
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