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Inflation Impact – Washtenaw

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Summer is in full swing in Michigan with travel and with tourism back in force, the housing market continues to produce its own heat with strong buyer competition despite the increasing inventory—up 21% in the past month. Sellers need not worry about the growing supply as homes are still selling quickly with less than a month’s supply of inventory across all price ranges. The increase in inventory is providing a stabilizing balance that benefits all by providing buyers with options that have been lacking though the past several months.

Because of extreme market shifts last year with the COVID shutdown, we’ve been including current market activity comparisons to 2019 as well as 2020. It’s remarkable that although inventory levels are down 59% compared to 2019, YTD closed sales are up 38%, which is quite the jump. Without available listing inventory, there can be no sales. Available listing had been declining for 10 straight months before leveling in May and slowly starting to rise. Expect gradual inventory increases into the fourth quarter.

Coming out of last year’s lockdowns, few expected such an aggressive market with extreme buyer competition, multiple offers, and rising prices. While experts have been expecting a cool-down, and there had been temporary signs of one in June, the market continues to rally. Weekly new pendings continuing to run with last June and July’s big rebound numbers and outpace 2019’s “typical year” numbers. The YOY rise in average sale price is higher than it’s been in 30 years.

Rising home values, combined with the lack of affordable housing and overall inflation, are pushing home prices out of reach for many buyers. Inflation is caused by rising prices of our everyday goods and services such as food and gas. The Consumer Price Index is up 5.4%, and the average sale price of a Washtenaw County home rose 15% in the past year. That combination has been pushing home purchases out of reach for many first-time and entry-level buyers. Recent increases in inventory provide some relief, but first-time and entry-level buyers should look to lock in on their purchases sooner rather than later the combination of inflation and rising prices may be moving homes affordable homes out of reach.

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