2007 Compared to 2006

The first four months of 2007 are following the same pattern as the last four of 2006. The market is still settling downward, but thankfully at a slower pace than 2006, which is on target for what we had expected. We actually are in the enviable position to have a relatively strong market compared to much of the country, were many markets are seeing the number of homes sold month over month declining over 20%. While the number of homes sold is off only about 5%, home values are off 10% causing a volume drop in excess of 15%. We feel that the decline in the number of homes sold will bottom out this year, with home values lagging behind, continuing to decline through 2008. What Michigan is going through is different than the real estate cold the rest of the country is experiencing. For Michigan, this is a core shift in how our economy functions, much like what the Northeast went through in the 90’s. The recovery time for this type of adjustment is slow and steady, typically covering a 5-6 year period. We are already approaching the third year of that change and are therefore moving towards the upward swing of the cycle.

What we know is that an “average” home is not likely to sell in a reasonable period of time. Since there are many homes selling in weeks not months, homes that are selling quickly have a well above average presentation mix of price/condition/incentives.