We’ve just completed the first quarter of the year, and the statistics for Ann Arbor real estate are pointing to several interesting trends. Now more than ever, everyone is asking, “What’s going on with the Washtenaw County real estate market?” The answer is not as short as the question.

In summary, my answer is that real estate values continue to dip in our market, however, there are now signs that homes may not depreciate as much as they did in 2006 and 2007. As real estate inventory comes down and sales pick up, we should look forward to a leveling of prices in the near future.

Keep in mind that the pricing of real estate is all about supply and demand, so we need to watch both of these to see what direction the market is headed.

On the supply side:

The residential listing inventory that came to the market in the Ann Arbor school district during the 1st quarter has decreased by 24% when compared to last year. In the first quarter of 2007, 860 residential homes came to the market, versus 653 in 2008. This is helping to bring down the inventory. The current listing inventory at the end of March 2008 was 16% below what it was last year.

The condominiums listing inventory that came to the market in the Ann Arbor school district during the 1st quarter has decreased by 32% when compared to last year. In the first quarter of 2007, 627 condominiums were listed, with 7.8% (49) being rentals versus 455. In 2008, with 14% (64) being rentals. The current listing inventory at the end of March 2008 was 18% below what it was last year.

On the demand side:,

Residential sales in the Ann Arbor school district decreased by 17% when compared to last year. In the first quarter of 2007, there were 189 residential closings in Ann Arbor, versus 157 in 2008.

Condominiums Sales in the Ann Arbor school district decreased by 18.5% when compared to last year. In the first quarter of 2007, there were 109 closings of which 11% (12) were rentals, versus 120 in 2008, with 34% (41) being rentals.

By taking both supply and demand into consideration, you’ll notice that sales went down, however the current available inventory decreased by the same amount, which will prevent a build up on inventory. The exciting trend is that new listings to the market have decreased by 24% for residential and 32% for condominiums. Should this trend continue, we should begin to see a decrease in inventory, a slow down in depreciation and hopefully stabilization. However, there are two factors that could put a cloud over these trends, and that is continued job loss and the tightening of mortgage lending. As we head into the spring, I will continue to watch those trends.

As we head in the spring, I am cautiously optimistic that we are near or at the bottom. Jobs are predicted to increase in early 2009, and the mortgage industry should hopefully get on track some time this summer. I can’t stress enough how this is an excellent time to buy a home, as prices are at their lowest point in years, interest rates are still historically low, and I do believe that we are at or near the bottom of the market.

At the Bouma Group, we track every school district in Washtenaw County in $50,000 increments, so should you be interested in the above trends in your price niche, feel free to contact us at 734-761-9666.