As we head into May, I’m beginning to notice a very positive trend in the Ann Arbor Real Estate market – namely, the Activity Index is increasing. This is a very important trend to watch, as it’s telling me what’s occurring in the market “right now”. What is the Activity Index you may ask? Usually, you’ll hear Realtors and Economists talk about the absorption rate, average sales price, and level of inventory when discussing the market. The Activity Index is the canary in the coal mine. It’s a good indicator of what’s coming down the road.

To determine the Activity Index, you simply divide the number of Ann Arbor homes under contract, by the total number of active listings (including the homes under contract). Since most of the homes went under contract within the last 30 days, the Activity Index let’s me know how active the market is. An Activity Index of less than 15% indicates a buyer’s market, between 15-20% indicates a balanced market, and greater than 20% indicates a seller’s market.

If you look at the above graph you’ll notice that based on the months supply of housing, every price point is in a buyer’s market. However, if you look at the Activity Index, you’ll notice that 4 of the price points – namely those between $100-500K are showing the signs of a Seller’s Market. 3 price points show a balanced market, and only 2 price points show the signs of a buyer’s market. This tells me that Ann Arbor home buying activity is much higher today than it’s been for some time. If this trend continues, we’ll see the months supply of housing also shrink, and with inventory shrinking, we’ll be heading into a seller’s market very quickly.

What does this mean to you as an Ann Arbor home buyer? With rates running in the 4.5% range, and prices at their lowest level in close to 10 years, PLUS with the $8,000 tax credit for first time home buyers, there will never be a better time to buy a home then now. As inventory continues to shrink and the majority of the price points turn into balanced markets and even seller’s markets, the opportunities for a “bargain” will become fewer and fewer. Don’t miss your chance to get a great deal. Even if prices fall another 10% in the next year, by virtue of obtaining a 4.5% mortgage, you will more than make up for that. Keep in mind that for every 1% increase in the interest rates, you lose 10% in purchasing power.

If you’d like to talk more about the Activity Index in Ann Arbor or the surrounding Washtenaw County area, contact me – I’d love to discuss it with you!

Until Next Time-

Martin