Michigan's economy collapsed this spring amid the coronavirus pandemic as thousands of businesses closed and more than 1 million residents lost work and sought unemployment benefits.
Yet in contrast to what happened when the 2007-09 recession hit, metro Detroit home sale prices haven't crumbled so far, and are actually climbing higher. Prices could continue to rise — or at least stay stable — through early summer.
Real estate agents attribute the situation to many would-be sellers deciding to wait out the worst of the pandemic before listing their properties. Those decisions, together with Michigan's temporary restrictions on the real estate industry during late March and April, exacerbated the low inventory situation in the housing market that has persisted for several years.
Buyer demand has remained healthy so far because, despite rising unemployment, many people still have jobs and anticipate an easing to the economic crisis along with the virus crisis.
"I don't think there's a recession discount because the market has been tipped to sellers for a long time," said Maureen Francis, an associate broker with Coldwell Banker Weir Manuel in Birmingham and president of Michigan Realtors. "Buyers might think sellers are desperate and they can get 20% off the house, and they are finding that sellers aren't."
In addition, Michigan has yet to see any flood of foreclosed homes during this downturn, thanks to various pandemic-related mortgage forbearance and foreclosure moratorium programs, as well as the temporary federal boost to unemployment insurance that put the maximum Michigan benefit at $962 per week, which would equal a $50,000 salary at an annualized rate.
To be sure, the housing market's outlook could change this summer if job losses mount and other economic fallout from the pandemic gets worse.
For now, real estate agents report seeing many sellers get full asking price -- or better -- for their homes, and houses under $500,000 are often fielding multiple offers.
"It is not always the case that a recession means home prices are going down," said Mark Zawaideh, CEO of MARK Z Real Estate Experts. "If you look at three of the last five recessions, home prices have gone up."
Buyers and sellers had to rely almost entirely on photos and virtual showings of properties before Gov. Gretchen Whitmer on May 7 lifted her pandemic restrictions on the real estate industry. Since then, sales have picked up as in-person showings return — with new social-distancing rules — and more sellers decide to try listing homes.
In April, the number of metro Detroit home listings was down about 20% and sales dropped 50% from a year earlier, even as the median sales price for houses and condos jumped nearly 16% higher, according to the latest data from the Realcomp multiple-listing service.
The figures define metro Detroit as Wayne, Oakland, Macomb and Livingston counties and do not include private sales or for-sale-by-owner transactions.
Those in the lending industry say there has been only a modest tightening of requirements for mortgage approval, and borrowers who are still employed and have 630-plus credit scores should be OK.
However, those who enter forbearance on their current Fannie Mae- or Freddie Mac-backed mortgage may need to show a period of on-time payments before they qualify for a new mortgage.
There are new rules and recommended behaviors for viewing and showing homes, said Francis, the Michigan Realtors president.
Under the governor's executive order for the real estate industry, no more than four people can be present at one time during a home showing and open houses are not yet allowed.
Realtors also are encouraging would-be buyers to wear masks and gloves when touring properties. Sellers are asked to switch on all lights and leave open interior doors as well as cabinets, drapes and blinds.
Steven Bartley said his daughter and her husband recently closed on the $125,000 purchase of a four-bedroom house in the LaSalle Gardens area of Detroit. The property listed for $115,000 during the height of the pandemic and saw multiple offers from people who had never stepped inside.
"The sellers did portray it on their Zillow ad with some very nice photos, and the photos did a very good job," he said.
Bartley said his daughter and son-in-law relied entirely on the interior photos until just the day before the closing, when they finally did a walk-through. The photos proved fairly accurate representations, he said, and they had no unpleasant discoveries during the in-person tour.
Dr. Molly O'Shea Gallucci and her husband, Tony, are using high-definition 360-degree virtual tours to help sell their Bloomfield Hills house, which listed for $775,000 near the start of May.
They considered holding off on listing, but decided that there was little point in waiting because market demand appears strong and families typically like to settle into a new house well before the start of a new school year.
Gallucci said they have already moved out of the house, which alleviates virus concerns for themselves and interested buyers who proceed to in-person showings. Their house had a half-dozen physical showings by the middle of May.
"I didn't see any advantage to waiting," she said.
