Appraiser proudly appraising Washtenaw County since 1989 (and active in RE community since 1984)

Musings, market trends, general blog


What is happening in the Ann Arbor market, and how does our appreciation compare with what shows in National Media? We have all been hearing about how robust the market is, and how there is a significant shortage of inventory, but in reality, how is it really from the numbers perspective?

Shown below are two images of data, one is the chart of a monthly comparison (run as one years worth of data at a time) for the entire Ann Arbor school district using only sales shown in the Ann Arbor board MLS in order to eliminate duplicate listings but retains foreclosures and short sales. The other is the same data shown as a graph, which is a good visual of how the market has been faring over this close to three year period.

What does this tell me by looking at the various columns? I am seeing an increasing number of sales, as well as increasing prices and increasing price per square foot. If you take a look at 2011 sales compared to 2012, and then to the last month of 2013 (since we haven't made it to 2014 yet) the median price has risen from $240,000 to $245,000 and now to $280,000. That means that there was only a change of 2.08% in 2012, but from the beginning of this year to present, the change is 14.29% for this macro data. Does this mirror the market as a whole? Where have the largest price increases occurred? Price per square foot shows the largest increase being in the period of July 2013, followed by the most recent period, which does seem counter intuitive to the contract-to-listing ratio shown below, which has been shrinking. 

Inventory levels are showing to be pretty low, with only 263 active listings available when over the course of the last year there have been 1140 sales (95 sales a month on average meaning the 263 active listings should be absorbed into the market within a three-month period if sales continue at the same level). This low inventory does appear to be driving prices upward still, but the number that are under contract does appear to be declining. Not unexpected given winter is upon us. 


Ever wonder what is happening in the market before it starts to show up in the pricing trends? Instead of relying on closed sales data, look at what is going on in the "contract-to-listing" ratio of a given area or market segment. This particular ratio looks at a market, say the entire Ann Arbor school district, as a snapshot in time. All current and under contract listings are taken together for the total number of properties exposed through the multiple listing system (MLS) and the number of listings that are showing under contract is divided by the total number available. This percentage shows the relative market activity in that area. Watching the fluctuations in this number will indicate market direction before the closings occur. 

Take the following chart for example. This is the percentage of sales found in the local MLS within the Ann Arbor school district under contract at any given time. Notice how the peaks in percentage are in the early summer months, starting to drop around July both of these years? This is an indication that the markets start to heat up normally in the early spring/late winter, and cool before Labor Day. Of course there is variability and this is just a sampling of an entire market. On an appraisal I look for both the macro market (such as the school district) and the micro market which consists of the generally competing houses.