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					Detroit, Michigan – Real Estate Market Trends




                                           Created by: Brent Saxon
                                Appraisal Management Service, Inc.
                                                        10/28/2008
                                     DETROIT FACTS


   Detroit is the largest city in the state of Michigan, the 11th largest city in the United States and is part of
    the eighth largest metropolitan area. Detroit is located in Wayne County.
NATIONAL AND REGIONAL MEDIAN AND MEAN SALE
      PRICES FOR THE YEARS 2005 - 2007




        The Midwest Region has seen a slight decline over the past three years.
2002 – 2007 AVG SALE PRICE AND TOTAL NUMBER OF
         SALES FOR THE DETROIT MARKET

   Over the indicated time period, the
 number of total homes sales increased
    substantially through 2004, then
  tapered off through 2007. While the
     average sale price continued to
           decline after 2003.
         *Data from Michigan Board of Realtors




                                                           Change -          Change -
                                                 YTD                Avg Sale
                                                           Previous          Previous
                                                 Sales               Price
                                                             Year              Year
                                  2002             3,790     N/A     $84,258   N/A
                                  2003             4,542     19.84%  $97,847   16.13%
                                  2004             6,304     38.79%  $73,299 -25.09%
                                  2005             6,816      8.12%  $73,307    0.01%
                                  2006             7,222      6.00%  $61,444 -11.74%
                                  2007             7,765      7.52%  $37,955 -38.23%
                                                                Avg Sale Price
   Median Sales Price of Existing Single-Family Homes

                                 Median Sales Price of Existing SFR

                  $250,000
                  $200,000
     Sale Price




                  $150,000
                  $100,000
                   $50,000
                       $0
                                2005     2006        2007      2007 -      2007 -     2007 -       2008 -     2008 -
                                                                2Q          3Q         4Q           1Q         2Q
                                                            Year (and Quarter)
                                            Nation     Midwes t         Detroit MSA




                       2005       2006          2007        2007 - 2Q     2007 - 3Q    2007 - 4Q     2008 - 1Q    2008 - 2Q


Nation               $219,000    $221,900      $217,900     $223,500      $220,300     $205,700       $196,100    $206,500


Midwest              $168,300    $164,800      $161,400     $162,900      $169,200     $156,000       $142,100    $161,500

Detroit MSA          $163,800    $151,700      $140,300     $144,600      $142,900     $133,300         N/A            N/A
             HOUSING MARKET IN THE EARLY 2000’s
   In Detroit-Ann Arbor, sales activity through June was down 4 percent from
    the high levels of 2000, but the median sales price increased 8 percent to
    $158,000. Period ending 2Q 2001

   The Michigan Association of REALTORS® also reported existing home sales
    were strong through June 2002. Sales activity in Detroit and Grand Rapids
    increased by 5 percent and 7 percent, respectively. Period ending 2Q 2002

   Demand for new homes increased and permit activity in the Detroit-Ann
    Arbor metropolitan area through June was up 4 percent to 10,150 new
    homes. Period ending 2Q 2002

   The Southeast Michigan Builders Industry Association reports that
    residential construction activity in the Detroit-Ann Arbor area was robust
    during the first 6 months of 2003 because of low mortgage interest rates.
    Permits were issued for approximately 11,350 new homes through June
    2003 compared with 11,200 units in the first 6 months of 2002. Period
    ending 2Q 2003

   The market appeared to be relatively strong from 2000 – 2003 with
    increased demand for new homes and the supply to accommodate. Prices
    held steady with some slight increases over the four year period while
    unemployment increased near the end of 2003
     UNEMPLOYMENT BEGINS AFFECTING THE
                 MARKET
   In the first 5 months of 2004, existing
    home sales increased 10% from the same
    period in 2003

   2004 - Year to date sales in Michigan
    increased to be 3.4% above the same
    period in 2003 and the average sales price
    increased 3.5% to $149,200

   4th quarter of 2003, unemployment rates
    were at 7.0% in Michigan

   In 2004, Michigan suffered a loss of
    33,000 jobs, or 1 percent

   4th quarter of 2004, unemployment rates
    were still high at 6.8% in Michigan
ABOVE: Chart depicting Average Sale Prices From 2002- 2007
BELOW: Chart illustrating the decline in Single Family Building Permits From 2000- 2007
Notice the decline in both charts began in Mid-2003



                                  SINGLE FAMILY BUILDING PERMITS

      600
      400
      200
        0
               2000        2001        2002        2003        2004         2005          2006   2007
           FRAUD, FORECLOSURE & UNEMPLOYMENT
   Existing home sales in 2005 increased by 4% in the
    Detroit area and the median sale price remained
    $164,000

   Through the 2nd Quarter of 2006, existing home sales
    in Michigan continued a 9 month decline, down 8%,
    due to the slow economy

   The Michigan Association of REALTORS® reported
    that sales activity in the fourth quarter of 2006
    continued an 18-month decline because of the slow
    economy. Existing home sales in the state were down
    13 percent for the year compared with sales in 2005.

   During 12 months prior to the end 2nd Quarter of
    2006, Michigan lost another 8,000 jobs leaving an
    unemployment rate of 6.3%

   By the end of 2006, Michigan’s employment
    decreased by 20,000 jobs. A further indication that
    the Michigan economy has not recovered from the
    economic slowdown of the early 2000’s

   By the end of 2005, building permits for single-
    family homes decreased by 9% in Michigan and
    Minnesota
    FRAUD, FORECLOSURE & UNEMPLOYMENT
   During the first quarter of 2007, the
    2.5-percent foreclosure rate recorded
    in the region ranked first in the
    country and was above the national
    rate of 1.2 percent, according to the
    Mortgage Bankers Association.

   In Michigan, tighter lending practices
    and continued job losses in 2007
    resulted in declines in existing home
    sales and average prices throughout
    the state. The number of homes sold
    declined 6 percent to 101,000 from
    the number sold in 2006, and the
    average price declined 6 percent to
    $142,400. Of Michigan’s 25 local
    boards of REALTORS,® 20 reported
    declines in existing home sales and
    average prices in 2007. The largest
    decreases occurred in the Detroit
    metropolitan area, where 2,300 fewer
    units were sold and the average price
    declined by 7 percent to $153,000.
     FRAUD, FORECLOSURE & UNEMPLOYMENT
 By June 2007, Michigan had lost
  another 54,000 jobs and
  unemployment rate increased to 7.2%

 By the end of 2007, Michigan registered
  a 1.4-percent decrease, or a loss of
  60,000 jobs, with more than half the
  losses occurring in the Detroit
  metropolitan area.

   Building permits declined 22% in
    Michigan due to a 35% decline in
    Detroit and 30% decline in Grand
    Rapids. Building permits continued to
    decline through the end of 2006

   In 2007, the number of building
    permits continued to decline, with
    Michigan and Ohio accounting for
    approximately 66% of the decrease
                   Fraud Findings Statistics
 Based on Fannie Mae loan reviews completed through the end of
September 2008 (by first 3 zip code digits and representative city)
    FRAUD, FORECLOSURE & UNEMPLOYMENT
   The 1st quarter of 2008, the National Association of Realtors reported
    existing home sales declined by 11% from the 1st quarter of 2007

   Existing home sales in Michigan fell by 8% in the 12 month period
    ending June 2008

   Through the 2nd Quarter of 2008, Michigan lost another 61,000 jobs,
    increasing unemployment to 7.5%

   Over the past 5 years, Detroit has had one of the countries highest
    unemployment rates
                                SOCDS Building Permits


    The following chart represents the number of building permits issued for Detroit, MI, Wayne County, MI,
     and the State of Michigan
    In 2003-2004, building permits were at high marks, but drastically fell after 2004



                                SOCDS Building Permits Database for: Detroit, MI
                               2000        2001      2002      2003      2004      2005      2006       2007
    Units in Single-Family            72        56       184       382       350       277       249        154
    Percent Change                         -28.6%     69.6%     51.8%     -9.1%    -26.4%    -11.2%     -61.7%


                             SOCDS Building Permits Database for: Wayne County, MI
                               2000        2001      2002      2003      2004      2005      2006       2007
    Units in Single-Family      2,939       3,006      3,388    3,729      4,211     3,138     2,056        919
    Percent Change                           2.2%     11.3%      9.1%     11.4%    -34.2%    -52.6%    -123.7%


                                 SOCDS Building Permits Database for: Michigan
                               2000        2001      2002      2003      2004      2005      2006       2007
    Units in Single-Family     42,960      40,517    41,656    44,726    45,881     38,875    24,782     15,188
    Percent Change                          -6.0%      2.7%      6.9%      2.5%    -18.0%    -56.9%     -63.2%
                        MARI Quarterly Fraud Report
   In a quarterly fraud report, published by MARI (Mortgage Assets Research Institute),
    Michigan ranked 3rd in mortgage fraud in the nation

   The Detroit MSA accounted for 56% of all
    misrepresentations reported for Michigan

   Appraisal misrepresentation (including value
    inflation and incorrect use of comparables)
    is most prevalent in Michigan

   Between 2002-2006, the Midwest accounted for
    23% of Fannie Mae Loan Acquisitions

   During that same time frame, the Midwest accounted for
    37% of Fannie Mae Fraud Loans




                                                                  Source: MARI Quarterly Fraud Report, August 25, 2008
   The above chart, from the Mortgage Bankers Association, indicates that 34% of Michigan’s
    loans affected by misrepresentation are located within the Detroit MSA

   This indicates that fraud and misrepresentations have had a large impact on the Detroit
    real estate market as a whole and
AVERAGE SALE PRICE: BY
   NEIGHBORHOOD
                           CONCLUSION
   The decline in employment has had a large impact on the
    Detroit real estate market

   After a strong and steady market through 2004, supply
    increased causing prices to steadily decline over the next 4
    years

   Increased fraud and misrepresentations, specifically in
    valuations, led to record numbers of foreclosures in the
    Detroit market

   Detroit has consistently been on top in unemployment and
    fraud when compared to other areas of the Midwest and the
    United States

                                                  Created by: Brent Saxon
                                       Appraisal Management Service, Inc.
                                                               10/28/2008
This presentation was for informational purposes only.
All information was gathered from third party studies
and is believed to be accurate but is not warranted. We
hope this presentation will aid you in lending or review
decisions in your market area. For additional information
please contact Jeff Bass at (678) 354-8363 ext. 116 or
jbass34131@aol.com for additional information. You can
also visit are website at
AppraisalManagementServices.net

				
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