When Is the Housing Market Going To Come Back In Ann Arbor ?

“When is the housing market going to come back?” I hear this all the time from sellers in Ann Arbor.

Well, I  don’t have a crystal ball, I tell them. The last 3 quarters in Ann Arbor have stabilized and we are short on inventory so those are two very good signs but…..

What I really think sellers are asking is, “When is my home going to be worth what it was in 2006?” That is something I do not know. I know my own house has come down in value 100K since 2006. (((sigh)))

Today I read a really good blog by Dave Halpern from Louisville, Ky. in it he stated:

“If you have $100.00 and you lose 50% of it, you now have $50.00 left.

If your new balance of $50.00 now goes back up by 50% (fifty percent), it is only worth $75.00.

Because 50% of $100.00 on the way down is $50.00. But 50% of the remaining $50.00 on the way up is only $25.00.

So, if the value goes DOWN 50%, it has to GO UP 100% to equal what is was.

Another way to put it is: If the value of something is slashed in half (by 50%), it then has to DOUBLE (go up by 100%) to equal its original value.”

Historically in the United States we have seen appreciation be around 3-4% a year. Only when houses inflated in the 90′s did it increase in the Ann Arbor area by 8-10%. That was unsustainable. When the market does begin to increase again my gut tells me it will be at those historical 3-4% increases.

Which means for me and you, it can take many years to get back to where we were in 2006. I remember picking up a USA Today paper in 2007 and reading predictions for the recovery. I remember it said Michigan would recover in 2010, and closing up the paper not wanting to believe it.

Right now many people would “move up”, “down-size” or “relocate” but they can’t sell their current homes in order to that. So they are waiting…but how long?

In my opinion it would be better to go ahead and sell if you need to move and sell low but then by low.



Ann Arbor Housing Market

One thought on “When Is the Housing Market Going To Come Back In Ann Arbor ?

  1.  Funny how realtors in 2006, and in 1999 to 2005 as well lol, never ever ever spoke about the ‘historic range’ of appreciation, hmm, interesting.  Now, somehow, it’s held out as ‘common knowledge’ that the price appreciation of that period was ‘unsustainable’?!
    I recall instead hearing advice like “you’d better buy now, or you’ll never afford to buy in Ann Arbor”.  Hmm.
    Funny how the industry ‘wisdom’ is, like, different now 😉

Thoughts?