What drove down Metro Detroit home sales in October?

And thank you for joining us here on Fox 2 Detroit Live at 8:30. I'm Aaron Jordan. We've got a lot to cover for you here tonight. Coming up in about 15 minutes, James and I are doing our weekly football picks. Good news for me, at least. I've taken the lead in our picks. Went 6-0, diving into the week that was in football, as well as the big games for this week. But right now we're talking about home prices. in Metro Detroit in sales. Sales took a dip in October, down nearly 14 percent. So what's driving the trend? We're bringing back Jeanette Schneider. She is the president of RE/MAX of Southeastern Michigan. Great to have you back here in our new digs. How are you? Thank you. Loving the digs, first of all. I do, too. This is a lot of energy here. I like the fact that we're standing and it's just a great view of the newsroom as well. No, it is. And I'm going to get a plug in. You had a 6-0 pick for football. I was 14-1 last week with my pick. Really? Congrats. Okay, that's a bigger accomplishment than mine for the fact that it's so many more games. No, I was pretty pleased. Kudos. Yes, thank you. So, 13.9% drop. What the heck's going on here, Jeanette? Well, I think unfortunately our market, which has been a little lackluster all year to begin with, really hit the mortgage interest rate wall. Once those rates went over 7 and they stayed there and they started to get inching closer to that mid-7s, it did take some buyers out of the market, took some wins out of the sales. And a lot of concerns as well about affordability, which we knew going into the election was going to be a thing. Was that kind of showing? Do you think? When it came to what we saw last month. Yeah, absolutely. Affordability has kind of been an underlying theme. pretty much all year because inflation has been an issue. And as gas prices went up and they didn't recede and people every week at the pump were feeling that. And realistically, when things cost more, it's harder to save for a home. And even if you were able to do that and then interest rates ticked up, well, now it's going to cost more to write that mortgage check. And it's just everything kind of came to a head. Everything's more expensive right now in general. So what are we seeing so far this month? I know it's a little difficult to tell and But how have things been so far in November? I was going to say, you know, probably a little bit on the quiet side. And certainly what we saw with the pending sales as we were ending October and going into November, those were down about 10% as well. So while, you know, those numbers aren't always an exact harbinger of what exactly is going to happen, they all, you know, they're kind of telling the tale of what we can expect. That makes total sense to me. So as far as the pending sales, those dropped. And what about the cost of homes that we're seeing right now as well? Okay, so that was the one thing that didn't have the negative sign in front of it that actually went up 2%. I mean, so we're taking a look at all year while home sales have slowly been inching up, it really has been inching. It's been very modest this year. We haven't seen wild swings in what the home values are. But if I'm a a seller or a homeowner, you know, this market is signaling there's still a demand. There are still people who want to go buy a house. So the values are staying there. And that's so interesting to me as well, because every time I talk to you, Jeanette, I feel like I'm learning something new when it comes to this. And just the fact that I want to pull up the pitch that Amy sent me earlier tonight, and we were able to get it, thankfully, with the Microsoft The Microsoft outage is still going on right now. But Macomb County, it looks like, and Detroit saw the biggest dips that we're looking at here. The smallest one was in Oakland County as well. Yep, and it was really interesting because I did a little bit more digging into Macomb to see were there any hot markets within Macomb, even though overall sales were, and no, Macomb as a whole, I mean, pretty much every community saw a decrease in sales. So there wasn't something I could pick out of that county specifically. It was kind of universal there. Wayne and Oakland and other, you know, while the counties overall went down, I can find communities where sales were up, so. Okay, so, and that's interesting to hear as well. Home prices remaining stable, median price increased to roughly $322,000. Yep. So, I mean. Those prices are staying high, which is good for sellers, maybe not necessarily good for buyers, though, at the same time. Not necessarily good for buyers, if I'm wearing kind of the buyer hat, if I will. The good news that is there is homes are retaining value, and they're not going up. significantly. They're still going up, but they're not going up like double digits like we saw back six years ago. And so the mortgage rates that we're talking about as well, Jeanette, where are those sitting right now? What can people expect to pay when it comes to that? Right now, it's about 7.2 percent. They dropped a little bit right after the election last week, but they've kind of inched up the last couple of days. And I think we've got a couple of things going. They went down initially after the election. I think more on the expectation that maybe the war with Iran would come to an end. Not quite so sure where we stand on that, you know, at the moment, if you will. And now with the CPI coming in so hot, that has kind of led to the thinking that the Fed is. more than likely to raise rates in December when they meet. So you've got to, you know, you got some mixed signals going on out there as to what's going to happen. So interest rates kind of start ticking up again. And the interest rates that we hear about from the Fed all the time when it comes to raising or lowering that key interest rate, does that affect the mortgage prices that we pay as well? Or is that a different thing? It's technically a different thing. I mean, surprisingly, because they do, it does kind of be a leader in a story, right? I mean, you're going to hear, oh, the Fed raised rates and it's going to impact what you pay for car Car loans and mortgages. Technically, it's not a direct line. It really isn't. However, the market seems to try to almost bake everything in together. And so when they feel that the Fed is going to make a move, it's almost like, I don't want to say, the market kind of predetermines what it's going to do, and it starts moving in a direction as if it happened. So we talked with Michael Greiner yesterday kind of about oil prices. And I promise I'm going to get to the point that I'm making here in a second. Talking about how that market and the fuel market that we see is a very reactionary market, given the news, is the housing market as reactionary as that is, or is that considered reactionary, or would you say that's more? Cautious and a wait-and-see type of market. I was going to say, I think right now we're probably in a more cautious wait-and-see. Can it be reactive? Absolutely. If all of a sudden interest rates go up quickly, then people tend to react. I would say overall, it tends to be more, let me kind of read the wind and see what's happening. So when we saw October sales go down, they went down more than we were thinking because election years, usually there is a bit of a slower market going into an election, whether it's presidential or midterm. The kind of history suggests sales kind of, because people. You're not sure what's going to happen. Could it be better for me to wait? Yeah, the uncertainty of it. So, I mean, that in and of itself isn't uncommon. But, I mean, reactionary, if you're somebody that now my mortgage payment's going to go up $200 or $300 and I can't afford that, yeah, there's going to be a decision. You know, there's going to be a reaction based on that. And to that point as well, so are you expecting to see an increase? Obviously, really hard to forecast because nobody knows what's going to be coming in 2027. Would that lend us to believe that 2027 might be a better year for home sales because it's not a midterm or a presidential election. It would be nice, certainly, if we did get a little, I mean, I would expect that, you know, going into the end of this year, you know, this year is going to kind of end quietly is my expectation. You know, hopefully next spring looks different than it does right now. And spring in and of itself brings out kind of a flock of buyers and things of that nature. Always kind of slows down in winter. It always kind of slows down in winter. We're just, you know, hitting the brakes a little harder, a little harder than we wanted to this early. And so what are we expecting as far as, are we expecting it to decrease or hold steady? As the end of the year goes, I would say I won't be surprised if we see, you know, kind of year over year, you know, negative numbers for the next. And that's really the trend we've been on all year. It's just this particular percentage drop was a little more eye opening. You know, a lot of the other ones have been single digit percentages. So it wasn't as much hard to tell for sure what November and December are going to do. I'm hard pressed to see either of those two months beating last year. So as far as people wanting to get into the market right now with trying to buy a home, maybe buying their first home, what's your advice for them as far as getting into the market, doing that search? What should they do? As I say, first and foremost, you kind of have to set aside the things that you can't control. So you can't directly control the interest rates. You can't directly control a lot of different things. But you can control your credit score. You can control meeting with a local lender to know what you can afford. You can control, you know, what homes you see. Focus on what you can afford. And as a buyer right now, if there's some good news in all of this, it's that you have a little breathing room. There's not as much competition now as there was, you know, and even like a year ago. So the ability to go out and see a home. Actually think about it before you put an offer, you know, have the conversation. Don't feel that sense of urgency that we've got to write an offer right this second. You're not feeling rushed quite as much as you were where homes were getting swept up from under people. Like that. And the other thing is you have a little more negotiation power. So if something does come back in the inspection, maybe this is something that you can actually talk to the, to the sellers about and negotiate that on. So from those perspectives, buyers have a little bit more muscle behind An inspection's certainly something that people want to go in on as well. How do you recommend searching for that inspector? Do realtors generally have a go-to one or is that on the buyer to try? No, I mean, well, you can do it either way. I mean, you certainly can do your own search or word of mouth. I mean, those are always options. Typically, realtors that have been doing this for period of time, they will have a few people that you can kind of recommend you take a look at and see. Because different price points, different things that they might be experts at, depending on the type of home that you're looking at. But yeah, you absolutely want to have an inspection. This is a big investment. You want to understand, because every home is going to have something. Nothing is perfect. But you want to understand, is this something I need to deal with in five years that I can kind of plan and budget for? Or is this, no, the roof is leaking right now. I need to get this fixed. You need to know that. Maybe see if they can take a couple of dollars off to offset that or figure out maybe one way or the other, find a way to get that fixed. So if you're a seller in this market, what's your advice at this point? A seller in this market, you really need to understand the market is changing and we're kind of living through it right now and you want to be very cognizant and work with the agent that you're working with on what has sold recently. What is it sold for? What's on the market right now? What's my competition as a seller? What homes are on the market? What are they priced at? Do they have any updates that are different than my house? Be very cognizant of what's out there in the market so that you can price it effectively. This is not a market where you throw a high price and think that, well, you know, we'll find somebody that's interested. You want to be pretty accurate on that. And certainly the old adage that the first impression goes a long way as well when it comes to that home sale too. It does. And that leads to the point of you want to, you know, and this is a market, certainly if buyers, you know, are feeling that they're, you know, they're, they're spending. As much as they can, you know, to get into a house, they don't want to feel like they're getting a house that they're going to have to do a lot of little, even nickel and dime stuff. Yeah. So the drippy faucet, you know, the handle that, you know, needs a little tightening, do even those little things because that really does make a difference. Finally, last question for you here, Jeanette, where are you seeing the most movement in homes and what's kind of the slowest area as far as cities go? I would say right now what we're seeing, and it kind of depends at what price point you're We're definitely seeing, you know, homes that are priced at around $200,000, you know, give or take either side. In those communities, those tended to be the communities in October where we saw home sales were still up over last year. Oh, really? Yeah, so Taylor, I'm trying to think, you know, some of the Downriver communities, you know, Madison Heights, places like that, they did see because, again, the price point is something that still is affordable. So those went well. But at the other end of the spectrum, we have, like, Lyon Township. We had Northville, Plymouth, you know, places like that where they're kind of destinations and people are willing or have the ability, if it's a second home, to go in and do it. We saw some movement there as well. Interesting. Jeanette Schneider, we always appreciate you taking the time and joining us. Certainly something that affects everybody at one point or another. We appreciate not only the insight, but the advice. Thank you for being here. Thank you for having me. We're getting to our football picks right after the break. Don't go anywhere.