Between rising national interest rates, the uncertainties of an ongoing pandemic, and a housing supply drought across large swathes of the country, the real estate market has been in flux for some time. In February, the Federal Reserve raised its benchmark interest rate from 4.5% to 4.75% — its eighth rate increase in the last year. Meanwhile, existing-home sales have declined for the 12th consecutive month, according to the National Association of Realtors (NAR).
In Washtenaw County, however, the picture is a bit different. Higher demand compared to national trends and a somewhat economically insular market are driving continued interest in popular neighborhoods – and even creating some new hot areas.
"Ann Arbor’s a really strong market, so oftentimes we're not in line with what they're saying nationally," says Kathy Linderman, an Ann Arbor-based realtor with Reinhart Realtors
High demand and low inventory
As of February, the median sales price of a single-family home in Washtenaw County was $375,000, according to the Ann Arbor Area Board of Realtors. That’s higher than the national median, which is $363,000, according to the NAR.
Linderman says the local market is "difficult for buyers but really good for sellers."
Alex Milshteyn, an Ann Arbor-based agent with Coldwell Banker Realty
who has practiced real estate for more than two decades, cites a rule of thumb that a balanced U.S. housing market should have roughly four million properties on the market. At the end of January, that number was only about a million.
"That’s a drastic change," he says.
A home for sale in Ypsilanti's Depot Town.
Still, Milshteyn insists, while the national market might look bleak, regionally, things aren’t so bad.
"We’re doing pretty well in the Midwest," Milshteyn says. In Washtenaw County, he says, "we actually have great demand. Properties that I'm putting on the market are selling with multiple offers, and they're selling within two or three days."
Linderman concurs that "there's a lot of demand and very low inventory." Both Milshteyn and Linderman attribute the high demand to the recent hikes in interest rates.
Because of those hikes, sellers have been holding onto their properties, staying put "because maybe that next step for them is no longer as affordable as it was a year ago," Milshteyn says.
As a result, Milshteyn says, both the supply of homes and the number of sellers have dropped.
A home for sale in Ann Arbor's North Side.
This is all borne out by the Monthly Housing Statistics published by the Ann Arbor Area Board of Realtors. In Washtenaw County, new listings of single-family homes went down by 13.7% for the year to date, while listings of townhouses and condos went down by 24.3%.
The same publication noted, "Sellers have been continuously cutting prices and offering sales incentives in an attempt to attract buyers, who have continued to struggle with affordability challenges this winter."
Meanwhile, the inventory of homes for sale went down by 20.4% for single-family homes over the last year, and by 27.8% for townhouses and condos.
Linderman says interest rate hikes have been "almost a non-issue" for higher-income buyers. But for lower-income buyers, she says the effect of the high interest rates has been "much more catastrophic." Many buyers have simply dropped out of the race and postponed buying a home, while she says others "have adjusted their upper limit for a home" and are trying to make do.
Hot spots in Washtenaw County
Cynthia Smigielski is an Ann Arbor-based agent with Real Estate One
. She says that despite the higher interest rates, buyers are "still out there looking. It's just [that] they had to reduce their expectations."
So what are they looking for?
"My experience is that more and more people are really drawn to walkable areas," Linderman says.
In Ann Arbor, she names the Water Hill and Old West Side neighborhoods as particularly desirable spots, given their proximity to the downtown area. Ypsilanti’s downtown and Depot Town are drawing buyers for the same reason. Linderman says Ann Arbor’s North Side is having its own moment since "the med school just had match day," and the hospital is located in walking or biking distance.
Depot Town in Ypsilanti.
But Milshteyn says COVID has created shifts in buyers' preferred neighborhoods. After COVID, he says, buyers have become more and more willing to travel.
Since the pandemic lockdown months, when many people were living, working, and sometimes even teaching children at home, Milshteyn says people's homes have become more than just living spaces.
"The definition of a home for a lot of people changed," he says.
Washtenaw Dairy on the Old West Side of Ann Arbor.
As a result, he says, buyers tend to place less importance in proximity to their offices, and more importance in factors like home size.
"People have these pockets that they want to live in," Milshteyn acknowledges. "But the reality is, I would say all of Washtenaw County is a fairly hot market."
Smigielski agrees, noting that Scio Township, Pittsfield Township, and Ann Arbor Township are all popular right now.
"It’s all hot," she says.
Linderman and Milshteyn are hopeful that the Washtenaw County housing market will remain strong. Milshteyn says the University of Michigan affords the local economy a certain degree of insularity.
"My feeling is that we're not going to see any significant changes in our market," he says. "... Do I see our [home] prices shooting up in double digits? I don't see that. But I do see a steady climb in our property values because Ann Arbor continues to be rated as one of the top places to live."
All three agents offer variations on the same advice to potential buyers: in Smigielski’s words, "have [your] ducks in a row."
Linderman and Milshteyn both emphasize the importance of working with an experienced and knowledgeable real estate agent.
"Hire a mortgage loan officer that is experienced and is going to walk you through that process," Milshteyn adds. "The best thing you can do is get professionals to surround you, to provide you with good advice."
Natalia Holtzman is a freelance writer based in Ann Arbor. Her work has appeared in publications such as the Minneapolis Star Tribune, the Los Angeles Review of Books, Literary Hub, The Millions, and others.
All photos by Doug Coombe.