Arbor Update

Ann Arbor Area Community News

Home prices slump - but downtown projects move forward

15. March 2007 • Murph
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While yesterday’s News cited an Ann Arbor Area Board of Realtors report stating that home sale prices countywide had hit a six year low, today’s Ann Arbor Business Review includes a March 21 groundbreaking for Peter Allen’s Kingsley Lane project, and notes that Freed plans to move forward on its CitiCentre Lofts project at Washington and Division, albeit with a change from condos to apartments.

On home prices,

The average home sale price last month was $217,294, down from $252,652 a year ago. The median sale price was $192,500, down from $206,000. A total of 230 homes and condominiums were sold last month, compared to 251 a year ago. The last time prices were that low was April 2001. . .[but] agents caution against putting too much stock in last month’s results. February’s price dip, while dramatic, could be the result of factors such as knee-jerk reaction to Pfizer’s January announcement that it will close its Ann Arbor facilities – some agents think that scared a few sellers into dropping prices. More lower-priced homes may have also sold during the month.

Kingsley Lane (pictured) has hit presale targets for one of the two buildings, and Allen intends occupancy for summer 2008.

Sales commitments total 10 for the 20-unit building that will start construction this month, and 12 for the east loft, Allen said. Six are market rate units and six are affordable.

Buyers are mostly affiliated with the University of Michigan, Allen said, either in medical school or pursuing doctorate degrees. A few are in the 45-55 age range.

Meanwhile, Freed is converting the CitiCentre project to a rental arrangement:

Freed officials have said that they planned to proceed with CitiCentre, even as they erect steel for Ashley Terrace, a similar project about four blocks west. The new configuration will have 106 apartments, 77 parking spaces, a laundry and fitness center on the 10th floor and a second-floor leasing office. The Illinois-based Freed will appear before City Council on March 19 to get new elevations of the building approved.

Freed declined comment on whether residents would take the elevator to the 10th floor fitness center.

  1. people have been asking ridiculous prices for houses in the high end, and now things are getting more realistic. It’s amusing to watch sellers try to chase the market down, down. They start out high and then keep lowering and lowering their prices.

    In other places, realtors price houses competitively, with an eye to selling, and then hope they get multiple offers. Here, the realtors seem to price houses really high, and then kind of play ignorant if no one makes an offer.

       —Cooler Heads    Mar. 16 '07 - 12:51AM    #
  2. CH – I certainly don’t deny that I’ve long thought A2’s housing due for a “correction”, as the kids are calling it these days, but I’m not sure I’m buying your here vs. elsewhere dichotomy. As I read it, the news seems to be that there’s a housing shakedown nationally, particularly in the subprime/Alt-A sector – e.g. people buying too much house for their wallet – and plenty of people are finding their houses aren’t worth what they thought.

    Of course, “buying too much” could probably describe plenty of homebuyers in Ann Arbor of recent years, but at a different level – one where people have the luxury of a denial period before the fire sale or foreclosure choice comes up.

       —Murph.    Mar. 16 '07 - 02:03AM    #
  3. Murph, there was an article today in the Newark Star-Ledger about realtors in affluent suburban NJ repricing houses to make them appear to be a great buy, a steal, and then getting multiple bids. A completely different approach than the one taken here. I know sellers who have told me that realtors tell them to set the price high, and “see if anyone bites.” and then lower it.

    A losing strategy for sure.

       —Cooler Heads    Mar. 16 '07 - 02:44AM    #
  4. Murph, there was an article today in the Newark Star-Ledger about realtors in affluent suburban NJ repricing houses to make them appear to be a great buy, a steal, and then getting multiple bids.

    Of course, we have to keep in mind that realtors don’t mind too much if houses sell for less, but mind very much when houses don’t sell at all. So a realtor is generally quite happy to sell your house for less and make a quick, sure commission. If your house is priced low enough that multiple offers pour in immediately…

    BTW, when is the assessor’s office going to be clued in about this so-called housing decline? Like clockwork, my assessed value rose $15K last year. Because of Headlee/Prop A, that doesn’t affect my taxes, but what’s up with that? What’s the city’s strategy — just keep jacking the assessments because nobody will bother fight them (given Headlee and Prop A) and then expect to reap the benefits when the house sells?

       —mw    Mar. 16 '07 - 05:10PM    #
  5. Huh? Your house is reassessed what, every three years? Are you claiming it didn’t appreciate at all between 2003 and 2006, before the Ann Arbor bubble burst?

       —Dale    Mar. 16 '07 - 08:16PM    #
  6. You’re right mw. I have a friend who bought a house for $500K, and it popped up to its SEV this year and now it’s assessed at $300K. Given the law, it should be assessed at no more thn $250K. But if they don’t fight it, it will stay as is.

    The assessor will not lower any values unless an individual homeowner fights. Why should the city bother with that?

    Also, there are two houses within a few blocks that have been on the market for more than a year. If realtors have priced to sell, why are these houses still sitting there?

       —Cooler Heads    Mar. 16 '07 - 08:27PM    #
  7. A pair of Todd Waller’s posts on assessment calculations and proposal a explain it pretty well, I think. Summarized:

    1. Assessed Value is based on the 24 months of market data preceding April 1 of the previous year. So the Assessor says your house is worth what the market said it was worth between 9 and 33 months ago. So that’s when the Assessor’s Office will be “clued in”.

    2. Meanwhile, if you’ve benefited at all from Prop A, your Taxable Value will keep increasing even after your Assessed Value starts to decrease, until the point where your Prop A benefit is obliterated. Remember that you pay taxes not on your Assessed Value, but your Taxable Value.

    So, on the one hand, those of us who bought houses recently will benefit because our Taxable is our Assessed, so our taxes will drop as soon as the 9-33 month window hits the housing slump, while long-time homeowners will have to have the Assessed Value drop a lot before the Taxable stops increasing. (OTOH, we’re not going to be cheering because, when our Assessed drops, it’s probably eating whatever equity we put into the house – those of you who have owned a while probably have nice cushions of inflationary “equity” built up that can absorb losses.)

    Meanwhile, a DetNews article from a month ago dismisses conspiracy theories that cities are hiking assessments arbitrarily and hoping nobody notices; when local municipalities asked the State about deviating from the formula for calculating assessments, “The responses have been less than encouraging. A State Tax Commission official wrote saying there was no room for tinkering with the rate since it was ‘set in statute.’”

    Love those unintended consequences!

       —Murph    Mar. 16 '07 - 08:31PM    #
  8. The sellers set the price, not the realtor. Realtors I talk to want their clients to lower their prices, but many of their clients are living in fantasy land.

       —Tom Brandt    Mar. 16 '07 - 08:31PM    #
  9. Tom, I have never sold a house here, just bought. But when I sold my house in another state, we asked our realtor to get some estimates from her colleagues on what they thought our house would sell for. Then we talked to her and between us we set the price. She was pretty firm about the opinions of others in her firm. When we talked high, she told us our house wouldn’t sell quickly.

    She was right. We priced well, and had ten offers, and ten counteroffers.

    So you’re saying the realtors here go to clients and say, what price should we put on your house? That’s crazy.

       —Cooler Heads    Mar. 16 '07 - 08:40PM    #
  10. Your house is reassessed what, every three years?

    No, the assessed value and taxable value are adjusted every year. The $15K is just for 2006-2007. But the justification is either an increase in the market value or ‘to equalize’. I assume the assessor would claim it was done to equalize.

    Our ‘Headlee/Prop A discount’ used to be fairly modest, but with ‘assessed value’ increases 2-5X as much as the ‘taxable value’ increases, our discount is now up to 40%, so we can never move (not that we had any plans to).

       —mw    Mar. 16 '07 - 08:55PM    #
  11. My new (AA city) assessment showed a 1.2% decrease, catching and pushing down the taxable value too.

    I’m looking to sell and buy into a bigger house.

       —mcammer    Mar. 17 '07 - 02:41PM    #
  12. Well, just when I thought it was impossible to sell a house in AA, I heard from a friend that someone put a $995k house on the market two weeks ago, and it is already sold.

       —Cooler Heads    Mar. 25 '07 - 01:41AM    #