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Michigan's hottest housing markets aren't in Metro Detroit


In some of Michigan's hottest markets, real estate agents have watched their clients pull all sorts of tricks in the last few months: Empty out retirement funds to pay for homes in cash. Pick homes in more rural locations to try to better their chances. Offer $20,000, $50,000, $80,000 over the asking price.

And sometimes, it still doesn’t work. Across the country, inventory is down while demand is much higher than it has been. That's driving prices to record highs across the country, according to data from the National Association of Realtors. Nationally, the association says 89% of the homes sold in May spent less than a month on the market.

Michigan buyers are noticing the same, but some of the state’s hottest markets may not be quite where the typical buyer might expect. Data shows that based on the number of sales and how high prices have risen in the last year, many of  Michigan’s hottest markets are in some of its less-populated counties.

A data analysis by The Detroit News found that, based on growth in sales and price, Sanilac County in the Thumb has had the most growth from May 2014 to May 2021, when the increase in the number of sales and the average price is weighted against other local groups. Sales prices are up nearly 160% on average year-to-date.

The county on the western shore of lower Lake Huron has also seen a 117.65% increase in the number of single-family home sales. That’s based on numbers from Michigan Realtors, a state-level association that collects information from local groups across the state.

"We're selling more than ever, but now we're pretty much out of houses as a result," said Brenda Smigill, who has worked in real estate for nearly 20 years and who owns Archie Thomas Real Estate in Port Sanilac. "I have 10, 15 buyers with nothing to sell them. If I had places to sell, this would probably be my best sales year ever."

The News looked at year-to-date data from each May from 2014 through 2021, which is the most recent data publicly available. Data is submitted by Realtor boards, which is a group of Realtors (real estate agents who are also members of the National Association of Realtors) working in the same geographic area. That data doesn’t include every house sold in the state of Michigan, but it covers markets across both peninsulas and can provide a measure for sales in most counties in the state. 

Real estate experts say other factors — including how long a house is on the market and how many houses never even formally hit the market before being sold — also help show a hot market. Those numbers can be difficult to track at scale, however, and Michigan Realtors publishes data only on how many houses are sold in a month and their average selling price.

In weighted rankings from 2014 to 2021, Sanilac County is followed by the Northeastern Michigan Board of Realtors, which covers Arenac (where Standish is), Iosco (where Tawas City is) and Ogemaw (home of West Branch) counties, along with a few properties in surrounding areas. The region reported a 103.61% increase in average price from May 2014 to May 2021.

Tuscola County, also in the Thumb area, saw a 91.3% increase in average price at the same time. That increase ranks it as the third-fastest growing area in the state, based on weighted data.

Would-be buyers might be surprised that the Metro Detroit area doesn't top the list, given that housing near the state's largest city is more expensive than in more rural areas and has also seen a big increase. But while many counties in Metro Detroit grew, their prices didn't increase quite as much as the more rural areas that ultimately topped the list.

That didn't make the process any easier for Kelly Mills, who is in the process of selling her home in Clinton Township and buying a new one in Utica. 

Mills estimates she looked at more than 20 houses and put offers in on at least five. She was initially planning to use a loan from the Federal Housing Administration, which allows a buyer to cut down on down payments and closing costs, but she quickly realized that wouldn't work. FHA loans require more inspections, and some sellers see them as more of a hassle than more traditional mortgages.

In a market where sellers are regularly getting as many as a dozen offers, more complex sales can mean a buyer misses out. So she changed her plans: she sold her house, which was on the market for only a day.

That sale freed up the kind of money she would need to make a 20% down payment with a more traditional mortgage. That meant she and her family had to "hunt like crazy" to find a new house before they had to leave theirs.

"If we hadn't had the house to sell to get the funds to put a big down payment down, I would have given up and said never mind," Mills said. "After losing out on house after house, I'm not sure I could have kept up if we hadn't been able to do that."

It can be hard to compare sales this year to last because the pandemic initially brought home sales to a temporary halt. But comparisons to 2019 can provide a better perspective on recent growth.

Based on weighted numbers from May 2019 to May 2021, the Battle Creek Area Association of Realtors (which serves Calhoun County) reported the highest overall growth. The average price of a home in the area rose by nearly 37.5%. The Branch County Association of Realtors ranked second, with a nearly 34.5% growth in the number of homes sold and a 36.2% increase in the average home price.

Sanilac still ranks near the top in that measure, tied for third with the Water Wonderland Board of Realtors, which sells homes across the northeastern tip of the Lower Peninsula, including in the Gaylord area.

Katie Weaver, a Realtor with Real Living Kee Realty in Washington Township, said she has seen clients looking to live in less dense parts of Macomb, Oakland and Lapeer counties. The president of the Greater Metropolitan Association of Realtors, which serves Macomb, Oakland and Wayne Counties, Weaver said she’s seen people craving space.

That’s driven people past what might be a typical commuting distance, she said: “I’ve met with a ton of people who wanted to move to the country because they’re working entirely from home. They want to live in these farther-out areas, and that’s pushing prices up in some of the areas because the inventory is so low.”

People want good school districts and to be near water, Weaver has found. Beyond that, location generally doesn’t matter as long as people have internet access.

Metro Detroit hasn’t seen the huge growth that other areas have, but buyers are telling their agents that their needs have changed in the pandemic.

Danielle Boulier, the Realtor who helped Mills put in several offers, said people want more space, both indoors and out. That means when a house goes on the market, especially if it offers the kind of space many people are looking for, it comes "right back down, with multiple offers."

"Sellers are over-the-top excited because in a lot of circumstances they can get way more than what a house is worth," Boulier said. "To be a buyer in the market, you have to be strong-willed, strategic, creative."

Boulier works in St. Clair County, where average year-to-date prices rose nearly $50,000 from 2020 to 2021 and now sit at $222,789.

Up north, lakefront property is going for big bucks. But even just a chance to be in beautiful cities near some of Michigan’s favorite recreational spots can be pricey.

Pete Platt, owner and broker of Gaslight Group Properties and Vacation Properties of northern Michigan, said his businesses broke sales records in 2020 in terms of number of homes sold. This year, revenues are already exceeding that pandemic year.

Unlike in many parts of the country, where investors are buying up properties to turn into rentals, Platt said he hasn’t seen many people looking to flip a property into a rental. With prices so high, the rate of return would be slim if it existed at all.

“The secret is out,” he said. “It can be difficult to make your way here, but it’s hard to leave.”

Platt’s businesses are in Petoskey, where numbers provided by the Emmet Association of Realtors show that 30 homes sold in May, up from 12 the year before.

Prices of those homes also have risen. The average sale price in 2021 was $746,681, up more than 28% from the $581,583 average a year ago. The median price, which is the middle number if you put all the sale prices in order, tells a slightly different story: It has actually dropped since last year, declining to $427,500 from $470,250 in 2020.

An explosive market like that can be hard for buyers anywhere. Weaver said ownership has been “taken out of so many first-timers’ hands,” even in “cooler” markets like that seen in Macomb and Lapeer counties.

It’s put special heat on areas like Emmet County, where Platt has seen locals have a hard time finding places to live. The kind of homes that were rented out a few years ago are now becoming second homes for people who want to have access to water and other amenities.

The demand used to be more focused on lakefront, but Platt said he’s seen sales rise in downtown Petoskey and other places where locals usually lived.

Part of that change is that people are more emotionally driven, he said. Buyers want places where they can make good memories, but more importantly, they just want to own a house. After sometimes offering as much as $30,000 over the asking price and still losing out, people sometimes can start to get nervous.

“People say they want a certain size garage or a certain number of bedrooms, but it all goes out the door when a house hits the market,” Platt said. “At the end of the day, they just want a place to call home.”

hharding@detroitnews.com

Twitter: @Hayley__Harding