Ann Arbor housing market suffers less than other areas in Washtenaw County

by Dan Meisler | Ann Arbor Business Review

Thursday January 15, 2009, 6:20 AM

By many measures, 2008 was the worst year for residential real estate in the Ann Arbor area in the past decade, at least.

The average sale price fell 15.5 percent from 2007 levels to $211,342. That represents the lowest average price for homes since 1999, when it was $205,042, according to data from the Ann Arbor Area Board of Realtors.

At the same time, the number of sales, while lower than it has been in at least 10 years, was essentially flat, rising 20 units to 3,082 in 2008. And data separated out by school district show stark differences in the impact of the lagging state and national economies among Washtenaw County communities.

A snapshot of the Ypsilanti and Lincoln Consolidated districts, for example, show sale price declines of 47.7 percent and 32.1 percent, respectively, comparing December 2008 to December 2007.

The same comparison for the Ann Arbor district showed a decrease of 7.9 percent.

Ed Surovell, founder and owner of Edward Surovell Realtors, said those numbers show the protective effect the University of Michigan has for the city of Ann Arbor when it comes to foreclosures and the economic downturn generally.

"The rest of the county is not immune from these problems," he said.

The flip side of that realization is that some areas will see significant activity in 2009 despite the poor results for 2008.

Geographically, that means Ann Arbor and nearby subdivisions, said Realtor Martin Bouma of Keller Williams. In terms of the types of homes, those valued at around $300,000 and between 1,500 and 2,300 square feet are more likely to move in 2009, Bouma said.

"If you get into the higher priced homes, you'll find less demand," he said.

Realtor Alex Milshteyn of Surovell agreed, and said that values of high-end homes are falling quite a bit.

"Million-dollar homes are now $600,000 or $700,000," he said.

Milshteyn predicted a flat year in the city of Ann Arbor, but continuing pain in other parts of the county.

In the city, the Burns Park and Old West Side neighborhoods have fared better than might have been expected. Specifically, older homes with large overall square footage but unique floor plans -- that is, homes that can stand out from the crowd -- will still garner demand.

"They're still going to have a very good market," he said

While some possibilities for activity are present, the 2008 results showed huge drops across the board.

Dollar volume, for example, dropped to $651.3 million compared to $766.4 million the year before. In the past decade, the year with the most sales and highest dollar volume was 2004, with 3,876 sales worth just over $1 billion. Volume hasn't been below $700 million since 1998.

The annual average home sale price in the area peaked in 2005 at $266,633. Since then it has fallen by about 3 percent a year, until 2008. The largest jumps in the average price in the last 10 years have been in 2000, when it went up 11.51 percent from the previous year, and in 1999, when it rose 8.36 percent.

Foreclosures, the tightening credit markets and the national recession have contributed to the low prices, as has the perception that Michigan hasn't yet hit the bottom economically, local market participants said.

"It's been a little bit of everything," said Jim Carey of University GMAC Real Estate, the immediate past president of the Board of Realtors.

Contact Dan Meisler at (734) 302-1721 or danm@mbusinessreview.com.