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July pending sales jumped up from June’s pace, proving once again that our recovery is moving in the right direction but not in a straight line.  Some months are moving up quickly, others just a bit, but so far, always up!  The overall Months Supply of Inventory (MSI) for Southeast Michigan hit a five-year low at 4.6 months and NW Michigan was also at a five-year low of 9.1 months.

The average MSI is the industry standard index for following the market direction, but to get to the true index number we look at the MSI in the market segment where the majority of buyers are, those homes on the market less than 90 days.

The pattern follows the same trends as the overall MSI, falling to the lowest levels during the market decline, and clearly showing a seller’s market, which explains the multiple offers we are seeing in the under-90-day market.  Low inventory is also helping fuel the rising price trends with values picking up speed since the beginning of the year.  Price per square foot is not a pure indicator of appreciation, but does filter out some of the distortion found in median values as an indicator of general value trends.

Appraisals have also been a challenge for the past 18 months as appraisal standards struggle to keep up with rising values.  Although there still are many issues, the good news is we seem to have turned the corner with appraisal shortfalls shrinking daily.  More and more appraisers will take into consideration the details on multiple offers in their evaluations.