March 2023
Friends,
March Madness has come to Ann Arbor.
It’s been a month of buzzer-beater offer deadlines, Cinderella story purchases (or Barbie-themed condos), and brackets busted with Match Day buyers disrupting the market.
Not a hoops fan? Keep reading for a translation.
Market Forecast
Despite the latest rate hike, expect demand to continue to outpace inventory.
Turnkey properties remain red hot in Washtenaw County, and will continue to induce bidding wars among keen buyers. Why are move-in ready properties in higher demand than in a typical market? This market shift has caused buyers to prioritize their funds toward heftier down payments, rather than immediate home repairs.
Look for a continued uptick in property values on the fringes of Ann Arbor this spring and beyond. With first-timers being outbid and outpriced of Ann Arbor, many have embraced more rural settings and put down roots in “the townships” like Superior, Pittsfield, Scio, Whitmore Lake, Dixboro, Hamburg, Webster, Lima, and Northfield. We are also seeing exponential $ / sq ft. growth in Ypsi, Saline, Manchester, Grass Lake, Dexter, and Chelsea.
MAILBAG QUESTIONS
This month’s theme is “Spring Forward.” There’s something about birds chirping and losing an hour of sleep that gets everyone thinking about short and long-term real estate plans.
As is tradition, my showing partner, Trevor, and I got together over a cup of coffee in my office to answer your hard-hitting questions.
Kelly,
Curb appeal matters A LOT in terms of getting a buyer to fall in love with your home. Even the most analytical buyers know whether they want to make an offer within 30 seconds of setting foot on the property and opening the front door. With so many resources available on the Internet, buyers generally know how many boxes your home checks before going to see it in person. They might also be willing to bend on some of their more practical requirements if they have curb appeal goggles. The stronger their emotional reaction while touring, the more #FOMO will be generated, and the higher they will be willing to bid.
That being said, not all landscaping/curb appeal projects are created equal in terms of objective resell and appraisal value. Changing the color of your front door or planting a garden won’t score you any points on an appraisal. However, functional items like new siding, a new roof, or windows will help when it comes to assigning a value to your home.
In terms of interior projects, the kitchen is king. Remodeling your kitchen is going to be the closest thing to a 1:1 return on your investment. And if your kitchen really stands out, it’s going to land in the sweet spot of that Venn diagram combining emotional and logical pleasure zones. The second most valuable interior updates happen in the bathroom. Bonus points if you can add a full bath or powder room in areas like basements that may already have the plumbing set up for it.
Regardless of the project, I would recommend going with a classic/timeless style versus a “flavor of the week” trend that might feel dated by the time you are looking to sell. It’s also important to ensure quality materials and craftsmanship while making home improvements. Having logged a fair amount of hours in your kitchen / remodeled screened-in porch, I am very confident your exquisite taste will pay off in spades when the time comes to sell :)
Tyler,
What a grown up question!
You should hang on to the dossier of documents given to you at closing, and keep them somewhere safe. When the time comes to sell and the Title company or listing agent is asking for the original lending docs, a copy of the deed, or easement information, you’ll have it at your fingertips. The same thing goes for updates to your HOA rule and regulations.
For resell value purposes, be sure to keep a running log of all home improvement projects you do.
Just like seeing a CarFax report when buyers kick the tires on a pre-owned vehicle, this will provide peace of mind when they consider buying your house. If you are like most homeowners, a given year might include some chimney maintenance, a gutter cleaning, and the installation of a Nest thermostat. Having 7-10 years’ worth of documentation for these types of projects will make you look like the homeowner of the year when prospective buyers see your diligence.
Also, make note of the exact shade of paint from Sherwin Williams in your living room, the type of Brazilian cherry cabinets, etc. And keep all warranty docs and the contact info for any vendors you’ve used.
Erin,
It wouldn’t be a Highest & Best newsletter without the following answer: It Depends.
I’m a little biased as a realtor, but it makes the most financial sense to buy for most relocators.
Before I make the case for buying, here are a handful of instances where it might actually make sense to rent for a year or two before making the leap.
If you need to save up more money for a down payment.
Keep in mind that while an FHA loan requires a 3.5% down payment, there are programs out there specifically for new medical professionals that require a $0 down payment that waives PMI. Similar programs also exist for veterans, front-line workers, and first responders.
If you need to learn the area first.
Living in a neighborhood you don’t like for 6 years sounds pretty miserable. If you are unable to do the proper research, finding a short-term rental while you get your bearings might be a good move.
If you don’t feel mentally prepared for home ownership.
Owning a home is a big step. If it feels overwhelming or daunting, especially if you are starting a new career, that’s ok.
Ok, now here are some reasons why buying a home is a great idea.
Single-family homes appreciate an average of 18% every five years.
This means that a house worth $300,000 today will increase in value by $54,000 by 2028. That’s over $10,000 per year of equity gained before making a single mortgage payment.
If your lease is $1,500 per month, that’s $18,000 per year with zero return on investment.
This number is also likely to increase with each year that you renew your contract with a landlord.
You get to live in a nicer house for the same amount of $ per month.
For most first-time buyers, their monthly housing expenses go down or stay the same when they buy. The paradigm has shifted a bit with higher interest rates, but my first-timer clients are shocked when they find out how much house they can get while keeping their monthly payment the same as their current rent.
Jack,
Buyers need to know that the city of Ann Arbor and Washtenaw County have taken a multifaceted approach to protect homeowners. It would be nearly impossible to buy a house in 2023 and be unaware of the risks you are taking re: floodplain exposure.
That being said, let’s start with the basics. A floodplain is defined as the land adjacent to a stream or river that has a >1% of annual flooding. The floodway (see below) is the more dangerous type of floodplain, as it involves streaming water that can cause more severe property damage.
There are five tributary streams mapped as floodplains:
Allen, Malletts, Millers, Swift Run, and Traver.
Local areas with the highest concentration of floodplain markings include the Old West Side, Arborview, Brookside Condos, The Northside, Pittsfield Village, and parts of downtown Ann Arbor. If you live in any of those areas, you don’t need to panic.
Even though the Huron River is a beast of a body of water, the benefits of having natural floodplains far outweigh the low grade risks. If there is a pink or green star next to your house on this MAP, you’ll want to pay close attention to any standing water in your backyard, and take good care of your foundation / retaining walls. Prevention is name of the game if you live near a floodplain.
A few other things to know about floodplains in Ann Arbor:
Ann Arbor approved a $9 million Hazard Mitigation Plan in 2022 that has been approved by FEMA. This is aimed at mitigating long term risks, and being strategic about our natural resources/housing development plans.
You’ll notice that many of the city-owned parks and preserves reside on one of the floodplain hotspots. This is not a coincidence and is very savvy urban planning. Our B2B trail, Broadway Dog Park and Swift Run Dog Park are all classified as floodplain lands. This is a classic example of turning a risk into an asset.
Water quality is improved in areas where natural cover acts as a filter for runoff and overbank flows; sediment loads, and impurities are also minimized. Natural floodplains moderate water temperature, reducing the possibility of adverse impacts on aquatic plants and animals. Floodplains also act as recharge areas for groundwater and reduce the frequency and duration of shallow flooding.
