Economic Update for Michigan in 2011

Now that the champagne bottle is empty and the gifts are open it’s time to get busy making a living again! Fortunately, at least in my opinion, it’s going to be a better year for business in Southeastern Michigan.

Economic Projection for Michigan
Most of the real estate professionals that I know, including Realtors, Appraisers and Lenders, seem to be in agreement that real estate values in our area have stabilized over the past 6 to 9 months. This should bode well for sales this year as buyers who may have been waiting to see if prices were going lower should get the message that they aren’t and that now is the time to grab up a house at the best value in 20 years. Also, the inventory of homes for sale has declined significantly and days on the market is back to historical norms in most areas.

In Michigan we should also see a stronger local economy as well. Industry experts are expecting a 10 to 12% increase in automobile sales this year and that should set the stage for improved consumer sentiment in our area and boost sales in a general sense in our State economy. Many Michiganders who would like to upgrade their home but have not done so due to job fears may find the comfort level they need this year to make the move into that new home. I believe that our State is going to emerge from this economic recession in front of the rest of the nation and that we are going to have a much healthier Real Estate Market in 2011.

Mortgage Loan Limits for 2011
For 2011 mortgage loan limits will remain unchanged with Conventional loan limit at $417,000, FHA loan limits in the tri-county area set at $297,500 and VA at $417,000. FHA is still requiring a minimum 3.5% down payment; Conventional loans are still available with 5% down and VA with 0% down.

Interest Rate Projection for the New Year
Interest rates reached an all time low in the fourth quarter of 2010 with 30 Year rates in the low 4’s. Since that time rates have moved up a bit and are currently in the high 4’s but are still very attractive and should not discourage any buyers from making a move in the housing market. Rates for this year should remain at historical lows but may move up a bit as the U.S. economy improves this year. It would not surprise me to see rates in the mid 5’s this year but I don’t expect a significant increase in rates until the overall economy really gets on much stronger ground.

So for the New Year I hope to see an uptick in real estate sales, a further firming of house prices, and a significant improvement in our local economy, a more optimistic consumer and a continuation of some of the best mortgage rates that have ever been available. Overall, it should be a good year!