The distressed Michigan housing market should get a lift this spring as bargain prices and favorable interest rates lure prospective buyers out of hibernation. Tighter lending practices however, means no one should expect the boom days to return any time soon.

 SPRING HOUSING MARKET ALMOST HERE

Spring is a pivotal season in the housing market in the Canton, Michigan area and in the Detroit metropolitan suburbs in general. Potential buyers typically emerge from a winter hiatus and shop in earnest for a new home or an investment. The strength of the market in March, April and May usually sets the tone for the entire year.

 This year, spring has assumed even greater importance as our ongoing Michigan economic slump couples with a sharp U.S. economic slowdown. The U.S. slump by many standards has been triggered also by a slow country wide real-estate market.

After sales of existing homes in Canton, Plymouth, Northville, Novi and surrounding cities sank almost 11 percent last year, a housing revival could help our local economy get back into revival mode.

 When the housing sector is thriving, so does the economy as buyers spend heavily on new appliances and furniture while owners pump cash into remodeling or additions.

 In many areas, the choice of homes on the market has increased considerably, with unsold inventory double the typical supply as foreclosures mount and sellers hold out for higher bids

 Indeed, possible buyers are already coming out the woodwork seeking deep discounts.

 Signed contracts that have yet to close were higher in January than any month in the prior six. While we’ve seen quite a bit of increase in traffic, a lot of people are shopping for deals right now.

 But the roadblock to closing the contracts is ominous.

While a flurry of sales this spring may highlight the pent-up demand in the market, it probably would not signal a sustainable housing upturn this year.

Bidders are emerging for foreclosed homes and for so-called "short sales" at sharply reduced prices. In a short sale, the lender agrees to take a loss and avoid foreclosure costs if the borrower is unable to command a sale price that will pay the remaining mortgage balance.

NEW GOVERNMENT STIMULUS SHOULD HELP

Additionally an expected new rate hike by the Fed that is rumored to take place in March will undoubtedly create more downside pressure on rates.

Even if you talk to people who refinanced recently, a lot of them are finding that the banks are asking a lot more personal and critical questions. There is no doubt It’s more troublesome to get a loan these days.

In spite of all the above I think this is the best buyer’s market that has existed in a long time. There are tons of inventory, great interest rates and the prices are back in line to where houses are decently priced again. In fact I would consider many houses on the market to be at rock bottom prices now.

Lee Bittinger