We’re not slated to see housing prices start to climb a lot anytime soon, but that doesn’t mean you should be lax if you want to secure a loan with a Metro-Detroit mortgage lender.  In fact, if you’re not careful about your timing, you might end up having to pay more than other people in surrounding neighborhoods.

The reason is that fact that large numbers of underwater mortgages sometimes boost home prices in different markets.  This occurs because homeowners who otherwise would be looking to move are unable to sell their current homes as they’re trapped under negative equity.  With fewer homes for sale, the demand on homes can increase.  Dwindling supply equals higher prices.

And this can happen at any time.  Supply and demand fluctuates all the time in Michigan, especially around major cities.

When Homes Don’t Sell

The national inventor for homes dropped in April, plummeting to a 6.5 month supply according to CoreLogic.  This is lowest level we’ve seen in five years, and is down from a 9 month supply as of June 2011.

In some cases you would attribute dwindling inventory to increased sales, but we’re just not seeing that yet.

“Negative equity is typically a demand-side obstacle to sales and refinances, but currently also is restricting the supply of homes for sale,” wrote Sam Khatar, CoreLogic senior economist, in the company’s quarter market report, released today. He continued “(It) restricts the ability of homeowners to list their homes for sale as the demand side of the market improves.”

What This Means for Home Buyers

If you’re in the market for a home, there’s really only one way to look at situations like this.  With increased demand and less inventory, housing values are going to creep.  It might not be much, but it’s enough to add hundreds (even thousands) to the back end of a mortgage in Michigan.

That also makes buyers stack up in lines as they watch for housing to come on the market.  This leads to a struggle for newer homes and bidding wars which can drive the cost up even higher.

If you want to get into a home now, as opposed to being stuck in a bidding war, you need to get your preapproval out of the way.  Talk to a Michigan mortgage lender, secure your loan, then start watching the market for the right home to become available.

Now is better than later, as the prices of nondistressed homes showed a market-wide annual increase of 1.9% from April 2011 to April of 2012.  Don’t wait and miss out on the home of your dreams.  Contact your Michigan mortgage lender today.