Real estate was a wild ride this spring. Inventory hit an all time low at 0.9 months of inventory this past March. There was extreme competition among buyers in the $120-250k price ranges. Most of my home buyers searched for at least a few months and wrote multiple offers. I educate my buyers on the different criteria the seller will use to evaluate the offer, and we worked to their strong points as best as possible. For example, some people were flexible in their timing, so they offered sellers longer time to occupy the home after closing. Some were tight on timing, but could offer larger down payments and earnest money. All of my buyers were well prepared and writing strong offers.
It has been a whole year since I wrote a real estate market update for the greater Grand Rapids area. Why? It has been the same story for the last two years straight. How many different ways can you say "we have extremely low inventory!"?
As a refresher, inventory is measured by months of supply. Months of supply is the measure of how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. Months of supply is a good indicator of whether a particular real estate market is favoring buyers or sellers. Our local market has strongly favored sellers the last few years. Although the market has been great for sellers, it has been extremely difficult for buyers trying to purchase, especially first-time buyers who generally have lower down payments.
In September last year, the greater Grand Rapids housing inventory started an uptick and continued for four months straight. This is the first time that has happened in the last five years or so. We went from a yearly low of 1.3 months of inventory up to 1.9 months by the end of 2016. Many were predicting the market to finally level out a little. However, from December through the end of January, inventory suddenly fell back down to 1.4 months. Last spring was a crazy market with buyers sometimes competing with 10+ offers. This year we have even less inventory than last as we lead up to the spring market. Buyers will need to be diligent, patient, and put their best foot forward in the home buying competition. Sellers have the convenience of short market times and multiple offers to choose from if the house is priced right.
Earlier this year, the spring market was a house feeding frenzy. Popular homes were receiving 5, 10, sometimes as high as 20 offers. March and April saw a housing inventory of only 1.3 months. It is too early to call for sure, but I believe this was the peak of the rising prices for the Grand Rapids market.
Over the last four months or so, we have seen the inventory levels increasing. Each month we have slowly ticked up to the current level of 1.7 months. That is still a very low level of inventory, however, the day-to-day pace of the market is noticeably slower. Homes are still selling quickly and multiple offers are common, but it is not as ridiculously competitive as it was this spring. Experts have been predicting inventory levels and price increases to level off for a couple years now. It may be finally happening.
In the last few months, the inventory level has tightened again. All the way down to 1.3 months. This is a historical low for the inventory of homes for sale in the Grand Rapids market.
Although inventory was dwindling, the number of buyers increased with the spring market. The result? Feeding frenzy is probably the most accurate way to describe the competition. If a house is priced right and in good condition, it is common place to see 5-10 offers on one property within three days of hitting the market. Open houses look like assembly lines of people going in and out. It is great to be a seller right now. Unfortunately, it is very difficult to be a home buyer at the moment. The buyers who are winning in extremely competitive situations are usually cash buyers, or buyers who have large down payments if they need financing. It makes it especially tough for first-time buyers trying to enter the market.
Over the last three years of giving market updates, I am starting to sound like a broken record. The real estate story of Grand Rapids, MI in 2015 was quite similar to 2014 and 2013. The inventory of homes for sale has remained low, and prices have been steadily increasing. It has been a great market for sellers and a frustratingly competitive market among buyers. Interest rates went up and down a bit throughout the year. Right now they are sitting around 4.0% for a 30 year loan, which is still quite low when you look at the history of interest rates.
The real estate story of Grand Rapids, MI in 2014 is quite similar to 2013. The inventory of homes for sale has remained low and prices have been steadily increasing. It has been a great market for sellers and a competitive market among buyers. Interest rates have remained low.
It is suspected that sales are slightly constrained because of the limited inventory. Year-to-date, new listings are down by 7.4%, and the number of housing units sold is up 2.8%. The average sales price is up 6.7% this year, growing from $152,833 in 2013 to $163,171 in 2014. Due to increasing sales prices, the volume of home sales is up by almost 10%.
It has been all over the news since yesterday. Zillow announced it is purchasing Trulia for 3.5 billion dollars. Zillow is both friend and foe to Realtors, and the recent announcement is causing a stir among Realtors and local associations.
Zillow.com is one of the top national real estate websites and consumers seem to love it. Zillow receives listing feeds from many of the local Realtor associations of homes for sale. They also include FSBO's (For Sale By Owner), "pre-foreclosures" (in parenthesis because the information tends to be wildly inaccurate), and past sales. Consumers like Zillow because it is user friendly and the information is very robust. The website is popular for it's "zestimates" which estimates the approximate property value based on a number of factors.
So far 2014 has been a crazy year. The real estate market cooled a bit this winter due to the massive amount of snow that dumped on us. It was definitely the worst winter I’ve seen in my lifetime. Sales are down this year so far by 23% compared to the same period last year. Although sales are down, the market is still hot overall and prices have continued to go up. The main reason for the decline in sales is there are not enough homes for sale. Listings are down by 27% YTD. There are a lot of buyers out there that are ready, willing, and able to buy, but cannot find the right property.
Here is a quick real estate market update for the Grand Rapids area:
The market has gone crazy this year! The inventory of homes for sale is way down, mostly attributed to less foreclosure properties. Increased buyer activity combined with this low inventory has caused prices to finally increase. The average sale price in Grand Rapids is up by 8.5%. Multiple offers are the new norm for properties in good condition that are priced right. Although home prices have gone up, home ownership is still incredibly affordable with interest rates sitting at a measly 3.5%. The future looks bright for Grand Rapids as we recover from this long recession.
Please contact me with any real estate related needs or questions. It is my privilege to be your resource.
Great info on everything real estate.