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.
Let's take a look at the inventory levels of the last four years (see chart below). In December of 2013, we had a very balanced and healthy inventory level of 5.2 months. Oh the good 'ole days! Suddenly, that level dropped to 3.5 months in January 2014. Aside from minor seasonal variations, inventory has steadily decreased over the last four years. When comparing 2016 and 2017, the inventory levels were almost identical with 2017 being ever so slightly lower.
We head into 2018 with 2.0 months of inventory, 0.1 less than the same time last year and 0.8 less than two years ago. March, April, and May generally have the lowest inventory relative to the rest of the year. There are usually more homes for sale during this time, but the spring season also brings a lot of buyers. The overall effect is less inventory per buyer.
The good news? Although inventory is extremely low, the fact that this year is so close to last year's numbers indicates that we may have leveled out. Hopefully we will finally see gains in inventory this year that will lead to a more balanced market. However, this issue will not be fixed overnight. Buyers will be in for another extremely competitive spring market.
Note: This report reflects closed sales and current activity (sales written) in the following areas: Kent County, Georgetown and Jamestown Townships in southeastern Ottawa County, Ionia County, the 6 townships in northeastern Allegan County, and the northern half of Barry County (including all of Gun Lake).
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