The Grand Rapids real estate market has been incredibly resilient to the change in interest rates. According to Redfin, Grand Rapids placed second in September among the fastest moving metro markets with an average sale time of only 9 days on market. While relative inventory has increased and the pace of the market is not as frenzied as it was the prior two years, inventory still remains low. Prices continue to increase, albeit at a much slower pace. Even though some things have changed, the greater Grand Rapids real estate market still strongly favors sellers.
The speed at which interest rates increased over the last year and a half was shocking. At the end of 2021, interest rates were sitting a little above 3%. In 2022, they started increasing and didn't stop until they hit 8% about a month ago. As rates kept increasing, many buyers fell out of the market and a fear of recession started to permeate the real estate landscape.
Reading real estate headlines over the last few months, I've seen many click-bait titles that pander to people's fears about a huge housing crash and global recession. However, if you actually read the articles, it doesn't say anything close to what the headline implies. While the market has cooled this year, there is still high demand for housing and short supply.
As of stats compiled through the end of November, the greater Grand Rapids area is currently sitting at 1.6 months of inventory. See the chart below for the monthly inventory numbers since 2014. Inventory is a measure of whether the market is a buyer or seller's market. This number is determined by figuring how long it would take to sell through the current number of homes on the market at the current rate they are selling, assuming no new houses hit the market. 5-6 months of inventory is considered a balanced market. Although 1.6 months is three times the amount we had last year at the same time, this number still represents low inventory and a market that favors sellers. Homes under $300k are in especially high demand.
Many economists were speculating the market shift to take place last fall. However, interest rates remained low and demand for housing was still ridiculously high at the beginning of 2022. Starting in January, interest rates started to creep up quickly and didn't stop. After hovering around 3.0% for most of 2021, rates went all the way up to almost 6% in the matter of a few months. 4% interest rates didn't seem to faze buyers, but once rates got over 5%, they took notice. Some buyers fell out of the market that were only motivated by super low rates. Others adjusted their budgets to account for the rate hikes. The result has been a slowing of the real estate market over the last couple of months.
The spring real estate market of 2021 combined a frenzy of demand with an already low inventory of homes for sale. Never had the competition to buy a home been more fierce. So what has the greater Grand Rapids real estate market been doing since this past spring? Slowly, but surely, inventory has been notching upward. It is still very much a seller's market, but not the same crazy frenzy this spring brought.
The current inventory level at the end of September was 0.8 months. Refer to the chart below to see the changes in inventory levels over the last seven years. Inventory is a measure of whether the market is a buyer or seller's market. This number is determined by figuring how long it would take to sell through the current number of homes on the market at the current rate they are selling, assuming no new houses hit the market. 5-6 months of inventory is considered a balanced market. In March, April, and May this year, we only had 0.5 months of housing inventory, an extreme sellers market.
Real estate has been all over the news the last couple of months. Due to the pandemic, people spent more time than ever in their homes over the last year. They've had to adapt to working from home and physical distance to work became less important. Many people are wanting more space and privacy. Combine that with super low interest rates, and there is huge demand for housing right now. The Covid policy of mortgage forbearance caused even less homes to hit the market than normal. Mortgage forbearance means payments are temporarily suspended for anyone who cannot pay their mortgage with no threat of foreclosure. We've already been facing inventory issues the last few years, so these factors have only exacerbated our problem.
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Real estate activity often slows surrounding the holiday season and into winter, especially in areas that get a lot of snow. Many people prefer not to move in winter if they can avoid it. There are always buyers out there and our local real estate market is still very hot, but typically the winter months are not as crazy competitive as the rest of the year. Is it really a good idea to buy a home in the winter? It depends on what your personal situation and priorties are, but there are both advantages and disadvantages to buying in the winter season.
This is a guest article written by Paul Denikin with www.dadknowsdiy.com. Paul shares his knowledge to help homeowners tackle projects on their own. Thanks for your contribution, Paul!
Thinking of sprucing up your home? With a little elbow grease and creativity, you can add some personal flair to your humble abode. Not to mention that with a few simple changes, you can increase your home’s value! Here are some great ideas you can tackle yourself, and tips for knowing when you’re getting in too deep.
For the last three years, the real estate market has held steady with almost identical monthly inventory levels. In true 2020 fashion, this year isn't following suit. While 2020 continues to be a hot seller's market, the monthly inventory levels have been quite different this year.
Before getting into the nitty gritty of inventory numbers, let's look at some general information first. The number of sales is actually down 5.2% compared to last year, but volume is up slightly by 0.6%. High demand for housing and lack of inventory continue to drive up prices. The average sale price so far this year is $263,338, an 8.3% increase above last year. Interest rates have helped keep demand high. Rates are at an all-time low, and are currently about 2.9% for 30-year loans and 2.5% for a 15 year.
This is a guest article written by Patrick Young with Ableusa.info. Able USA provides lots of valuable resources for people living with disabilities. Thanks for your contribution Patrick!
Buying your first house is a landmark moment. It’s also a major investment, so you want to make sure you spend your money wisely. Finding an affordable home if you have accessibility needs can be extra challenging. According to Pew Research, Americans with disabilities earn less, with a median income of $21,572 compared to the $31,871 earned on average by those without a disability. However, by teaming up with Lisa Vanderloo, and with some effort and financial savvy, you can find a first-time home you love — and can afford. Follow these tips for first-time buyers.
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