Market Update July 2020
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Hi, Kevin Yoder here with Yoder Real Estate. It’s been a while since I’ve done a market update, so let me give you a quick & right down to the point Real Estate Market Update. Now, I know we could go into a lot of stats and a lot of boring detail, but let me just give you what you need to know about Real Estate.
We were wondering what would happen with post-pandemic Real Estate, and one of the forecasts was we were going to bounce right back and it’s going to go crazy. Well, that’s what happened. The average sale price last year at this time was $246,000 and now it’s jumped to $271,000, so quite a big hike. Days on the market has stayed the same. So we’re about $30,000 up in price, and around 20 days on the market.
Why does DOM or days on the market matter? Well, it matters because you can get a sense for the market conditions based on days on the market. The longer the days in the market, we understand what it should be from a seller’s market, to a middle market, to a buyer’s market. There’s only three types of markets. We’re in a seller’s market and then it moves into a middle market and then to the buyer’s market. The last buyer’s market was 2007 through 2012 in West Michigan, and we’ve been in a seller’s market ever since. These things change, so watch closely.
The third factor I’m going to share with you is interest rates. This by far is going to have a greater impact on affordability. Affordability, what is that? It is when we compare the household income for any given region to the cost of home ownership. In West Michigan, we have always been one of the most affordable places to own a home all across the United States of America. Today, interest rates, I’m looking at 3.14% for a 30 year mortgage and for a 15 year mortgage, 2.75%. Now, let me just stop here for a second. I can see how if someone has never purchased a home before, if you’re a first time home buyer and you’re reading this, everything is relative. The law of relativity states nothing is neither good nor bad, only as we compare it to something else. So understand that 3.14% is a super low rate. (It’s almost free!)
Now when, your parents and grandparents were purchasing homes back in the ’80s, interest rates were almost 20% and you could hardly get a mortgage. We had to do what’s called land contract. For those of you who lived through that, understand 3.14% is a low, low, LOW interest rate, so that’s going to impact affordability. If you’re thinking about buying a home, let’s just sit here for a minute. Interest rates are lower than they ever have been in the ENTIRE history of home ownership in the United States of America.
So 3.14% for a 30 year mortgage, and at 2.75% for a 15 year, your payment’s going to be lower as a result of that. It impacts your payment more than home prices do. So if you’re thinking about it and you want to get out there in the marketplace, this is not a pitch to go buy a home. It has to be the right time for you and all the other things line up, but just realize affordability is right on mark. It’s so much better than if interest rates hike to, say, 5%, which is still low, but not as low. So if you’re thinking about buying a home, now would be a great time.
It is challenging because it’s a seller’s market to find a home, but get the right agent who knows how to navigate through that process, and you’ll still win. You’ve got to know how to strategically place your offer so that the seller is more interested in yours than any other option. If you want to know more about that, and how to win in this market, give us a call at Yoder Real Estate, 616-942-2449, online at yoderrealestate.com. I’ll be coming back in about a couple of weeks from now with another update on what’s going on in Real Estate.
Thanks for tuning in! This is Kevin Yoder with Yoder Real Estate. Until next time!