Market Update - September 2020
Hi, Kevin Yoder here again with Yoder Real Estate with another market update. I did one about 30 days ago, but given the state of the market and what’s going on with the economic conditions a lot of things are in flux. I thought I’d throw another one in here for the late summer/early fall so that you could get a good snapshot of what to expect over the next few months with Real Estate. Some national, and some local on what’s going on right here in Grand Rapids, Michigan.
Let’s talk about what’s different between this year and last year. Nationally home sales numbers are up 25% from July of 2019 to July 2020. That is a big number! Now, why did that happen? A lot of pent up sales activity. Here in Michigan, we were deemed not-essential for five or six weeks, so all those buyers in the early spring market that could have bought, and those sellers that could have sold, a lot of them were on the sidelines. All of that activity is piling into the later months of summer here, which might lead to more of an expanded Real Estate market.
Now listen, here’s the thing. Double-digit unemployment is at play here, but what’s counterbalancing that is this super crazy-low mortgage interest rates. One thing that I always tell my agents here at Yoder Real Estate is that we can provide perspective to anyone we talk to. 3% or 2% mortgage rates are the lowest in history, and that’s driving a lot of Real Estate activity despite the fact that there’s super high unemployment. Those people that are actually able to buy are taking action and taking advantage of those super-low interest rates because that impacts affordability more than any other factor.
People are moving to the suburbs more and more. They’re considering larger homes to take advantage of the home office scenario.
The average sales price is up 9% from last year, so up roughly $25,000 for the national average sales price of $291,000. Here in West Michigan, that number is at $272,000 so we’re just trailing behind. We’re still a seller’s market, and how do we know that? – Based on days on the market. Nationally, days on the market is around 90 days. Here in West Michigan, though, we’re still sitting at under 30 days. That puts us in a very low inventory environment, which is a seller’s market. A more healthy, balanced market would look like a home being on the market for five or six months, which would mean there’d be enough homes for sale and an equal number of buyers that would absorb that inventory. Currently, it’s just more challenging for buyers and there are a lot more multiple offer situations because of the low inventory and increased demand.
So what’s the forecast? The chief economist for the National Association of Realtors, Lawrence Yun, put out a report late July that gave us a lot of this information. He’s forecasting the interest rates should stay around 3%. If you’re thinking about making a move, understand that that interest rates of 3%, even 4%, are still super low from the historical viewpoint. In terms of behavior, people are moving to the suburbs more and more. They’re considering larger homes to take advantage of the home office scenario, which would mean needing at least one more bedroom to make that home office a real thing.
If you need to reach out for any reason, contact us here at Yoder Real Estate – we are here to help. We are in tune with the market conditions, and we want to be able to relay that information to you so that you can make an educated decision on what is the best time for you to make a move and know what your home’s value is. We’ll look forward to talking with you soon!
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