This month Rick shares his perspective (slowly and surely), provides area statistics, and ends with a monthly summary.
My Perspective – Slowly and Surely
Last week Tuesday, the Consumer Price Index (CPI) report for November was announced with better-than-expected inflation news. The progression since a high report of 9.1% in June has curtailed to 7.7% in October and to 7.1% in November. That’s good progress, but not where the Federal Reserve (FED) wants it to be, as they announced the following day that another upward interest rate adjustment of .5% will be initiated.
The plan is working and the continuing battle against inflation seems to be on target. The economy has cooled, consumer spending has slowed, just as the Fed has planned. The real estate sector has also slowed, caused by increases in interest rates and our normal seasonal slowing. New concerns of a recession have rekindled, as last Friday the Retail Sales report for November revealed a slower than expected pace. We continue to walk that necessary, but fragile line.
Until we reach an acceptable level of inflationary and economic readings, interest rates will continue to be adjusted upward, as it is the only known tool to help curtail inflation. Slow and sure is exactly what we need. More real estate inventory is also exactly what we need. As we near the end of the year, take note as to how our area real estate markets have reacted year-to-date.
2022 Statistics Year-To-Date
Average Sale Prices
Year-To-Date Through November 2022
| School District | Average Sale Price YTD / Final 2021 |
| Forest Hills | $557,437 / $503,893 |
| Rockford | $451,128 / $389,329 |
| Caledonia | $423,727 / $393,991 |
| Lowell | $403,755 / $348,377 |
| Entire MLS | $294,336 / $268,982 |
| Saranac | $266,597 / $254,552 |
| Lakewood | $238,432 / $203,636 |
| Belding | $234,720 / $212,680 |
*MLS is Multiple Listing Service. Coverage area includes all of Kent and Ionia Counties, northern Barry County (inclusive of Gun Lake) and southeastern Ottawa County. Statistics courtesy of GRAR (Greater Regional Alliance of Realtors).
Lowell, Forest Hills and Caledonia school districts posted increased Average Sale Prices from last month. Rockford, Lakewood and Belding delivered decreased prices from last month and Saranac remained the same. The Lowell School District remains almost 14% above their 2021 Average Sale Price of $348,377. That is a one-year increase of $55,378. The Entire MLS is now 8.6% higher than 2021, a $25,354 increase. Regionally, West Michigan is maintaining Average Sale Prices higher than 2021, in almost all market areas.
Average Sale Prices by Surrounding Township Through November 30, 2022 (12-Month Rolling Average)
| Township | Average Sale Price YTD |
| Ada Township | $624,920 |
| Cascade Township | $591,644 |
| Vergennes Township | $473,306 |
| Lowell Township | $389,630 |
| Bowne Township | $376,954 |
| Grattan Township | $357,401 |
| Entire MLS | $294,336 |
| Boston Township | $283,240 |
| Keene Township | $274,005 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
Here are the Average Sale Prices by Surrounding Townships through November 2022. The Lowell School District takes up a portion of each of these townships, except Vergennes and Lowell, where the entire townships are encompassed by the Lowell School District. This table represents the first 11 months of 2022. As you can see, our surrounding townships have higher average sale prices compared to the total MLS, except Boston Township and Keene Township in Ionia County. All our surrounding area townships experienced 12-Month Rolling Average increases over last month, except Grattan Township and Keene Townships.
Market Inventory As of November 30, 2022
|
School District |
Homes Currently
for Sale |
Months of Supply for November 2022 | New Listings in Nov.
2021 vs 2022 |
| Entire MLS – GRAR* | 4,139 | 1.7 | 2,718 2,347 |
| Rockford | 72 | 1.6 | 48 50 |
| Forest Hills | 65 | 1.3 | 39 41 |
| Caledonia | 58 | 2.1 | 33 21 |
| Lowell | 29 | 1.2 | 19 24 |
| Belding | 17 | 1.4 | 10 13 |
| Lakewood | 8 | 1.1 | 10 10 |
| Saranac | 7 | 1.4 | 6 2 |
*MLS is Multiple Listing Service. Coverage area includes all of Kent and Ionia Counties, northern Barry County (inclusive of Gun Lake) and southeastern Ottawa County. Statistics courtesy of GRAR (Greater Regional Alliance of Realtors).
“Months of Supply” refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, five to six months of supply is associated with moderate price appreciation, and a lower level of month’s supply tends to push prices up more rapidly.
Homes Currently for Sale – All our focus area school districts experienced a slight increase of Homes Currently for Sale over last month, including the Entire MLS. Some of this is expected because of the seasonality of winter and some because of lesser demand, induced by higher interest rates.
Months of Supply – All our focus areas had slight gains in Months of Supply from last month, except the Entire MLS and Saranac. Lowell increased from 1.1 to 1.2. All our focus areas are now above 1.0 Months of Supply for the first time since 2000. However, we are still well below normal levels of 4.0 to 6.0 Months of Supply.
New Listings – All of our focus areas experienced at least a slight increase of year-over-year new listings, except Caledonia and Saranac. However, the Entire MLS experienced a sizeable decrease in New Listings when comparing November 2021 to November 2022. Again, the seasonality of the winter market is playing a role on a larger scale.
Pending Sales As of November 30, 2022
|
School District |
Pending Sales
Nov 2021 vs Nov 2022 |
| Entire MLS | 2,816 1,877 |
| Rockford | 50 32 |
| Forest Hills | 34 34 |
| Caledonia | 34 14 |
| Lowell | 17 18 |
| Lakewood | 11 6 |
| Belding | 14 9 |
| Saranac | 7 4 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
Pending Sales are sales under contract with an accepted offer, but those transactions have not finalized yet (closed). Overall, the Entire MLS saw a sizable year-over-year decrease in Pending Sales when comparing November 2021 to November 2022. All our focus area school districts experienced year-over-year decreases as well, except for Lowell increased and Forest Hills remained the same. Increasing interest rates continue to slow Pending Sales locally, regionally, and statewide.
Pending sales have now decreased within the Entire MLS for the tenth consecutive month. We will continue to watch this chart closely, as additional hikes in interest rates will continue to slow overall demand. Another related factor could include the fact that 70% of all American households with mortgages have interest rates below 4%. Unless there is a need big desire to move, then most buyers with a current mortgage would be giving up a lower rate and obtaining a higher rate. The current mortgage rates are hovering around 6.5% for a 30-year fixed rate or 5.5% for a 5-year adjustable rate.
December 2022 Monthly Summary
What does all this mean? The West Michigan real estate market continues to slow down due to higher interest rates and the seasonality of the winter market. However, the lack of real estate inventory continues to be problematic as buyers continue to lack choices. Less choices also cause less Pending Sales.
All in all, our focus area school district real estate markets remain stubbornly strong as Months of Supply remains well under 2.0 months. We really need this closer to 4.0 months to create more supply, create competition, slow down the double-digit price increases and help First-Time Homebuyers with affordable choices.
The FED will continue to increase rates over the near term, which will cause less overall demand and should help with inventory as we approach the spring market. I see no reason to believe we will see falling prices, but more appropriately a leveling of normal sale price increases as supply and demand nears a more historical normalization. Conversely, Realtor.com just ranked the Grand Rapids area market 7th in the nation for being positioned for most real estate growth for 2023 (ranked by expected sales and price growth). This remains to be seen, but the ranking shows the national respect for West Michigan’s housing demand and the desire to live in our area.
As for inflation, most economists believe that the bulk of our inflationary woes are mostly due to the pandemic disruptions that interacted with global supply systems. Those supply systems were already fragile before COVID-19 hit us. Inflation and supply chain shortages are a global problem. The laws of supply and demand act the same way all over the world. Europe’s most recent inflation rate is around 11.5%. Canada is 7%, Australia 7.3%. Finland and The Netherlands are over 9%. Germany and the UK are over 10%. America appears to be making progress at 7.1%.
Rick Seese works with buyers and sellers of residential, commercial, and industrial real estate. He is an Associate Broker with Greenridge Realty, Inc. and has been licensed full-time for over 40 years. If you’re interested in reaching out to Rick for more information, or have a question for the monthly article, you can contact him via email ([email protected]), visit his website at www.rickseese.com or Facebook page at (www.facebook.com/RickSeese), or call/text him at 616-437-2576.
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