In this edition, Rick shares the latest market statistics previews what 2022 will look like for real estate.
2021 Statistics Year-To-Date
Average Sale Prices – Year-To-Date Through September 2021
| School District | Average Sale Price |
| Forest Hills | $488,966 |
| Caledonia | $386,659 |
| Rockford | $375,674 |
| Lowell | $337,100 |
| Saranac | $240,512 |
| Belding | $199,802 |
| Lakewood | $196,924 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
The entire MLS (Multiple Listing Service) Average Sale Price grew at a smaller .64% in September from $261,695 to $263,500. The Average Sale Price in our focus area school districts also grew at a lesser pace in September, except Forest Hills bounded forward at a 2% clip. Caledonia and Rockford continued up about 1% each, with all other focus areas increasing less than 1%. All our focus area school districts had Average Sale Price increases in September. The overall demand remains strong in most areas of West Michigan. The Lowell School District continues to be a desirable destination for younger families and a strategic location for rural settings with easy access to Lansing and most portions of Grand Rapids.
Average Sale Prices by Township – As of September 30, 2021
| Location/School District | Average Sale Price |
| Ada Township | $547,312 |
| Cascade Township | $484,500 |
| Vergennes Township | $406,726 |
| Bowne Township | $338,317 |
| Lowell Township | $330,340 |
| Grattan Township | $314,331 |
| Boston Township | $276,541 |
| Keene Township | $253,750 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
All the above surrounding townships experienced increases in Average Sale Prices in September. There are portions within Ada Township and Cascade Township boundaries that are Lowell Schools, but most of their elevated Average Sale Prices are influenced by Forest Hills Schools. Bowne Township contains a large area of Lowell Schools but is also influenced by the Caledonia School District. Grattan has a portion of Lowell Schools, but also has a large area of Belding Schools. There is at least a portion of each of the above townships that contain Lowell School District boundaries, but Vergennes Township and Lowell Township are entirely contained within the Lowell School District boundary lines.
Market Inventory – As of September 30, 2021
| Location/School District | Homes Currently for Sale | Months of Supply |
| Entire MLS – GRAR* | 4,082 | 1.2 |
| Rockford | 72 | 1.0 |
| Forest Hills | 64 | .9 |
| Caledonia | 39 | 1.1 |
| Lowell | 25 | .9 |
| Lakewood | 10 | .8 |
| Belding | 10 | .7 |
| Saranac | 8 | 1.2 |
*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, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.
All our focus area school districts had a smaller number of homes for sale at the end of September compared to the end of August, including the entire MLS. Months of Supply in our focus areas continue to be less than the entire MLS. The lack of inventory continues to fuel an extraordinary seller’s market and Average Sale Price increases. Many of our focus school districts have now reached their lowest Months of Inventory levels at any time in recent history.
Average Price Per Square Foot – As of September 30, 2021
| Location/School District | Average Price Per Sq. Ft. |
| Forest Hills | $165 |
| Rockford | $160 |
| Caledonia | $155 |
| Lowell | $150 |
| Entire MLS | $136 |
| Saranac | $127 |
| Belding | $124 |
| Lakewood | $117 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
The Average Price Per Square Foot means the price per square foot in relation to the Sale Price. These averages continue to increase in our focus area school districts. These numbers are also an indication of supply and demand. Average new home construction costs begin around $200 per sq. ft. in West Michigan, but that does not necessarily include landscaping; the cost of the land or lot to build the new home; or the cost of improvements to the land, such as water/sewer hook-up, well, septic, driveway, electric, and gas. The above averages include existing homes and some new construction. Our focus area school districts had a range of increase from $0 to $3 per square foot in the month of September.
Pending Sales – As of September 30, 2021
| Location/School District | Pending Sales |
| Entire MLS | 3,074 |
| Rockford | 63 |
| Forest Hills | 57 |
| Caledonia | 32 |
| Lowell | 28 |
| Belding | 18 |
| Lakewood | 10 |
| Saranac | 8 |
Statistics courtesy of GRAR (Greater Regional Alliance of Realtors)
Pending Sales are sales under contract with an accepted offer, but the sales are not finalized yet (closed). Some of the above numbers could change daily, as some sales will fall apart, but new sales will be added. Pending Sales decreased within some of our focus areas from August to September, including the entire MLS, which had nearly 16% less Pending Sales. Only Lowell, Belding and Saranac Schools had increases in the number of Pending Sales from August to September. If enough homes are available for purchase, and the demand continues to be strong, Pending Sales will remain constant or increase. These numbers are important as a tool to forecast future closings and indicate recent activity. The above numbers are based on the one-month activity of reported Pending Sales. Most pending sales become finalized and closed within a three-to-six-week period, from the date it became pending.
Looking Ahead: Early Preview for 2022
Much has been said about the housing market throughout this past year. There were plenty of naysayers that spoke of a housing bubble and others that predicted a slowing of home buyer demand in most areas of the country. As the world has turned, I have witnessed many events that can create supply and demand in the housing market, including many new factors. Let’s touch on the important factors to keep an eye on as we approach 2022.
Housing demand should remain constant, mainly because of the largest generation known to mankind: The Millennials. There are more Millennials influencing the housing market than there were Baby Boomers at any given time. If the Millennials want to purchase their first home, an additional home, or their next home, there will be demand. There are also the Gen Z’s in front of them and the Gen A’s behind them, sort of like a well-stocked college football team, full of able players that want to play. This demand should remain consistent, unless there are economic challenges that slow this inevitable annual process.
Housing supply has been a challenge across America over the past few years. West Michigan has not been immune to this problem, as we have seen most local markets experience their lowest Months of Supply in recent memory. Will supply remain a problem? As we move toward the winter months, we normally see a lesser number of homes hit the market and normally less buyer demand through the winter months. This is almost always true. However, there is so much current demand, this coming winter may not see much of a slowdown. Many of the “unsuccessful” 2021 homebuyers are hoping that the West Michigan winter demand lessens, so they can finally have a chance to not get outbid by other buyers. Unfortunately for them, this probably won’t happen, as the normal demand, along with the first-time homebuyer pent-up demand will remain consistently strong. Therefore, there won’t be much of a chance for additional inventory to accumulate.
The 2022 Average Sale Price growth will most likely continue in most of West Michigan. West Michigan is one of the hot spots in America for younger buyer demand. We should also see additional demand and growth in further outlying suburbs, due to affordability seekers and a more solidified work-from-home status, allowing less work-related commutes. Higher demand school districts, such as Lowell will continue to draw primary attention from younger buyers. However, as interest rates rise and sale prices continue to grow, affordability decreases. Growth to suburbs and further outlying rural areas is a natural occurring pattern with residential real estate.
Mortgage interest rates will continue to be affected by the upward pressure of inflation as rates will rise through 2022 and into 2023. This will cause more affordability questions, but the parade of demand will continue. The latter part of 2022 may see homebuyer demand slowing somewhat, which may allow housing supply to catch up a bit, but that process may take many months to reach anywhere near normality. Housing starts may begin slowing in 2022, especially if construction materials remain in short supply. The high cost of building materials, along with rising interest rates may contribute to a total housing demand slow-down.
In conclusion, when I refer to a housing demand slowdown, the result will still be a very active housing market with plenty of demand. Maybe just not quite the caliber of demand that we experienced in 2021. Therefore, hang on, as 2022 will still be a quick and somewhat wild ride, as the housing demand sorts through affordability, supply, and interest rates.
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/Rick Seese), or call/text him at 616-437-2576.
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