The Real Estate Corner with Rick Seese: April 2023 Edition

Rick Seese has more than 40 years experience working in real estate market, and each month, he shares the latest news and outlook for Lowell-area housing market.

April 2023 Edition

-My Perspective – The Interest Rate Debate
-The Latest Area Market Statistics
-Monthly Summary – What Does All This Mean?

My Perspective – The Interest Rate Debate

It appears that the race against inflation might be rounding a bend toward the finish line. Notice I said a bend and not the final bend. The March economic numbers that seem to indicate the Federal Reserve’s (FED) initiatives are finally heading toward their goals are not yet conclusive.

The takeaway from the March Consumer Price Index (CPI) is the overall CPI figure declined a bit more than expected on a year-over-year basis, but also as expected, the March core CPI figure (food, shelter, energy, etc.) ticked higher compared to February. The markets and many economists reacted positively to the main CPI data.

However, when we look at the core CPI data over the last three months – January’s 5.6% year-over-year figure, February’s 5.5%, and the latest 5.6% for March – the reality is there has been little change. Core CPI is the reading that affects consumers the greatest with everyday expenses. The FED’s goal is to reduce inflation back to the 2% level. Additionally, the jobs report did not provide proof of a slowing economy, which is needed to subdue inflation in the long-term.

In translation, our local real estate market continues to outperform most markets around the State of Michigan, as well as the Midwest. The current effect of rising interest rates continues to slow First-Time Homebuyers the most, because of affordability. The high demand for lower-end priced homes continues to positively overwhelm sellers with multiple offers, which continues to support higher prices. Unfortunately, higher interest rates continue to cause mortgage payments to be out of reach for many.

Our March statistics continue to show strength and resiliency, but also show a slowing in existing home sales. Our local markets need more inventory, especially affordable inventory. The higher end markets are still affected by a sector of buyers shying away from spending larger sums of money until their stock portfolios begin to recover.

In conclusion, we have a mixed bag of economic readings this month and a similar reading from our local real estate markets. The latest charts below reveal the local story.


The Latest Housing Statistics

We are comparing the current 12-month rolling average sale prices with the final 2022 average sale prices. Most of our focus area school districts have had varied increases, except for Forest Hills and Lowell as the above chart shows. All our focus area school districts did record varying increases from last month, except slight decreases in Lowell and Lakewood. It is still very early in the year to find any trends, but the next few months of a typical spring market will begin to provide better insight.

Here are the 12-Month Rolling Average Sale Prices for our Surrounding Townships through March 2023. The Lowell School District takes up a portion of each of these townships, except Vergennes and Lowell, where the entire townships are totally encompassed by the Lowell School District. All our focus area townships had increases in average sale prices over last month, except Lowell and Boston Townships. This chart shows us a bit more of current geographic values, rather than school district values.

“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 – The Entire MLS Homes Currently for Sale fell by 1,200 units from last month. This was mostly due to 900 units of New Listings decrease when comparing March of 2022 and March of 2023. Inventory is extremely tight everywhere. March usually begins to increase inventory as we begin to enter the spring market. All our focus area school districts had a decrease in Homes Currently for Sale compared to the same period last month. The demand is beginning to increase with the seasonality of spring, but the listings are not keeping pace. This is causing the Months of Supply to remain very low.

Months of Supply – Most of our focus area school districts continue to have less than 1.0 Month of Supply. The Entire MLS increased slightly from 1.1 months to 1.2 Months of Supply. Lowell decreased from .8 to .6 from last month. The demand continues in our focus area school districts despite higher interest rates, although at a slower pace. The spring market typically provides for more New Listings to meet increased demand, but that does not seem to be happening yet. 2023 may be another year of very limited choices for buyers.

New Listings – All our focus areas experienced decreases in New Listings when comparing the same period last year, but all school districts experienced increases over last month, except the Lowell School District saw a slight decrease. The Entire MLS had a large decrease in New Listings when comparing March 2022 to March 2023. Lowell experienced a huge decrease from 41 New Listings in March of last year to 18 this year. Hopefully, the seasonality of the winter market will soon begin to give way to the forces of the 2023 spring market, when more homeowners normally decide to sell their home.

Pending Sales are sales under contract with an accepted offer, but those transactions have not been finalized yet (closed). Overall, the Entire MLS saw another year-over-year decrease of over 800 units in Pending Sales when comparing March 2022 to March 2023. All our focus area school districts also posted sizable decreases from the past year. Pending Sales are being affected by low inventory causing a lack of buyer choices, and a lack of potential sellers that don’t know where they will move to once they sell.

We will continue to watch this chart closely, as we enter the spring market.

March 2023 Monthly Summary

What does all this mean?

The charts tell us that the West Michigan real estate market is showing signs of a slowdown. Inventory is crucial to buyers having enough choices when shopping, or they will merely continue to shop, which slows overall sales. Existing homeowners are choosing to stay put for several reasons, but one reason is their existing mortgage has a much lower interest rate than a new mortgage will have. All these reasons are contributing to less inventory.

The economic numbers appear to favor a FED slowing of interest rate increases, but the bigger picture says the economy continues to be overly active. Therefore, look for at least another .25% rate increase soon and look for a slower supply of homes for sale than in normal spring markets. The result will be less sales, but continued higher prices as stiff competition will still cause multiple offers. The FED will be looking for a continued decline in all inflation, which may need an increase in the unemployment rate, a decrease in retail sales, and a continued decrease in overall consumer spending. The last stretch of the FED’s attempt to lower inflation back to 2% may be the most difficult part of the race. The current interest rates are around 6.25% for a 30-year fixed, and 5.625% for a 5 year Adjustable Rate.

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 or Facebook page or call/text him at 616-437-2576.

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