After 30 years of real estate management and teaching the business to hundreds of agents, I now focus solely on helping my clients buy and sell homes. But now I also have time to share my experiences and knowledge with you, the readers of Lowell’s First Look, on a monthly basis. I invite your ongoing questions, whether you are planning on purchasing your very first home or your next home, or your last home. Just email me your questions at [email protected].
The Changes
We appear to be on the downslope of the pandemic. We are all hoping it stays that way, as America moves forward with the reopening of our economy, families and lives. The real estate industry and the construction industry have now been released to near normal activities. Both industries remain deliberately safe, using face masks, while disinfecting doorknobs and other commonly touched handles, etc. The sellers of properties remain in control and can request all showings take whatever precautions they wish. In-person open houses are now allowed with the same circumstances of safety precautions and currently a 10-person maximum inside of the home at a time. However, most of us are not comfortable with that many roaming through a house at the same time. Each of us may have a seller request for an open house plan. Realtors remain armed with disinfecting wipes, extra face masks, gloves and booties. This preparedness is to add comfort for our buying and selling clients and will most likely remain as “our new normal” for at least the near future. But the good news is, we are no longer confined to our computers, cell phones and Zoom meetings with our clients. I think I can speak for all of my fellow Realtor friends, when I state that our nature is to meet people in-person and interact face to face, so we are all very happy that we can finally do that again. Unfortunately, we are not quite back to a couple dozen handshakes per day. We will continue to follow a Best Practices approach and provide respect to all others, as we should.
We are still encouraged by our Associations (Michigan and National) to work from home, practice social distancing and wear face masks.
The Market Demand
The immediate feel of the market demand on the local level is astoundingly strong. Properly priced listings are still selling quickly and many with multiple offers. Just as I mentioned in my May article, West Michigan appears to have not missed a beat. Of course, some of this activity is due to the two-month pent-up demand, as most buyers decided to wait it out until they could visit and see homes, rather than negotiate based on photos. However, we have also seen new buyers come into the marketplace with their desire to purchase a home, just in the past couple of weeks. It also appears that these “new buyers” are rather widespread throughout all price ranges, which is additional good news. Again, properly priced listings are getting the bulk of the activity. Keep in mind, the open market dictates current value.
I also stated a few weeks ago that the Millennials will decide how strong the Covid-19 comeback will be and it appears they are doing a fine job at driving the initial demand. Every year, first time homebuyers make up between 30% and 40% of all single-family home sales nationally. In the fourth quarter of 2019, first-time homebuyers represented 39% of all buyers in America. Millennials are also a large factor in the move up market, as their family size grows. Additionally, they are also well within their career growth years, which has a bearing on their ability to move to larger homes and purchase 2nd homes.
The Market Inventory
The inventory remains low and could affect sales. If there are not enough choices for buyers to choose from, there will not be as many sales. Therefore, the market is still depending on baby boomers to scale down, so the next generations can purchase those larger homes for their growing families. This natural market process has always been the normal progression, but history has never experienced such low inventory, at least in my 40 some years of real estate. Some of this shortage can be explained by the fact that baby boomers are living longer than previous generations; and are somewhat healthier and wish to stay in their homes longer. This trend is aided by additional in-home care programs and/or the encouragement by their children to help with maintenance and care, which allows their parents to remain in their homes longer and more comfortably.
The Numbers – Greater Regional Alliance of Realtors (GRAR)
We still have limited information, but the following numbers are very encouraging:
TOTAL STATS FOR COVID PERIOD TO DATE 2020 vs. 2019* – Limited Real Estate Activity Reinstated
| Period | New Listings | Pending Sales | Closed Sales |
| 5/7/20 – 5/27/20 | 1,116 | 1,103 | 376 |
| 5/9/19 – 5/29/19 | 1,075 | 999 | 769 |
| Year Over Year % | + 3.8% | + 10.4% | -51.1% |
*Coverage area includes all of Kent and Ionia Counties, northern Barry County (inclusive of Gun Lake) and southeastern Ottawa County.
Of course, the Closed Transactions are about 50% of the compared time frame in 2019, but the strong pending transactions haven’t had time to close yet and should provide normal or increased comparative numbers as they close over the next 30 days. One more month and we will know much more.
The Forecast
The local real estate engine seems to be running well, as the Covid-19 gate opens. However, we need more fuel to keep the engine running at its best. Covid-19 conditions or not, the fuel always translates to inventory, which are homes available to purchase. It seems to be a great time to sell a home. When the demand is strong and the interest rates are extremely low, buyers tend to look and then get caught up emotionally, because they can. Sellers usually understand those economics and will most likely provide more listings, as the Covid-19 fears continue to subside. Even though inventory may remain historically low, I suspect that new listings will at least keep pace with 2019, as we approach mid-summer.
Two things come to mind. On the positive side, as America works their way through difficulties, they tend to dust themselves off and move on. I believe Americans are trying to do so. On the negative side, we now have historically high unemployment. Consequently, those without jobs cannot buy homes. Even though the U.S. Dept. of Labor jobs report came out last week with a drop in the unemployment rate of 1.4% to 13.3%, it remains nearly quadruple the rate from February, which was at 3.5%. Obviously, jobs create income and income allows for home sales to happen. The decline of the unemployment rate and the creation of new jobs may be slower than we like, which may cause some bumps in the road as we move forward. Therefore, we may feel some dips in demand over the next several months, as people get back to work or find new employment, but the sound foundation of demand should continue. The numbers above, are already indicating that a very active rebound is underway.
Current mortgage rates are incredibly low, but mortgage lenders will most likely remain a bit skeptical and tighten their requirements throughout the summer. Most lenders have increased the required credit score levels and documentation requirements necessary for mortgage approval and affordability. If the economy continues to improve and Covid-19 continues to diminish, those increased lending conditions should begin to fade away. Regardless of an inconsistent remainder to 2020, with real estate demand, inventory or economic indicators, we should be looking forward to a strong finish to 2020 and a solid 2021. West Michigan has one of the stronger housing markets in the nation and West Michigan buyers are continuing to prove that position.
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 43 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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