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, knowledge and insight 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].
RANDOM THOUGHTS/2021 PREDICTIONS
I have a few thoughts and reminders this month as we head to the 2020 finish line. I must include some statistics as they have been popular with many readers of The Real Estate Corner this year. It’s also time to provide some housing predictions for 2021.
Some Statistics
Market Demand – Year to Date Through November 2020
| Location | Average Sale Price | Pending Sales |
| Lowell School District | $301,057 +6.5% | +4.2% |
| Forest Hills | $469,100 +7.7% | +3.7% |
| Rockford | $333,417 +5.1% | -1.1% |
| Caledonia | $371,298 +13.0% | +4.3% |
| Saranac | $222,032 +16.7% | +4.3% |
| Belding | $176,519 +5.0% | +4.4% |
| Lakewood | $177,877 +8.5% | +24.8% |
Statistics courtesy of GRAR is the Greater Regional Alliance of Realtors.
This is not the final tally, but 2020 has already been a record year. There have been very robust Average Sale Price increases from 2019, which includes about 2 months of very little activity due to COVID-19. The total number of homes sold in 2020 has been either equal or a little less in most market areas, but total dollar volume has increased. Pending Sales remain very strong, which equates to a very strong closing month in December.
Market Inventory – Year to Date Through November 2020
| Location | Homes Currently for Sale | Months of Supply |
| Entire MLS – GRAR* | 5,303 | 2.0 |
| Lowell School District | 33 | 1.2 |
| Forest Hills | 108 | 2.0 |
| Rockford | 94 | 1.6 |
| Caledonia | 56 | 1.9 |
| Saranac | 9 | 1.5 |
| Belding | 21 | 1.4 |
| Lakewood | 23 | 2.0 |
*MLS is Multiple Listing Service. GRAR is the Greater Regional Alliance of Realtors. Coverage area includes all of Kent and Ionia Counties, northern Barry County (inclusive of Gun Lake) and southeastern Ottawa County. Statistics courtesy of GRAR is the 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. Lack of inventory has been the market theme everywhere for the past few years. Low inventory means less choices for buyers. Extremely low inventory and above average demand causes escalating prices and multiple offers on desirable new listings. These numbers are remarkable. The demand for housing in the Lowell School District is keeping the Months of Supply at an extremely low level of 1.2 months. Only 33 homes were for sale at the end of November, as we move into the slower listing holiday months and the beginning of winter. There is a very good chance that the Lowell School District Months of Supply could fall UNDER 1.0 in the coming months, which would be extremely rare in any real estate market.
Just for Fun
So far, through November 2020, the highest and lowest price home sales in our focus area are:
| School District | Lowest Home Sale 2020 | Highest Home Sale 2020 |
| Lowell | $18,900 | $2,900,000 |
| Forest Hills | $126,350 | $2,300,000 |
| Rockford | $76,000 | $970,000 |
| Caledonia | $90,000 | $1,600,000 |
| Belding | $12,000 | $690,000 |
| Saranac | $45,000 | $850,000 |
| Lakewood | $42,000 | $525,000 |
Statistics courtesy of GRAR is the Greater Regional Alliance of Realtors.
Again, this was just for fun. Please, don’t call me requesting one of those $18,900 homes. I’m sure there were extenuating circumstances, such as a tear-down home on a tiny lot. Conversely, you are certainly welcome to call me requesting one of those $2,900,000 homes.
Realtor Best Practices
COVID has not left the party yet, but vaccinations are on the way. However, it may not be until summer until everyone that wants the vaccine will be able to obtain it. There may also be some lingering risk as we try and end its continued grasp. More than likely, efforts to stay safe in our industry will continue until the chance of contaminations diminish well below a safeness level. Sellers will stay in charge with their wishes of any combinations of required protocol during home showings. The current combination of those requirements are masks, limited number of buyers in a home at one time, footwear removal or booties, and agent surface touch only with sanitizing wipes. Some sellers with higher risk still require the use of protective gloves.
2021 Outlook
We still have many questions to be answered, such as the economic effects of the recent escalation of COVID-19 infections and consequential related restrictions. The housing industry continues to coast through the pandemic rather unscathed. However, without an effective vaccination distribution and a full economic recovery, there could be growing consequences and deeper economic concerns on the horizon. As of this writing, the United States continues to be within the definition of a recession, waiting for additional answers for those unemployed and financially impacted with past due rent and mortgage payments. We are all certainly hoping for the best and quickest return to normality.
With that said, I’m taking a middle of the road approach to my thoughts for 2021:
Interest rates – We continue to have the near record low interest rates, which continues to help fuel the housing purchase demand. With rising sale prices, low interest rates help with affordability and are rather necessary for First-Time Homebuyers. The national consensus is for 30 Year Fixed Rates to remain in the high 2% to low 3% range for the near term, but potentially increasing to the mid-3% range toward the middle and end of 2021. Does anyone remember the early 1980’s with rates exceeding 17%? I do.
Home Prices – There are National predictions ranging from average increases of 2% to 5%. I believe that we will experience slower increases locally. I need to reiterate that real estate is local, so market areas and neighborhoods will experience their own demand. We have been examining local school districts throughout the year, but there are market areas within each school district. I believe the range will be 2% to 5%, but closer to a 5% to 6% range in the first and second quarters and slowing to a 3% to 4% range toward the middle and end of 2021.
Demand – I fully expect buyer demand to continue at a steady clip from all age groups, especially the older Millennials and the Generation X group (born 1965-80). The First-Time Homebuyer movement will continue to surge toward 40% of all home sales in 2021, which will be fueled mostly by Millennials. As COVID-19 concerns begin to diminish, look for an uptick of Baby Boomers finally letting go of their larger homes, in favor of smaller homes and condominiums. Additionally, we can’t forget about the front end of the up and coming Generation Z group (born 1998-2010), as they begin to heat up the First-Time Homebuyer Market. Homeownership is alive and well and the future demand looks extremely healthy.
Market Supply – In the short run, expect the same low inventory of listings. Seasonality has not necessarily held true over the past several years in West Michigan, as buyer demand has remained constant over the winter. However, sellers tend to wait a bit from November through February, when deciding to sell. This creates an even better Seller’s Market over the next several months. As new construction continues to expand at a higher pace through 2021, most of those new owners will have an existing home to sell. This will account for some inventory of existing homes to increase. I also foresee a slight uptick of short sales and foreclosure sales, as lenders begin enforcing delinquencies.
Thank you for all the positive emails, texts and comments regarding The Real Estate Corner this year. Hopefully, as the pandemic winds down, we can focus on other subject matters. In the meantime, from my family to yours, have a safe and enjoyable holiday season.
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 44 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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