The Real Estate Corner with Rick Seese: July 2024 Edition

Rick Seese has 47 years experience working in real estate market, and each month, he shares the latest news and outlook for Lowell-area housing market.

July 2024 Edition

-Happy Dance?
-The Latest Area Market Statistics
-Monthly Summary — What Does All This Mean?

Happy Dance?

The Consumer Price Index (CPI) reported last Thursday was met with widespread applause from those hoping for the Federal Reserve (FED) to begin lowering interest rates. However, Friday brought an elevated Producer Price Index (PPI). Despite this, the data strongly suggests that the FED’s efforts to combat inflation have been effective and continue to be so.

For US consumers, inflation has been trending in a favorable direction over the past couple of months, exciting homebuyers across the country. Despite some brief price increases earlier this year, inflation has cooled significantly over the last three months.

The Thursday CPI report, which is the most widely used measure of tracking consumer prices, dropped on a monthly basis for the first time since 2020, and annual inflation slowed to 3%. This monthly drop was negative, indicating that prices actually fell. Then, Friday brought news of a slightly elevated PPI report, which tracks wholesale prices. The PPI rose 0.2% for the month, above the forecasted 0.1%. The 12-month PPI inflation rate increased to 2.6%, compared to the forecasted 2.3%.

These reports brought a bit of confusion and varied opinions concerning future interest rate decisions by the FED. Some believe lower rates could be delayed further, while others think the FED will view the overall conditions as positive.

For homebuyers, here are some key points: the long-awaited slowdown in inflation is real. Other reports indicate that the labor market is balancing out, with the supply of available workers nearly matching hiring demand. The job market remains strong, wages are up, the unemployment rate has slightly exceeded 4%, and the stock market continues to reach new highs.

All these factors suggest that interest rates may ease in the coming months. Many experts believe that September could see the first round of cuts, with another potential cut in December. Of course, we need continued monthly CPI and PPI reports that point in the right direction, but all the underlying factors indicate that the positive trend of lower inflation should continue.

This should be very encouraging news for those currently shopping for a home, as well as those who purchased with elevated interest rates over the past several months. I foresee a lot of refinancing opportunities in 2025 and 2026.

As we await more detailed statistics, here’s what’s happening in our focus area real estate markets:

We are comparing the current 12-Month Rolling Average Sale Prices with the final 2023 Average Sale Prices within our surrounding focus area school districts.

All our focus areas have higher Average Sale Prices compared to 2023 ending prices, except Saranac and Lakewood. All our focus areas have higher Average Sale Prices from last month, except Forest Hills, Belding and Lakewood. The largest Year-Over-Year Average Sale Price increases to date are Belding (5.0%), Forest Hills (4.8%), Lowell (4.4%), and Rockford (2.2%).

Pending Sales are sales under contract with an accepted offer, but those transactions have not been finalized yet (closed).

Caledonia, Lowell and Lakewood have experienced year-over-year Pending Sales increases and increases from last month. Rockford, Forest Hills, Belding and Saranac registered decreases in Pending Sales both year-over-year and from last month.

July 2024 Monthly Summary

What does all this mean?

Our local real estate markets in West Michigan continue to be strong. Sales have continued despite higher interest rates, and average sale prices have consistently risen. If interest rates begin to fall, we could see a return to a frenzied market, with multiple offers on homes in high-demand locations becoming the norm once again. First-time homebuyers will appreciate the increased affordability that comes with lower rates but may still face challenges in a competitive market.

Lower interest rates could also lead to a welcomed increase in inventory, as homeowners with low mortgage rates who wish to move may find the new rates more acceptable. As rates continue to drop, this phenomenon could continue to multiply, and lead to a long-awaited more balanced market.

The real estate markets in our focus area school districts are thriving, and West Michigan remains a highly desirable place to purchase a home and raise a family.

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

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