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.

June 2024 Edition

-Inching Closer
-The Latest Area Market Statistics
-Monthly Summary — What Does All This Mean?

Inching Closer

The Consumer Price Index (CPI) is the Federal Reserve’s (FED) closely monitored measure of inflation, which tracks consumer prices. The annual CPI rate decreased slightly in May from 3.4% to 3.3%. This is viewed positively by most economists.

The chart above breaks down the categories, comparing current data to figures from 12 months ago. Auto insurance leads the list, unsurprisingly to those paying for vehicle insurance. Unfortunately, rent and housing come in second and third, driven by market conditions of supply and demand.

On a positive note, earnings are outpacing the current CPI rate. The rest of the list is not only interesting but also demonstrates the FED’s progress over the past year.

Additionally, wholesale prices unexpectedly declined in May, providing further evidence that inflation is easing. The Producer Price Index (PPI), which measures the prices producers receive from retailers for their goods and services, fell by 0.2% for the month, as reported last Thursday. Annually, PPI increased by only 2.2%, serving as a forecasting tool for future CPI, and prices to be paid by consumers in the future.

Home buyers, home sellers, as well as all consumers are hopeful that the easing inflation data will prompt the FED to reduce interest rates this year. The FED’s latest announcement last Wednesday hinted at a modest 0.25 percentage point rate cut later this year, contingent on continued positive monthly data. As we approach the FED’s goal of 2.0% CPI, there may be justification for additional rate reductions. The progress from a CPI high of 9.1% exactly 24 months ago to 3.3% today is encouraging.

In the real estate market, West Michigan continues to experience strong demand, with most areas seeing increases in average sale prices despite higher interest rates.

As we await more detailed statistics, here’s what’s happening in our local 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 lower Average Sale Prices from last month, except Forest Hills, Rockford and Belding. The largest Year-Over-Year increases to date are Belding (7.3%), Forest Hills (5.0%), Lowell (4.4%), and Rockford (1.0%).

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

Rockford, Forest Hills, Lakewood and Saranac have experienced year-over-year increases. Caledonia, Lowell and Belding have experienced decreases. All our focus area school districts have increased Pending Sales over the last month, except Lowell.

June 2024 Monthly Summary

What does all this mean?

The Federal Reserve’s ongoing efforts to reduce inflation are crucial for restoring home ownership affordability, particularly for first-time homebuyers. With average sale prices remaining high, lower interest rates are essential for providing relief. Across the United States, many real estate markets are experiencing stagnant prices and reduced demand. However, West Michigan stands out as a highly attractive area for families, thanks to its quality of life and strong community appeal.

Despite those trends of slower demand, West Michigan continues to face low inventory for both homebuyers and renters. This shortage is unlikely to change significantly throughout 2024. Nevertheless, the FED’s progress in controlling inflation offers some hope for the future. As the FED makes strides in this area, we can anticipate a more favorable environment for potential homeowners.

Overall, while the broader real estate market nationwide may be sluggish, West Michigan’s unique appeal keeps demand steady. With continued efforts to manage inflation, we can look forward to a more balanced and accessible housing market in the years to come.

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.