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.

March 2024 Edition

-My Perspective – The Wait Continues
-The Latest Area Market Statistics
-Monthly Summary – What Does All This Mean?

My Perspective – The Wait Continues

The latest economic reports highlight that inflation remains a significant concern, with data from various indicators showing higher than expected increases. Both the Consumer Price Index (CPI) and the Producer Price Index (PPI) surged beyond projections, dashing hopes of any near-term reduction in interest rates.

Starting with last Tuesday’s announcement of a 3.2% year-over-year increase in CPI, the week ended with Thursday’s release revealing mounting pressures at the wholesale level in the PPI report.
These reports will strongly influence the Federal Reserve’s (FED) upcoming policy meeting, where discussions will focus on interest rates and long-term forecasts. Most economists believe that if this trend continues, preemptive rate cuts will become increasingly difficult to justify, suggesting that the battle against inflation is not over.

On Thursday, the Labor Department reported a significant 0.6% increase in the PPI for February, doubling most estimates. The CPI also rose 0.4% on the month and 3.2% from a year ago, slightly exceeding forecasts. This could lead to the Fed maintaining interest rates higher for longer than originally expected much to consumers’ dismay.

Despite much lower inflation data than several months ago, consumers are showing signs of curbing their spending spree, as retail sales increased below estimates, indicating a possible shift in consumer behavior.

On a positive note, the inflationary reports on “shelter”, which includes home sale prices and rents, showed a slight decrease in February nationwide. However, shelter costs throughout West Michigan remain on the increasing side, especially within our focus area school districts.

Both buyers and sellers have been eagerly awaiting interest rate relief to help stimulate the real estate market, with hopes of boosting both demand and inventory as we approach the 2024 spring market.

Here are the most recent statistics from our focus area markets:

The Latest Housing Statistics

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 Rockford, Caledonia, and Lakewood. The Entire MLS is up $2,711 (slightly less than 1%). The Lowell School District is up $25,041 (5.9%), mostly due to some early year new construction closings.

All our focus areas currently have higher Average Sale Prices than last month, except Lakewood. The Entire MLS increased $2,194 and the Lowell School District increased $2,554 .

Here are the year-to-date 2024 12-Month Rolling Average Sale Prices for our Surrounding Townships. The Lowell School District takes up a portion of each of these townships, except Vergennes and Lowell, where those entire townships are totally encompassed by the Lowell School District. All our focus area townships had increases from last month, except Keene Township. This chart shows us a bit more of current geographic values, rather than school district values.

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

The Entire MLS had a year-over-year monthly increase in Pending Sales for the first time in many months (2,174 to 2,452). However, all our focus area school districts reported decreases, except Saranac, with Forest Hill staying relatively the same.

As we enter the beginning of spring weather, we should begin to experience more demand and additional inventory. We will look at this chart closely over the next several months, as the hope of lower interest rates becomes a reality for buyers and sellers.

March 2024 Monthly Summary

What does all this mean?

Amid persistent inflation, the prospect of interest rate relief is uncertain. While the FED may need to consider relaxing its 2% target goal, I agree that the risk of another surge in inflation outweighs the benefits of lowering rates prematurely. Despite this, the economy remains robust, characterized by job growth, low unemployment, and adequate consumer spending. With these factors in mind, the FED will likely continue its efforts to curb inflation. Expect interest rates to remain higher until mid-summer to mid-fall, then hopefully, the FED can identify a clearer and safer path to begin reducing them.

On the local front, all our focus area school district markets remain stronger than most other markets around Michigan and the entire Midwest region.

 

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.