Rick Seese has 50 years experience working in real estate market, and each month, he shares the latest news and outlook for Lowell-area housing market.

March 2025 Edition

-Inflation/Mortgage Rates
-Where Are We Headed?
-The Housing Market Outlook 2025
-The Latest Area Market Statistics
-Monthly Recap – Uncertainty Continues

Inflation – More or Less?

The February Consumer Price Index (CPI) report exceeded expectations, followed by an equally positive reading from the Producer Price Index (PPI). However, both indexes remain close to 3.0%, still above the Federal Reserve’s 2.0% target. While these figures are encouraging, concerns persist about potential inflationary pressures, particularly as new tariffs take effect.

A key contributor to the lower CPI was a sharp decline in airfare prices. Additionally, the pace of residential rent increases slowed, while hotel room and car insurance costs rose more moderately compared to the previous month. The price of new cars also declined in February, further easing inflationary pressure. These trends suggest that consumers are cutting back on travel—especially air travel—and reducing overall spending.

Further reflecting this shift, the March Consumer Sentiment Index dropped to its lowest level in two and a half years, signaling growing caution among consumers.

Interest Rates – Stuck in the Middle

After hitting a four-month low early last week, 30-year mortgage rates initially spiked but have since stabilized just above their recent low.

As of last Friday, Bryant Ellam of Lake Michigan Credit Union quoted:

• 6.50% for a 30-year fixed-rate mortgage
• 6.125% for a 5-year adjustable-rate mortgage (ARM)

For context, in April 2024, the 30-year average peaked at 7.37%, making today’s rates a notable improvement. However, they remain 1.4 percentage points below the 23-year high of 8.01% recorded in October 2023.

Where Are We Headed?

As 2025 unfolds, housing market activity remains steady despite rising home prices and elevated mortgage rates, which continue to challenge prospective buyers. Mortgage rates are currently fluctuating between 6% and 7%, falling short of economists’ earlier optimistic predictions. Meanwhile, home prices continue to climb, particularly in high-demand areas.

However, the rapid price growth that began in 2020 is slowing in some markets, driven by increasing inventory and softer demand stemming from affordability concerns and economic uncertainty. Despite this shift, both home prices and mortgage rates are expected to remain elevated in the foreseeable future.

In many of our focus-area school districts, demand remains strong, while inventory remains below average. This ongoing supply-demand imbalance continues to drive upward pressure on home prices.

Housing Market Outlook for 2025

Over the past five years, median existing home prices have surged nearly 40% nationwide. However, in 2024, prices increased by just 3.9%, indicating a noticeable slowdown. This trend is expected to continue into 2025 as inventory levels gradually rise and mortgage rates remain above 6%.

That said, housing market conditions vary widely across different regions. In some parts of the U.S., large-scale government job losses could have a significant impact on housing supply, as affected homeowners may need to relocate for new employment or sell their homes due to financial strain.

Despite the slower pace of price growth, homeownership remains out of reach for many buyers, particularly first-time homebuyers. To improve affordability, two key changes are necessary:

• A substantial increase in inventory to ease upward pressure on home prices.
• Lower mortgage rates to expand access to homeownership for a larger pool of buyers.

West Michigan remains a popular destination for younger homebuyers looking to establish careers and raise families. As a result, strong demand and tight inventory are expected to persist in our focus-area school districts.

Check out the latest market statistics below.

Below are the current 12-Month Rolling Average Sale Prices for our surrounding focus-area school districts, including the entire GRAR MLS (Greater Regional Alliance of Realtors Multiple Listing Service).

Over the past month, Rockford, Lowell, Belding, and Lakewood saw increases in their Average Sale Prices, while Forest Hills, Caledonia, Saranac, and the entire GRAR MLS experienced slight declines.

It’s still early in the year to identify clear trends. However, the largest year-over-year Final Average Sale Price increases for 2024 within our focus areas were:

• Lowell: +9.7%
• Forest Hills: +8.3%
• Belding: +7.4%
• Rockford: +6.4%
• Caledonia: +4.5%

We will continue to monitor early 2025 spring market statistics for emerging trends.

Pending Sales represent homes that are under contract with an accepted offer but have not yet closed. These transactions provide insight into future closing trends, which ultimately contribute to actual sale price data.

Year over year, Rockford, Lowell, and Belding saw an increase in Pending Sales, while all other school districts experienced declines. However, the entire GRAR MLS recorded a year-over-year increase in Pending Sales.

Comparing to the previous month, only Rockford, Lakewood, and the entire MLS saw an uptick in Pending Sales, while all other focus areas experienced declines. These numbers are expected to rise as we enter the busy spring market.

New Listings play a crucial role in inventory growth, making them a key metric to watch. This month, we are introducing this category to track new listings more closely. A healthy inventory level is essential for maintaining balanced sale price growth—without sufficient inventory, increased demand will continue to push prices higher.

As shown in our new chart, all focus-area school districts experienced a year-over-year decline in new listings, except for Saranac, which saw an increase. The entire MLS also recorded a decrease in new listings.

The coming months will provide a clearer picture of overall inventory trends, helping us assess whether supply levels will improve or remain constrained.

March 2025 Monthly Summary

Uncertainty Continues

The West Michigan housing market appears to be following a similar pattern to last year, with limited inventory and fewer buyers navigating an already competitive landscape.

However, broader economic concerns loom, particularly the impact of potential massive federal job losses on employment and consumer spending. A decline in spending could lead to further job losses, putting additional strain on businesses already facing profitability challenges. Coupled with declining consumer confidence and the uncertain effects of tariffs, these factors increase the risk of an economic downturn or even a potential recession. Uncertainty carries consequences.

As we move forward, we will closely monitor critical economic and housing market trends, including:

• Inflation trends & the impact of tariffs
• Mortgage rates & Federal Reserve policy decisions
• Retail sales & employment data
• Financial markets & consumer sentiment
• Pending home sales & housing inventory levels

The coming months will be pivotal in shaping the direction of both the housing market and the broader economy. Stay tuned for updates as we continue to track these key developments.

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.