The Real Estate Corner with Rick Seese: September Update

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 and knowledge 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].

Moving Forward

After receiving an abundance of positive comments from last month’s statistical report, I decided to continue with the same concept.  Statistics are important, as they show the past and help predict the future.  However, statistics do not guarantee the future, they merely help guide us toward a reasonable prediction.  Real estate brokers throughout America have been stating for several years — that real estate is local.  Our surrounding communities differ in many ways, including the supply and demand side of real estate.  We are now nearly 4 months past COVID-19 restricted home showings, which lasted about 6 weeks.  Let’s compare Year-to-Date numbers where we are today, compared with the same period in 2019.

The Market Demand

This chart compares the Lowell School District market area with other surrounding school district market areas. The percentages are increases/decreases over the same period as last year.

Year to Date Through August 2020

Location Average Sale Price Pending Sales Showings Per Listing
Lowell School District     $289,544        +6.1% +4.5%        4.3        +22.9%
Forest Hills     $426,546        +5.3% -1.7%        4.5         +0.0%
Rockford     $316,031        +3.4% +2.2%        3.5         +25%
Caledonia     $328,384       +10.6% +4.4%        3.1         +3.3%
Saranac     $221,779       +13.1% +4.5%        3.7        +23.3%
Belding     $169,680        +5.3% +5.6%        3.9        +14.7%
Lakewood     $168,384        +7.1% +14.8%        3.0        +36.4%

Statistics courtesy of GRAR is the Greater Regional Alliance of Realtors

All the school districts listed continue to show a strong recovery from the Michigan mandated shut-down.  After 2-3 months of very little sales activity, we’ve spent the last 4 months handling 6 months of demand.  Lowell’s Pending Sales remain strong despite nearing the $300,000 average sale price category.  Caledonia continues their popularity.  Saranac, Belding and Lakewood continue strong demand with more Average Sale Price affordability.  Lowell and Forest Hills continue to outperform in the Showings Per Listing category. The easterly side of Kent County and the westerly side of Ionia County appear to be high demand locations.

Inside the Lowell Market Demand

                                                           Year to Date Through August 2020

Location Average Sale Price Pending Sales Showings Per Listing
Lowell School District     $289,544       +6.1% +4.5%        4.3        +22.9%
City of Lowell     $186,269       +6.8% +8.6%        5.8        +38.1%
Lowell Township     $280,082       +5.1% +4.1%        3.4         +9.7%
Vergennes Township     $336,249       +4.6% +7.0%        3.5         +9.4%

Statistics courtesy of GRAR is the Greater Regional Alliance of Realtors.

As expected, Vergennes Township has a higher Average Sale Price and the City of Lowell provides the most affordability.  The Pending Sales and Showings Per Listing are strongest in the City of Lowell due to more demand for affordable homes within the Lowell School District and closer to conveniences.

The Market Inventory

                                                             Year to Date Through August 2020

Location Homes Currently for Sale Months of Supply
Entire MLS – GRAR*            7,316           -15.9%              2.5             -16.7%
Kent County            1,263           -13.4%              1.6             -11.1%
Ionia County               114            -16.2%              2.3             -17.9%
Lowell School District                 44            -35.3%              1.7             -32.0%
Forest Hills               162              -6.4%              2.4                -4.0%
Rockford               161            -17.8%              2.4              -25.0%
Caledonia                 94            -12.1%              2.6              -10.3%
Saranac                 11            -21.4%              1.8              -25.0%
Belding                 31            -24.4%              2.0              -23.1%
Lakewood                 27              -3.6% 2.5                 -3.8%

*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.

These are Year-to-Date percentage changes from same period as last year.  “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.  As you can see, the extreme low supply continues to be an industry-wide problem, as buyers have fewer choices of homes in higher demand areas.

This is the reason why properly priced listings sell relatively fast and often with multiple offers and a sale price above the listing price.  The above table shows the Lowell School District has 35.3% less homes for sale this year compared to the same time last year.

Inside the Lowell Market Inventory

Year to Date Through August 2020

Location Homes Currently for Sale Months of Supply
Lowell School District                 44            -25.3%              1.7             -32.0%
City of Lowell                   6            -25.0%              1.3             -18.8%
Lowell Township                 13            -18.8%              1.6             -23.8%
Vergennes Township                 10            -37.5%              1.9             -32.1%

Statistics courtesy of GRAR is the Greater Regional Alliance of Realtors.

I have only shown the largest populated three municipalities within the Lowell School District.  This chart magnifies the supply problem.  Only 6 homes were for sale in the City of Lowell when these statistics were accumulated, equaling 1.3 Months of Supply.  I have never seen a more perfect market climate to sell a home in the Lowell School District.

Current Trends

Mortgage applications for 2020 are up about 30% over last year.  This includes purchases and Pre-Approval applications for buyers still in the hunt for a home.  This is a huge indicator of current and future demand.  Before the pandemic, migration trends were movements toward urban centers for more convenience.  The pandemic has turned that trend around, with buyers seeking more elbow room with suburban social distancing.  Work from home flexibility has become the normal and is potentially a growing trend for the future.  Therefore, location to work is mattering less and less.  The data also suggests that first-time home buyers have also been looking to the suburbs for affordability and will continue to do so.  The previous charts are showing an increased demand in Lowell and the surrounding school districts.  Geographically close-in suburbs with well rated school districts seem to be the primary target of buyers, with the next outlying areas being the secondary target for more affordability.

Uncertainties Continue to Loom        

Although jobs have returned to the 8%-10% unemployment level, it’s still a far cry from February levels of around 3%.  There are remaining questions about further job losses, as many businesses are still hanging on by a thread. Unfortunately, consumer spending remains relaxed as more Americans are choosing to save, rather than spend.  This could turn into a big plus, as pent-up spending could return, as the economic picture improves and creates more consumer confidence.  That domino effect could create more employment.  Some questions remain with renter and mortgage delinquencies.  If those affected by the sudden loss of employment have trouble catching up on their payments, there could be an increase of evictions and foreclosures.

What’s Next?

Well no one knows for sure, but some indications tell us that jobs are slowly being added, which will slowly add new buyers into the real estate market.  Some segments of the job market will take longer to recover, such as the travel industry and all the sub-components of travel.  Many retail and restaurants will also be on the slow side for recovery.  Also, let’s not forget that tax revenues are declining, which provide the services that citizens depend on in the cities that they live.  What data also provides for us is the continual movement from larger cities to a slower pace suburb and rural life.  This can be seen happening on our local level, with high demand and low supply in the Lowell School District, eastern Kent County and western Ionia County suburban locations.

With lower interest rates providing market fuel over the next few months, look for more buyer demand increasing.  I believe more first-time home buyers will continue to look for suburb and rural homes to find more affordability.  I also believe there are more Millennials entering the market to strengthen that continued demand.  However, to keep the engine running smoothly, we need more inventory.

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 43 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 or Facebook page at ( Seese), or call/text him at 616-437-2576.

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