Why Did The Housing Market not Crash in West MI in 2023 like some thought it would?
Why Did The Housing Market not Crash in West MI in 2023 like some thought it would?
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Real Estate is a great Hedge to Fight Inflation
While we are seeing more demand than inventory in the housing market, which certainly serves as a seller's market, buying in our current economy is also a good financial move.
It’s no secret we are seeing firsthand the effects of high inflation, the highest it’s been in decades. Food prices, natural gas, and gas prices are all up 6%, 25%, and 58%, respectively. Unfortunately, it shows no signs of going down in the relatively near future.
As we watch market trends, we are seeing that rents are up 3% and have been growing more than 5% annually. Many times it’s more expensive to rent than to purchase your own home. In addition to rent hikes, current mortgage rates are also slowly increasing. We’ve seen it already grow in some markets for a 30 year fixed mortgage in December 2021 of 3% to 3.8% the first week in March.
So what does this all mean for homebuyers? According to Lawrence Yun, NAR Chief Economist, historically real estate has proven to be a good hedge against inflation. Statistics show that the rate in home value has grown over 2% higher than inflation rates & home prices even held up in the 1980s with skyrocketing interest rates and low home sales.
As we turn the corner on winter and we head into spring, we are seeing it favorable for home buyers as mortgage rates are still lower now and as seen in other decades, home value has held their inflation value. So even with the seemingly lower purchase price that buyers may worry about in this market, owning real estate has proven to hold up as a great investment against inflation.
Area Real Estate News & Market Trends
You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!
Interest Rates jump over a 1/2 percent the week of 1/3/22
As expected interest rates are on the rise to start out 2022 for a multitude of reasons. Rates are still relatively low. Take a look at where we expect to see interest rates go in 2022.
West Michigan saw a record year for home appreciation growth, a 14.3% increase overall. To put that in perspective in an average market we see 2-4% growth. See how much the home values appreciated in your community.
42 Familes Served in 2021. Thank You!
Happy New Year to all of our past, current, future clients, & family friends. We partnered w/16 sellers, 26 buyers. We continue to get most of our biz from all you folks trusting us with your closest friends & family. Thank you! I'm most proud of closing almost half of my buyers w/FHA financing in the most competitive buyers market in WM history, most only had a few thousand to make it work. When I set out to do this my goal was to do real estate differently & give my clients an advantage in our competitive market. We do this by spending time to find inventory off-market by networking with other realtors and calling on potential sellers every day. By connecting you to the best resources for your situation. Once buyers are ready to make an offer we take a proven approach to get the offer accepted. For sellers, one of the many ways we give an advantage is by providing an extra service or two that will ensure you net more, whether that be an included pre-inspection, or professional cleaner. Next year our goal is to help 55 families accomplish their goal of making a transition. Jan is god month to get organized for the year. Let's touch base and make it a reality for you this year. #wiseradvantage
Earn a higher Net for your home in Winter in West Michigan, Here's Why.
We saw 1887 homes hit the market in Dec. 2021 Only 1/3 of the 4800 listings we saw hit at the market's 2021 peak volume in July. With lots of sellers looking to cash in this Spring and rising interest rates for buyers if you need to sell and are just "waiting until Spring" I would argue in most instances you will receive a higher net w/more favorable terms if you list in Jan or Feb. Ask for 60 days after close, you're still moving in the spring. Just a thought as I ponder at my desk.
Ranked in the Top 300 of Realtors in Grand Rapids
2021 was a breakthrough year for my business. I landed #205 in volume out of 3500 Real Estate professionals in our Realtor association. The love from past clients & the circle of others around me is an assurance we have a good thing going here. My WHY for doing this has always been to accomplish your big goals however possible & to offer an advantage. I know I have some of the best professionals in WM ready to make your goals a reality in 2022. Jan is the best month to get organized. 📲I am here to assist no matter the obstacle.
The last 18 months in real estate have been a wild ride. Average sale price is up by double digits, new listings are selling like hot cakes, and there is extreme competition among buyers. The pace and frenzy of the market have been both invigorating and daunting. The balance between fear-of-missing-out and market fatigue dictates buyer, seller and realtor behavior.
One thing we know for sure is that these conditions won’t last forever. This market will change. But when?
In addressing that question, it’s important to first appreciate the driving forces of today’s market. Since the pandemic began, government stimulus to the economy has resulted in many people having more money to spend – and one of the main places they have been spending it is in real estate.
The desire for residential housing both as sanctuary and retreat during COVID — not to mention functioning as a home office, home school, home gym, etc. — has bolstered both primary and second-home purchasing. Persistently low interest rates continue to spur the impulse to purchase as well. These factors, on top of a systemic 10-year shortage of available housing inventory that has grown year after year, have all helped lead to today’s imbalance between supply (available listings) and demand (active buyers).
So, if the question is “when will things change?” the answer is “well… it depends.” Here are three things we will be watching as we move forward:
Interest Rates
While government stimulus spending is likely to lead to inflation and upward pressure on interest rates, rates have stayed low so far. This is largely due to the U.S. bond market still being a relatively attractive place in the eyes of investors from around the globe. Rates may tic up a bit, but they appear poised to remain near our current historic lows.
Affordability
Affordability also may cause a shift in buyer behavior. So far, people are prioritizing housing near the top of their budgetary hierarchy. That has meant the demand side of the housing market is strong, even in the face of rising prices. How much rising incomes are able to keep pace with the rise in housing values will be a key factor in how long this trend can persist. For now, interest rates, money supply and modestly increasing incomes seem to be overcoming any acute concerns about affordability.
Increased Investment in Residential
The rise of vacation rentals (think Airb&b and VRBO) has meant increased demand for residential real estate. The popularity of vacation rentals among travelers appears to have potential for even further growth. As it grows, investors will continue to look for properties to buy to meet that demand. Investment in residential real estate will continue to be a factor in steady demand and value increases.
So, what’s the message? Considering these factors, we see a robust West Michigan real estate market continuing its current trend for the next 12 to 18 months. Even as some of the above factors shift and we continue to move back toward a less frenzied market, the medium term to five years looks like it will shift to a more gradual increase in values – but not a drop in values. For those with changing real estate needs, it will remain a good time to take advantage of solid equity positions and favorable interest rates.
Appraisal Gaps are on the Rise!
It’s economy 101 – when supply is low and demand is high, prices naturally rise. That’s what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals.
In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this: “Recently, we observed buyers paying prices above the listing price and higher than the market data available to appraisers can support. This difference is known as ‘the appraisal gap . . . .” Why does an appraisal gap happen? Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you’ve ever toured a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers.
When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts. Dustin Harris, Appraiser Coach, drives this point home: “It’s important for everyone to understand that the appraiser’s job, in the end, is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.” In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional. In a highly competitive market like today’s, having a discrepancy between the two numbers isn’t unusual.
What does this mean for you? Ultimately, knowledge is power. The best thing you can do is understand an appraisal gap may impact your transaction if you’re buying or selling. If you do encounter an appraisal below your contract price, know that in today’s sellers’ market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home. Do you want more insight into the mind of an appraiser? Click here to rewatch Wake Up with YPN, where Blaine Feyen answers all of your questions about appraisals!
- Article from Keeping Current Matters
Make sure you're hiring a listing agent to sell your home!
Did you know the average Realtor may only list 4 homes a year, most of which are usually those of close relatives or friends? Most Realtors do upwards of 80% of their business on the buyside. Whereas an experienced Listing Agent averages listing 2 to 3 listings a month, half to a majority of their business is in listing the properties.
When seeking a Realtor to list your home make sure they specialize as a listing agent. A good listing agent should have a recent portfolio of their business, a well laid-out marketing plan, and be able to speak freely about all the variables that are unique to your home. The buy-side and list side of the market may seem similar, but they are not! Hiring mainly a buyer's agent to list your home could be a very costly mistake. Simply put, they don't know what they don't know. As an experienced listing agent, you can trust your biggest asset, your home will be sold for the highest net, most favorable terms, and be marketed to the best of its ability. - Josh Wiser, Team Leader & Realtor, The Wiser Group
Still a seller's market in West Michigan but it's starting to cool down updated 9-23-21 !
Realtors across West Michigan have noticed a shift in the market over the past couple of months. We are still in a seller's market, but homes are starting to see a reduction in the number of offers submitted, terms offered by buyers are becoming less aggressive, & sales prices over listing price are in a steady decline from historic late Winter/Spring highs. More so than ever it is important that you are choosing an experienced listing agent to effectively market your home so you can receive the most favorable terms and highest net for your property! Josh Wiser, Team Leader The Wiser Group
Interviewing your Buyer's Agent & asking the right questions will make all the difference in getting your offer accepted in our current competitive market!
You may have heard we are dealing with the lowest home inventory levels in our lifetime. The past few months we have had less than 1 month of inventory, the past few years we have had around 2 months. This market is competitive for buyers under $225k (it has been for years), but it is very doable or I would be without a job. With a solid plan in place and writing the best offer, not the highest offer you can get any loan type accepted right now.
Your mortgage preapproval will be a huge determining factor of your overall strategy and experience. You should speak w/different lenders to get the best possible program that works for you and shows your strongest position possible to a listing agent. Lenders want realtor’s business and do a great job informing us of all the special programs they offer. Speaking with a realtor before a lender can be helpful in navigating you to the strongest position. (I can help with this, most buyers don't do this and it can hurt you).
Second, interview your buyer's agent. They will be your ticket to cutting through the competition & getting your offer accepted. It is the difference maker.
Ask them what their process is for getting your offer accepted (make sure they have one!). Do they just email the offer over or do they get on the phone and fight for you!
Make sure they develop a strategy for you based off your situation. They should do this without asking.
Make sure they fully review your preapproval situation. If they are not offering alternatives be wary. You do not have to go with these, alternatives, but you have several options to make you stronger on the lending side of things. They should be thinking about this.
Ask them what conditions in the purchase agreement may benefit your situation.
Make sure they are going to be on the lookout for off-market properties ie for sale by owners etc., listing in their office, etc. Ask them what their system is for staying on top of your search. If the agent is not sending you a listing through text every week or two be wary. That means they are not watching your search and are just waiting for your call. They are not taking a proactive approach and you both may be missing opportunities.
Ask them how they have won for their other clients this year in a multiple offer situation with your loan type.
A buyer's agent job has never been tougher than right now. Those that are doing a lot of business right now are effectively navigating this market & getting it done as in years past. Make sure you choose wisely! It's the difference-maker out there right now. That’s my advice for ensuring you reach your real estate goals this year if you’re a first-time buyer under $225k
-Josh Wiser, Realtor & Team Leader, The Wiser Group
Connect with a Realtor early on to ensure the best experience
I know this housing market can seem impossible (it’s not) with all the negative talk spewing around, but if you’re thinking of starting to look for a it’s so crucial you let your realtor of choice know early on.
Active realtors have learned to adapt to this market, so many things are happening behind the scenes these days. You essentially need someone to be scouting these opportunities for you below the surface of what everyone sees.
When you choose a realtor make sure you ask them what systems they have in place for buyers & sellers to ensure you find the home you love in a reasonable amount of time. What systems do they have in place to beat other offers? Etc. The explanation should go beyond watching the MLS for inventory to come on the market amongst other things!
-Josh Wiser, Realtor & Team Leader, The Wiser Group
How to sell a home & buy a new one without a deadline or contingency
You will find a home you love if you decide to sell your cash cow starter home! Here's how:
1. We hold it as a pocket listing (off-market). W/100 agents in my office, we have a great buyer for your property willing to negotiate your transition terms.
2. Make the sale contingent on you finding another home. Somewhat common in this market.
3. Use lending programs that are not bridge loans that allow you to buy first then list after you're under contract with your new home.
4. Ask for 60 days after close. Giving you 2 months to find a new home, that's a long time to complete the search process.
I promise you will not be homeless. The above will cover your back. #wiseradvantage
-Josh Wiser, Realtor & Team Leader, The Wiser Group
Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!
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We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.
