Video transcript:

Hey, I'm Steve Volkers broker owner of the Steve Volkers group in Grand Rapids, Michigan. And this is our monthly market update. This is like three in a row Kev. This is pretty legit that we're actually making. What is it like if you got to do 90 days for a habit? So maybe we're, maybe we're making a habit here, but we are talking market data.

Feel free to watch the last two episodes, which sort of built into this month's data. First episode was really about the inventory shortage, still feeling the crunch of that. We talked a lot about new construction and the fact that new construction hasn't come online. To having that issue, which is what the big spike was in pricing over the last six months.

Then, we started talking about what we're going to talk about this week. We heard a lot of agents last month, just sort of saying it's a perfect time to buy the market's going to continue to just thrash upwards. Don't lose out on the opportunity. And I was maybe a little pessimistic and just saying, I can see some ripples that are going to start happening.

Those ripples are starting to take effect, I think. So we're going to talk about affordability. We're going to have a conversation about today. We're gonna talk about interest rates, which are inclusive of the affordability, but then I always want to go to what does a home really mean? And what does home ownership mean to me personally?

Which I think is what we ultimately sell as realtors. So, the market data, Kevin throws together, these, this data this provided through our association but he adds all kinds of graphs to it all kinds of really great info. So I'm going to read through a couple of these slide sheets, then talk specifically why these slide sheets are coming into a fact, which is the data that we get.

And then again, the ownership stuff. Getting into it. We are 160 units off again for this month. So that is 16% down for the year in total sales for the month. That is a lot that's significant in our association that does play into the inventory issue. That there's not enough houses being listed so that buyers can buy or that we can sell obviously.

So that number is going to be down just directly because of that. We've talked about the new construction as well. So sales are off the question just to starting to play out is how much is the interest rate going to play out next month in this data to having sales be off? And we'll talk about that in a second.

Five-year average, we're down 9% in sales compared to last. Closed transactions for last month are 12% down. The kicker always is we're still making money as real estate brokers and agents. If we can put deals together and the sellers are making money in this market, we're up 9% in sales volume. So we're still growing in the number of how much that house is worth because of the inventory issue, even though.

Way below the amount of transactions we should be seeing right now, medium sales, price percentages. This is one that I really want to spend just a second or two on. I scribble. If you want my scribble notes, let me know. I want to talk. So last month we talked about this interest rate increase that's occurring right now and how it occurred back in 2019 and what that felt like.

Right? So in 2019, if you bought, you were heading this five percent-ish range that we're at now, or five, five and a half percent right now. And we saw a pretty decent slowdown. We got up to almost three months of inventory, two and a half to three months of inventory started to settle down. You might have a listing for a couple of weeks.

And buyers were harder to find a transition between that sort of smaller period of time. But what I would tell you is if you bought at that higher interest rate at five, five and a half in 19, because you wanted a home still, you probably got a decent deal or at least paid, maybe full price. Maybe you didn't have to pay a ton over William.

You'll see, in one of these sheets that calves got here, the percentage you had to pay over back at 19, but. The difference is that you would have increased your value 32% since you bought it. Right. So even though you would have to pay a little bit more in the interest rate mentally, if you're okay with that monthly payment, the value of your home would have increased 32% in two and a half years, right.

Three years. So I would just say it's still part of the American dream is really gaining wealth through your house, your home, right? Let's scoot down, scoot down. There's lots of great graphs here. One big one that Kevin wanted me to point out is the average sale of last list price. Right? So if I list a house for 300, I get multiple offers. How much above listed it go or how much below? So in the crash we were seeing, uh, you know, houses sell at 90% of list price or 87% of list price. Right? You could say, oh, well just take 10% off. And that's the price. Offer. Oftentimes right now over the last couple of months, anything in that lower price point, the starter price point, we started price point right now is two 50 to 300, which is crazy.

Right. But let's just say that two to 300 mark, you're saying to your buyers, right? 10% above to get the house. That's what we've been saying for the last six months. I'm going to be a little cautious to say that going forward with my clients. What we did see is that play out in April. We sold homes 107% above list price.

So list price is a hundred percent, 7% above. So whatever number it was listed for add 7%, that's generally what they went pending for. And I think we'll see that slide off a little bit here. Next month. My prediction would be more like the 105. Kevin quote me on that. We'll see how good I am at this predicting thing.

But I think we'll see that come down a little bit. The offers that I've received on homes over the last three days have not been that spike. Yeah. If they're cute and they're priced, right. And they're under two 50, you're going to get some of that spike, but the stuff that's a little bit higher price point is not seeing that big gain, but yeah.

Or let's just see here, back then, in the, in the change over in 19 with those, pricing, when the 5% interest rate came about, we were sitting at about a hundred percent and we went down to 99, 99, 99, 98, 99, 99. And didn't come back up until April 2020 just before COVID we had a hard.

COVID obviously got us for a couple months, and then now we've been just running at 104 to 107 increase above list price every single time. So it just shows you again, this, when the interest rates did this quick, quick jump like they did in 19, we had a fall off of the market. We had a fall off a valid.

We're at least a stabilization of value saying, well, wait, you're listed at four. I'll pay you, but I'm not going to go crazy anymore because they can't afford to go crazy. Like I could last year, month of supply, we're up 20%, but I'm just going to scoot to the last page, which I think is pretty interesting Cav, uh, which is the.

Uh, new listing versus sales per month. And I got all kinds of scribbles. I got my 19 scribbles in here showing that, just slide off that I'm talking about, but what I also am showing is the last two months, we have a flat line of new listings, right? So we listed the same amount last month as we did this month.

So marches and April's listings were almost identical in the. Which isn't normal. Usually you'd have a big March and then you'd have even a bigger April and you'd have also those sales of March and April sort of be on the same trajectory and they flat lined and March, April sales did not peak opt to eat up that inventory that March had in there.

So what you're going to see over the next month or two maybe is that inventory. Increase so that we might even get over a month worth of inventory or, or, uh, again, maybe up to two months of inventory, which would slow the market down. What you're seeing in general, just from being out there in the business and running around and showing houses, the things that are not cute and not under 300 are taking a little bit longer to sell, or they're just only getting one or two offers.

Not. This is not just in grand rapids. I was golfing with my buddy. That's out in Holland has a big real estate team there. He said the same thing. They were seeing 30 to 40 showings on a house, five to seven offers. You name it on Monday, Tuesday. And over the last three weeks, he's down to six to eight showings and hoping he's getting one or two off.

Right. So this is a, an industry, uh, situation in west Michigan. With that interest rate spike that comes down, the interest rate spike comes down to affordability. Anybody that's asked me, what's going to happen. Is there a bubble or what's gonna happen in the market? I've I've said for years, at some point we're having an affordability issue in the market will slow down.

And I think that's where we're at at this. The market's going to start slowing down because of the affordability issue. Affordability means too is just monthly expenses, right? What can a household expense, a $300,000 house, which is your average sale price right now last year would have cost you. At a, at a 3% interest rate this time of year would have cost you 1600 bucks, 1660 for your principal and interest.

Right now you buy a 300,000 it's 2076. So we've gone up $400 for the exact same house, in that period, $400. But that house that's 300 that's being sold right now was a 2 62 50 last year. So we've lost $50,000 in value. Plus $40,000 or 4,000 or $400 a month in just payment. That's an affordability issue that on top of how much has my freaking gas tank costs me to fill this morning was ridiculous.

Right? You hear all the news about baby formula and not being able to find baby formula. And so you still have the supply chain issues that are happening. You have not enough workers that are balancing the supply. And so we have basically rise in inflation, which is the rise of interest rate, trying to balance those equations to find some new happy medium.

The fed is very into the idea of continuing to raise interest. To tamper down inflation so that people rebalance this thing. And the biggest thing that they're trying to rebalance is housing pricing. They just, we can't continue to afford to grow this much. Our wages are not keeping up with it.

So that gets me to the. The end, if you made it all the way through is your home is ultimately a place of security for me, right? The home is not necessarily about the monthly payment, even though that's important, you need to be able to afford that, but a home one that you own, yes. The bank owns it because you've got to pay a mortgage.

We saw predatory lending and we saw all, uh, uh, a change in the mindset from the last time that we had a pretty big deep recession with housing being the issue. That's not the issue. This time, there is equity in homes. People are not tapping out of their equity. Banks are not going. All their dollars out.

But what I would say is the people in 2019 have done well and they bought at this rate, but not only have they done well in the value of the house that they've earned over time. But I think the biggest thing is that they also had a place to live that was theirs, right. That they could manage and grow.

I was sprinkling grass in my backyard. I planted grass right this morning. I was outside sprinkling dogs running around. There's something about that, that it's, it's mine. As long as they make that monthly payment, this is a place that I can grow in my life. And, and in growing in my life in, I can hopefully make more money in my career.

And grow and the things that I enjoy doing. So a home is a foundation don't get so wrapped up into, you know, interest rates are, is the house going to go up or down? How much is it going to go up and down? We in the business get really excited about those things. And maybe some accountants in some, some people that are very intimate.

Getting into those things, but most people just want to find freedom and having a home that they can call theirs, that they can come home to their stuff that they can sit in the backyard, have a bonfire, have the dog run around you name it. So housing isn't going anywhere. We're not going to go anywhere.

We're still selling houses all the time. And we enjoy what we do. I hope this information though is powerful for you. Kevin puts a lot of time in it. Feel free to email or throw us. Uh, hi down below or thumbs up or whatever, and we'll make sure that you're on the list to get this, uh, when Kevin throws it out on the emails each time.

So thank you. I know this goes long each time, but I find this a value to talk about, and I hope that you find it a value to learn. Thanks. I'm Steve Volkers have a great day.


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