(Video Transcript)
Hey, it's Steve at the Steve Volkers Group. Of course, we're in our office in downtown Grand Rapids, and it's another monthly update, the data is in. So then we go through the data. Kevin puts together this really great book for us. If you haven't downloaded it or gotten it, It's worth getting. I think it's worth getting, and I know the data is not for everyone.
It's for some people, but not for all. But, hopefully recording it and putting a video out, you take a couple of minutes to think about what's going on. So this is our monthly update. We do it every month. It is for August we're talking about, but obviously, it's in arrears. So all the data is July's data and past, so.
We have seen a pattern. Right? And I want to get a little bit off of the topic of the pattern a little bit more on what you could do based on the data, right? So, I feel like a broken record lately, Kevin, with the data, right? Which it's how do you understand what to do, right? If you're the buyer or you're a seller, how should you take the data?
So the broken sort of record is even more broken this month. Kevin was pretty shocked when he did the data, this past week. So we are down in residential sales. over last month, 27%, right? So, July is always an interesting month, right? Where people are, taking off in June to do summer. We like to binge summer.
I'm still in my summer t-shirt. Because it's August and even though school starts in like two weeks, some people even next week, it's still summer around West Michigan. So we don't really see the fall market start until this time, end of August going into, I. Into the rest of the year, but ultimately that June becomes very slow.
And then you see July as not as many sales. That's very normal, but to see 27% down, that is not normal. Right. The other thing would be, the five-year average is 28% down in units. Sales and then closed transactions month to date is down 22%. We have been trending at like 12 to 14%. So that's a pretty significant dumping right of units, that have not sold year to date. Close transactions are 16% off this time last year. But there are two measurements that are here that I'd like to talk about and that, really are three, three major topics of, okay, we talk about down things being down. But then people are like, but why are housing prices going up?
Why are we still seeing, prices be more than what they should be? Right? Or what we think there should be. When is the crash coming? When are prices coming down? When are bargains gonna be out there? and it seems as though a lot of people have been waiting for two things. One for pricing to stabilize or not to go up and interest rates to go down. Both have not occurred and they haven't all year. So anybody that called me in January and February and March and didn't get a house, 'cause there are multiple offers, and said, well, we'll just wait. For the end of the year for rates to go down. And I know there are a lot of lenders predicting that rates could go down a percent or two, but they're up to almost 7% this week.
Right? So it's like, okay. Like it's great to say that rates might come down a percent or so, but they've gone up a percent or so, right? So if they come down a percent, they're the same as what they were at the beginning of this year. They really have not come down. They've come down off of the middle of the year, but not come down off the year.
So, be careful about always thinking about what could be instead of what is now. Right. So, ultimately dollar volume is 7% down, but we have been 10, 11, 11% down. Volume is the amount of money, right? Not the number of transactions. So we're down a lot of transactions, but actually, the volume amount is up, right?
This means prices continue to rise and all of a sudden, even though we're 27% down from last month, the price of those sales. We're so much higher than it actually pushed the market up. So that's where the differentiation is coming from. If you're waiting for the market so far, the rolling 12-month average, so since 12 months ago to now, the median sale price is up 8%.
So as you're waiting for a half percent or a percent better on your interest rate, you lost eight. Saving one. You lost eight. So that's seven. If I do the math right, one minus eight is seven. So in the waiting game of prices to stabilize or rates to come down, you lost? Uh uh. Like I think you're smart.
Most of you are, are almost too smart. Right. You're trying to outsmart what is here and the data, and not listening maybe to me or other professionals that say, this is where we're at, this is where we're going. And not looking at the micro of West Michigan, right? Maybe if you look in Vegas or in Phoenix or other areas where there are mega builders putting up hundreds and hundreds of homes at a time, maybe they're stabilizing or going down.
But West Michigan, we're not building enough. There's no creation of space enough. There are not new condos going up at the rate of which sort of household formation is occurring, right? So we're 7%, right? And then what was the other one that was interesting? I got a couple here. We're still 103%.
So, the list price plus 3% is your average again, right? So there's plenty that are well above that. and then, new listings are down 26% since last year in July. So again, why are values going up? We've been talking about this. It's inventory. It's straight up. It is still in inventory. Right? What happened to the lead-up to this moment was an inventory crisis since COVID, but then we had an interest rate crisis, right?
The interest rates were so low that there were more buyers in the market to afford all the housing. So we had an inventory issue this whole time. Now we have it. Now we don't have an interest rate issue. We have an inventory issue still. The, the, the, the balance has not come back yet, and it's gonna take a year or two, I think, for that balance to come back for people to need to sell and buyers to be able to afford that median.
But it continues to create a bigger separation. So prices continue to rise with no inventory, and interest rates are either stabilizing or continuing. So every month you wait. Is month is money you're losing. It just is like, there's no two ways about it. Every month you think I'll save more money in my account, put more down.
You probably lost more than you saved, right? every month you wait for the house to stabilize or for a deal to come up if you had just bought the nice house that you looked at, at a good value. You would've actually made 8%, right? Like you would've made the money that you thought a good deal was, right?
So now when you're looking at a 300,000 house, at the beginning of the year, it was a 2 75 house, right? That's what the data shows us. So, right now, it looked like a good deal if it was listed for 2 75, which you just bought it for 2 75 4 months ago, or five months ago, right? So you've lost those dollars.
Okay, so what does that mean? How could you handle this, right? So everything's down, but volume and interest rates, right? Which means that prices are going to continue to go up. I got all really good sticky notes today, Kev. we talked about the rate and waiting for the rate to go down, right? But you lost 8%, you know.
Lenders, they like to talk about the refis, right? Because that's easy money for 'em, like to refi you out of the bit. The thing is, there's not a lot of work. There's a lot of work in a purchase mortgage when you're buying your first house or whatever. There are a lot of documents that are needed. and then there are multiple people, multiple agents.
There's a, there's a lot going on, right? When they refi, it's put it in the computer system, gather some info. They get paid, they like those dollars. They have not gotten those dollars for a year and a half. They're dying on the vine without those dollars. So you'll hear lenders do the date, the raid, or marry the house, right, or whatever kind of analogy that they want to make to make it sound interesting.
But I'd have to agree with them right now. For a little while I was like, that's corny. But right now, yeah. Like I don't know if the rates are gonna go down to five ever again. I don't know if they're going down to four and a half ever again. Right. But the longer you wait for the hope that they would, is the less money you get to have in a house.
Right. So if you're worried about the rates, But if you could afford to buy right now at the current rate. At the current value buy, please buy.Don't wait to buy for either rates or values to adjust. They aren't going to. And if the rate adjusts again, then call the lender that you worked with or we can refer you to a new one.
And then, They will adjust your rate. Believe me, they have a list of all the people that they've put on the six percenters and the six and a half and the sevens, and they're just waiting for the rates to go down to five and a half or five. They're gonna be calling you to get you a better deal on that monthly payment.
Buy the house if you can afford it. One thing also we talk a little bit about is affordability, right? People are concerned about whether can they make the payment right? So the payment's higher. One thing to consider, which we've helped clients when you do the math right, is, okay, well we have 10% to put down on the house, right?
What is the 10% payment? What is the 5% payment? How much is the difference between five and 10%? So on a $300,000 house, obviously 10% is $30,000, right? 5% down. Conventional is. is 15, so you're saving 15. If you don't put that down, how many monthly payments could you make up? The difference between the payment of the 10% down to the 5% down?
Right. And what I normally find is if people were to take the $15,000, put it in a savings account for the rainy day funds, don't drain their accounts, put it in the rainy day funds. If they can't make the 5% payment and they need a little help. Well, they have $15,000, right? That usually would last them two or three years of making up the difference in that monthly payment.
But then they have an emergency fund. So we've helped a lot of people think through how do you use your money to buy the house now and make a wise investment to also be able to secure the house and help with the. The anxiety of the monthly budget, right? We all have that. I bought a new house and right now it's like, do I really wanna spend money on landscaping or can I just hoss it myself? That's still a debate in my house right now. I'm winning 'cause I'm just going after the landscaping myself right now. But, The monthly budget is always the thing that people are concerned about. So if the monthly budget is stopping you from buying the house, like if you're looking at housing, maybe you did an online application or you did the Zillow and, and you did some kind of calculator, and you're like, that's too expensive for me.
Just call us. You don't even have to call the lender, right? Just call us and I'll help you with that math a little bit, and then we'll get you with the right lender that can help you secure the right financing for yourselves. I'm not a lender. I don't know all the backend, but I know a lot. We've been doing this for a long enough, and every agent here at Steve Volkers Group would be able to help you figure that out, and try to balance how much money do you have and how could you use it wisely. We don't usually say, how much are you gonna put down? We say, how much cash do you have to invest in a home? And then we help you say, with that cash, here are some ideas of how to use it. Right? Right. To create the best. so those are some of the ideas or thinking that I have sellers, we need you please come put your house on the market. Obviously, you are the reason we're 27% down, like. I get it. Like you're sitting on that 3% mortgage, living high on the hog, going out to dinner every night. 'cause you don't have to pay for a high-interest mortgage. But we need you to sell your house please. Right? Like, you know, find something new. We can find something.
Yeah. It's 27% down, but let's invest in a second property then, right? That you can gain some income. we talked a little bit about that last month of how to use some of your money. to invest in the second one. we have helped a number of people over the last 30 days start talking about rentals.
That's the other equation. If you're, if you're feeling like, I need to move up but I don't wanna lose this payment on this house 'cause it's so cheap. We are starting to help people consider the rental process, right, of could I rent my house, make up some of the financial difference of what my new payment's gonna be.
And then having a lease on it. You don't have to have that as an issue on your debt-to-income ratio. So if you put a lease on it, the bank does not include that payment as part of your debt. Right? So all of a sudden you can buy something non-contingent. You can keep that rented even if you only rent it for six months or a year, and then you realize, yeah.
That's not for me. Let's sell it now. Well, you've made 8% by holding it a year, right? And you've made that cash flow. So, we're more than willing to walk through that with you on the selling side of what would it look like instead of selling, being a landlord. What process can we help you in that, to do so?
Those are some thoughts. Got anything else, Kev, that you can think of that, that came to mind when you're going through it? “That's a lot of good advice right there.” So I would just take some time, call us. We'd like to meet up with you, right? Like our goal is not when can we sell you a house and how quickly. Someone can call me today and we can write an offer and put it pending tomorrow. That has happened many times, but I, I tell you, a lot of times it's, it's three to six months where people will make that phone call now saying, Steve, Rachel or Paul, or Ariel, you name the agent here. We'd like to sit down and just have coffee or have a happy hour with you and talk about what our dreams and goals are for ourselves.
And where we'd like to go, and then we can help create a plan that might fit for you to create that dream. So we still believe in the American dream, buying residential property, living in it, and growing its value over time. I'm Steve Volkers. Steve Volkers Group your monthly update for August. Thanks, guys. See ya.
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