The real estate market lags what is happening now in the financial markets...it's time to focus on your goals.
Hey, I'm Steve Volkers with obviously the Steve Volkers group in Grand Rapids, Michigan, and this is our market update. It is now November, and we just got done talking about Christmas. I am a Christmas guy. I really like the holidays. So you know, just for anybody that wants to. Christmas music is out and it's okay for me at least.
We have some, you know, scrooges in the office that don't agree with me this morning, but that's okay. Let's get into the market data. So market data. November, and obviously we're talking about the data for October that came out, that big Kev behind the camera put together for us. Um, this stuff is just great.
Thank you, Kevin. I just, when we came up with this idea early on this year, uh, I didn't realize how this data would play out and how fun it is. The data is not fun actually at all, the market's not fun, but the data is the data and so that's what we go. So the, uh, title of this one would be, I would say the market lags whatever happens now.
So we think of a real estate market in October. Or really whatever happens in October really is from a three to six months before it, Right? So we in the real estate business, always say, The activity I do today equals my paycheck or opportunity three to six months down the line. Right. And that is so true with almost everything in the market.
A buyer calling me today usually does not finalize a transaction on a, on a fast transaction. Yes, 30 days, but majority of the time it's three, six months, even a year out. So the activity I do today, or the phone call I get today, Or the listing appointment I have today doesn't always equal a transition to next month's data.
Some can, um, some things move faster, but, um, what I would just tell you is a lot of the information or the data that we've been talking about in sort of seeing in end of July, beginning of August, September is now showing its ugly hat in October. Right Kevin? It's, it's some gnarly stuff. So we'll just go through it and talk about like where it's at.
And yeah, that's just what we do. So, um, what we saw is everything across the board, Kevin, that you've put out here. Is at least 20% or more down, right? When I say down, that means inventory sales compared to last year. This time compared to this time compared to the five year average, everything is 20% off of.
Last year's this time, or the five year running averages. So, um, the first sheet you would see if you download this and you get a copy of it, is, we are 26% down, um, in the amount of sales this month compared to last month, 26%. Right. Um, what, what that shows us, we have been running since the beginning of this year.
6, 7 11, 7 5. We have been down in Transac. Uh, throughout the year, but this is the biggest jump in that situation over last year, this time. So it's, it's pretty significant. And again, why are we seeing that? It's because three months ago the real big interest rates were what hit. I was out with happy hour with some clients.
They closed it on their house about four months ago. And I just was like, Hey, remind me what was your interest rate? And they said our interest rate was 5%. and they did a pretty low down program, so that was a little higher than probably average. They were thrilled with that 5% right compared to now. Um, but at the same time, they're also talking about buying an investment property right now.
So things will still continue just cuz rates are higher. They said, Well, we understand that, but when are we ever gonna get a, an opportunity to buy? Still? Like, we don't think that this is gonna last. We still think that the values are low, which I completely agree. Residential sales, month over month, five-year average.
This one too. 24% compared to the five-year average of sales this month. So if you take five years of Octobers and you compare 'em to this October, we're 24% down in sales. I could just keep going with these. Right. Um, one, the year-to-date closed transactions were down 9% this month compared to last year, this month.
But what's interesting is we probably are gonna be 10 to 12% off in total sales, Maybe more. Why is that significant? Um, when I was on the board of the Realtor association, we would always. Yeah, the market's up or down, values are up and down, but generally speaking, transactions stayed the same. So for 1, 2, 3, 4, the last five years we were within a couple hundred transactions.
One way or the other, the plus or minus, that's not that big a deal. Right, But being a thousand houses or, Uh, yeah, a thousand houses below. That's significant. That started the beginning of the year with a no inventory, with a low interest. And now I think it's a combination of affordability and inventory.
So inventory is still an issue because there now is the affordability issue. So why would I move from my three and a half percent interest rate home to a 7% interest rate home? and bigger or smaller. Either way, my cost just went up significantly, so I'm no longer interested in moving. I will just stick this one out for a while.
Right? So you're gonna have the inventory issues next year, which will, uh, drive pricing, which is the interesting part. We're down 26%, right, Kevin? We said that 26% for this month in sales, but we're up 3% in. Like the volume went up 3% if I'm reading this right. So we sold more expensive houses or the houses total was worth more this month, even though we were 26% less sales.
Well, and that's why the Fed is doing all the crazy crap they're doing right with adding the interest rate cuz they're trying to tamper the market, right? Which they did in October. They've definitely tampered it. We're quiet. It's quieter than what it should be, which you see. We're not doing as many transactions.
The prices are still high, which is why they're still freaking out about inflation, right? That prices are still really high, even though they've basically made our market not a market anymore. Like they've, they've cut the opportunities because affordability is getting tighter. So I could go on a rant about that, but you know, that's next level.
I'm not really an economist, so I should be careful of what I'm saying. Um, medium price per home. Uh, square footage continues to go down. Um, number of pendings are down. Um, I did like Kev. Uh, so anyone that really is a, a data geek, um, this stuff is really great that Kevin's doing. Um, and if you print it out and color or look at it in your screen and color, he's done, uh, a new thing.
This, did you, this is right, like I catch this. So he changed the color of the October's for the years. So you can really see the trend line over the October. So the average price of list, uh, last list price. So we're down again this month, but we're, if I look at it, we were down every October, so it's kind of cool to be like, Well, yeah, sure, it's October.
So then you start seeing the seasonality. But in it, but. This sheet is really fascinating. Um, and Kevin, maybe you could just throw up this sheet as a, as a one. Um, what it shows is month over month, since January of 2018 to now. And, you know, 2018 was great year to buy and sell average interest rates, I think were like at four, four and a half, maybe even five.
And, and you didn't have a hundred percent of value. There was times, you know, in this October it was 99% and we're at a hundred 0.7%. So these two peaks are not real. Right. These two peaks are by, because of the, the pandemic and because of the government's printing money and ultimately creating low interest.
Right. So that's what they're trying to correct. Now, they made an unrealistic thing happen for two years straight with low interest rates where prices went crazy, um, because people had extra money cuz they gave them extra money and because of the interest rate down. So they've gotta get a, what they're trying to do is getting us back to here.
Right? So here is not a bad thing. The question just is did they take it too far or are they going too far to correct the two years of the mess up? It's interesting how the government messes with stuff and then it's a mess three years in a row, but that's again, it's election day. I gotta be careful, Kev.
I don't wanna go anywhere with that. Um, I, you know, we don't talk politics here, but we do talk economy and we do talk about selling homes. And so the government is messing with money before they're trying to correct. They're messing with money before, which is creating a weird market. . The goal and the hope really for us is next year, 2023, is to find some stability, right?
I would hope that our world or our real estate market would become what we would say is stable enough homes to sell enough buyers in the market to buy them. Um, people calm down and create an affordable, uh, purchase price and can buy the home that they need and want, can sell the home they need and want, and we can get to a stable place, which we have not been stable for a very long time.
Um, so anyways, to wrap it up, we're 20% down on everything. Um, we're hoping to find stability next year. Um, and there is some nice trends just to say that that could come into play. You know, Yeah. Mortgage interest rates are way high, but they're saying they could go higher, right? So last month I went on a rant about it's always a good time to buy, and that's what real estate agents.
Talk about, I might need to correct that. Like I think it could be a good time to buy. Kevin did another graph and he helped me with some, An infograph, right, that talked about the advantage of buying now compared to the advantage of buying six months ago. Six months ago, you would've needed. Probably about 70 grand in that starter market to really get the house with putting, uh, appraisal gaps on, putting 20% down.
You name it. Now you really can buy a house with 5% down and not have the appraisal gap and get an inspection to make sure the house is in good working order and maybe even ask for a repair. We didn't ask for repairs the last two years. Take it or leave it is what the, what we would say. Um, so. Your interest rate payment's gonna be higher, but you're probably gonna make more money over the next couple years in your job.
Um, and so if you're looking to buy or sell, I guess it is always a good time if that's what you need to do in life, and there's always an advantage or disadvantage in that season that we're in. Um, it's just making sure that you're making a long term plan for yourself. So I would just make sure that if you're meeting with us or meeting with another agent, it doesn't really matter.
Um, we'd obviously love to meet with you, but, but take the time to look at your full financial. What are your goals in life? When we were meeting with a young couple yesterday for happy hour, which was fun, I kind of like happy hour meetings. Um, it really was about where do you want to go and what does this mean?
Right? Are you looking for short term money? Long term money? You've got a little bit extra cash and you're trying to decide what to do with it, and just even talking about are you using it for your Roth IRAs? What are you doing financially to set yourselves? First and foremost, then how are we building LLCs?
What are we buying? That makes sense. Um, not everything makes sense to everybody, but I think that housing and homes are just that. I started this video talking about the holidays. Holidays can be tough for people. Houses can be tough for people. But in general, the hope is that your home is a place of safety.
That's what we sell. That's what we get to enjoy with you when you buy and sell. Thanks. I'm Steve Oakers. This was November's update on October's data. Behind the camera's Big Cal and in front of the screen with the data. I just get to talk about it. Thanks guys. See ya.
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