Real Estate Blog

(Video transcript - auto-generated)

Hey, I'm Steve Volkers and this is a Steve Volkers group, and this is our October update on the data that big Kevin puts together for us on the market, the residential real estate market in West Michigan. Uh, it's October, mid-October, right? So we got a little bit delayed on this because.

Behind the camera got engaged. Congrats Kev. And was in Europe for the last three weeks and just enjoying life, which we love that he could do. So we're gonna go through that. Obviously, the data is September's data, right? And then we're reviewing it in October. And with anything, stuff can change quickly, but it.

It's a good time all of a sudden. Right? It's an interesting time. The sentiment out there is people are nervous, but ultimately we're starting to see some positives, right? So we've been talking about affordability being the issue over the last four or five months, um, that struggle and how that struggle is sort of pulling the market back or would.

Early on in these sort of January, February, March, I said, Hey, look out. This might be coming. Sure enough, it did. Sometimes I'm smart and it works out the way that I think it's going to. And then, um, now we're starting to see a, I would say the stability. And it's kind of fun to see, so, Some takeaways I'll get into the specific data.

What I'm telling my new buyers, right, and sellers that are also gonna be buyers is I think the window of the next six months before the spring market probably is gonna be one of your best times to buy in, um, and ultimately sell. For the next probably 18 months to two years. Why do I say that? I think that the interest rate conversation of the prices of interest rates and the cost of money going up so quickly has got people sidelined for right now.

They still believe that in, in all my conversations. Uh, the first thing the buyer said in my phone call interview is, Should we wait? I think we might wait to see, and the wait to see is, will interest rates come down. For us to feel good about or will pricing come down. And I would tell you the two, um, based on the data right now and what we're seeing in the market is those two actually have already sort of come together.

The pricing has come down, the interest rates have come up to slow the market over the last two months where we had the dip and now the last two months we're seeing just the trend line of stability. So what I'm telling 'em is I think that we're gonna have this stable, interesting market. Where people are still really nervous about buying, so there're not gonna be as many buyers in the market.

Also, it's fallen winter, which there also is normally not as many buyers in the market. But if you could be ready to do something in the next six months or early spring before everybody's ready to go and all the excitement, that's when I think we will see a jump again in values. Not to the extent that we have seen before over the last four years, but we will see an.

The other thing is the Fed is still talking about interest rate increasing. Interest rate increasing in the Fed could then push up interest rates on the mortgages. So instead of six and a half, um, last month, we saw a spike or just a couple weeks ago, about 7.21 day. Right? Like just crazy. But there's no reason that we wouldn't maybe see a seven or an 8% interest rate by mid next year, potentially.

I don't know. I'm not that much of a banker in that. But if that went up, your affordability index goes down what you can buy in a house, and then if prices go up, all of a sudden you're, you're on that run back up in value and just ultimately your monthly cost. So I would tell you right now, the, you know, I really get frustrated.

Sorry, a sidetrack, an agent saying this is a great time to. Why do we say that? It's like when we say that every single month for 5, 10, 15. Does the consumer not think that we're like just selling them a piece of crap, right? Like at what point is it not a good time to buy? So there has been those times where it's been tougher, um, but right now, I would say in the next six months, um, I think is a good time.

It will hurt a little bit more. With that interest rate. Some say that interest rates might come down and there's this whole like date, the interest rate and marry the house. That's kind of weird to me. But anyways, that, that's a thing. Some people are trying to sell that interest rates could come down.

So if you only date the interest rate, then you can refinance. Sure. Possible, but I would just set your budget up accordingly to um, what you can afford. And if that happens, congratulations. If it doesn't, you still got a great house, um, and can move forward. So we should probably do a little data, right, Kev?

Cause I'm sort of ranting already. Data. The beauty is in the data. The data doesn't lie, right? So we can, you know, come up with all kinds of analogies. Tell you it's great or not great, but the data is the data and Kevin puts it together for us. So what we're seeing is a continuation of inventory being lower or less unit sales, right?

So we're selling less product than we ever have or we've had in the last five years. So there's no longer those spikes, and we're down 500 units so far this year. I think that. 12% or 7% so far for the whole year. Why is that significant? It's significant because three of the four referrals this week that I've got from buyers that are coming into the market are coming from other areas.

A lot of them are baby boomers that are starting to retire saying, I want to live close to my grandkids. You know, it's interesting. They say their grandkids, they don't say their kids kept, but anyways, they wanna live by their grand. So they're moving into town. They've got money and resources, and they will again, drive the market up because they have a need and a want, and they are not tied to an interest rate, right?

So they will then push market up, and if there's not enough units where we're 12% down, then that will again create that, you know, uneven balance of too many buyers and not enough inventory. The supply and demand conversation. , but stability, stability is the key right now. So, uh, let me, let me get to the page.

First one, medium price per square foot, we have been seeing 1, 2, 3, 4, 5, 6 months, uh, or five months of decline, right? We hit the peak and march of this. But that's also when interest rates were at 4%. The minute that they climbed to five into six and six and a half is where we've seen that steady decline based on affordability.

And just nervous energy around are we in a recession or not. But the beauty is the last two months we have been at 1 61 and 1 61, and you see this over and over again in these churches that you've given me. Is that we're starting to see a leveling off number of showings per pending. Again, we were way up in February 24 showings.

That's a huge peak. February. In March we had 24 and 20. I'm getting old, Kevin. I take my glasses on and off. It's getting sad. Anyway, uh, they kind of keep on saying, I need bifocals. I don't really wanna do that, Sean. I'm just gonna take 'em out enough. So 24 and 22. Months or, uh, showings. Now we're at 12.5.

Last month we were at 12.4. The month before that we were at 11.6. Again, you saw that dip of end of summer, some of that seasonal, and we've talked about that. But ultimately the last two months, same kind of thing, average price, uh, average percentage of LA list. Last list price, right? So again, in February we were hitting 107%.

So 7% was the average above list price, right? So $7,000 more than a hundred thousand, $14,000 on a 200,000. You keep adding that math. Now, the last two months we've be 1 0 1 0.6 and 1 0 1 0.1. Not really a difference, right? So again, stable last two months, all of a sudden, August and September have created stability in the market.

So that we can grow. Same thing with average, um, monthly supply. Last, uh, for three months running. Now we're at 1 0 1, 1 0 2, and one oh. So we have a stability of, um, homes coming in the market, sales going out, and we're finding a balance, which that one month of inventory is why we're only seeing, you know, sort of you get your list price, right?

They, they already got their 7% value growth in February and March, so now they're still capturing a seven to 10% growth and value from the beginning of the year. They're just not getting it. Right. They're just getting their number. So again and again, we're seeing that through these charts of the stability, um, you know, new listings are down 12%, which again goes to that inventory issue.

So, just some closing things. Inventory is gonna be down. It's gonna stay down because people have really low interest rates on their house, so they have to have a life change to make that adjustment. So we're gonna get into a, hopefully a stable. If we don't get into a big recession, if the recession sort of holds itself off and we stabilize here, um, that we then could see an 18 to 24 month pattern of stability, I think where you're gonna increase in a normal increase of three to 5% growth, um, on your house next year, and you're gonna be able to buy and sell, but it's gonna go back to not.

I need to buy now because it's cheaper than rent. And I, I need to, and there's not gonna be the panic. It's gonna be just a, I want to own a home. I have kids that have left the home and I wanna buy a condo. You, you name those life changes, I got married. You name those things, we're gonna have babies. Any of those life changes, we're gonna start seeing normal buy-sell as the community around buying and selling gets used to a normality and an interest.

Right. So we just have to get people past the, the heyday, uh, and cheap money, and we're gonna get into steal cheap money and relative to what, what is affordable, um, but ultimately into that stability. Talking to some real estate agent friends yesterday at a networking. It was interesting to hear, and it just proves this fact one more time, that for August, in early September, very few units were selling.

Everyone was panicking, and days on market grew. Everything grew and what they've, what I, when I, I talked to two agents that both said they had three to five listings for the first time that they had capped for 18 to 25 days. And they had, you know, this is a market that anybody that's been in the business less than five years has never seen this.

They're like panicking, like, what does it mean? I actually have to call my seller more? Once in a week, like I actually have to talk to them. And one guy said I had four listings and they sat for 18 to 25 days. They did not do price reductions, they just kept their price and all four went pending this week.

Right. So that just proves to me that the stability in the market is there, that we're starting to have people say, I still wanna own a home. I can understand that. Interest rate is what it is right now, and I either capture it or it could go up, or it could go down, but not enough that I don't want to risk the higher end.

I might as well buy it now. And they're feeling confident enough with their jobs, with their security, and with generally where we are in the US economy to still make that transaction happens. So I would get off the. If you're on the fence and you're worried about what could happen, um, if you're in the market over the next year to buy a house and you could do it now, I really would suggest getting that showing set up, getting the portal set up, knowing what the market is.

We're taking a lot of people out just driving neighborhoods and getting into some homes again and having them understand the market. And if the right home comes. Be prepared to do something. I think that, that you might actually win a little bit, um, in the next six months. So I'm Steve, Kevin, who's engaged is behind the camera, and this was our October update with our September data.

Thanks for hanging out with us.