Now that we are approaching the holiday season and the end of the year, how is the real estate market behaving?
In September we predicted a continued strong market. Data shows that the trend is at pace with our forecast, whereas growth is expected to slow down nationally. Per Freddie Mac’s analysis, the increasing interest rates, combined with other indicators, will pull the breaks on home price growth in the years ahead: 5.4% in 2018, 4.6% in 2019, and 2.9% in 2020.
GRAR’s monthly statistics in Kent County and the Grand Rapids area – both by comparison to last year and year-to-date (YTD) – show fewer new listings, closed deals, and pending properties. Yet, volume has increased significantly. By how much?
In the GRAR area, compared to last year, closed sales were down by 5.6%, and YTD by 3%. Volume on the other hand increased by 0.8% and 5.8% respectively. YTD average sale price has gained 9.1% based on closed sales, and by 9.4% based on pending deals, confirming the home price growth trend.
Multi-family units are behaving somehow differently. We observe a 2.1% rise in listings, and a 75.9% increase in closed volume compared to last year, in spite of a 11.4% decrease in transactions. Across Kent County the multi-family volume has increased by a staggering 99.9% during the same period. Freddie Mac is pointing to similar interest in new multi-family homes nationally, in spite of overall slower growth in the third quarter.
In Kent County, sales of single family homes valued at $500,000 or above have continued steadily at 4.3% of market share, with 34 units closed in August 2018 and 298 since the beginning of the year.
This general tendency is sustained by the average months of inventory, which has been decreasing steadily from 2.3 in 2014, to 2.0 in 2015, 1.8 in 2016, 1.4 in 2017, and 1.3 as of September 2018.
All these indicators point to a consistent and more balanced market in which home values are increasing significantly in our area, above national average. My personal local knowledge and experience align with the data. While multi-offer situations have decreased – there are seasonal adjustments to take into consideration – demand is still strong.
Whereas mortgage rates are expected to increase for the upcoming two years, raising to 5.6% in 2020, the real estate market continues to benefit from low unemployment combined with solid employment rate.
This seems a perfect time to sell and buy. Home prices are increasing, to sellers’ satisfaction. Loans can be secured with a more favorable rate now, to buyers’ advantage. Fewer multiple offers prevent buyers from overpaying, and sellers from losing a deal due to buyer’s remorse.
Time to make your move!
Happy market everyone! And yes, I am extremely contactable if need be.