Category Archives: Market Update

It’s Time for Homebuyers to Catch a Break

Buyer Information, Market Update

Buyers who have been discouraged about purchasing a home because the housing market is too competitive, will like the latest 2022 forecast update from Realtor.com.

Inflation, higher home prices and higher mortgage rates are impacting affordability, which has caused many homebuyers to stop looking. In April 2022, existing home sales dropped 2.4% from March, and 5.9% year-over-year, partly due to mortgage interest rates crossing 5% for the first time in decades. Meanwhile, home prices in April rose 14.8%.

Many sellers are putting homes on the market in an effort to cash in before prices possibly begin to fall. Active listings, or homes listed for sale, are anticipated to grow 15% year-over-year in the second half of 2022. Home builders have stepped up production by about 5%, so buyers will have more inventory to choose from. Home sellers will have to become more competitive which will invite wait-and-see homebuyers back into the market. Housing sales volume for 2022 should be the second-highest in 15 years, even though a decline of 6.7% from 2021 is anticipated.

With unemployment rate near 50-year lows, wage growth should rise 3.8%, and flexibility to work remotely, even out of state, will continue. First quarter data showed that 40.5% of Realtor.com® home shoppers viewed listings located outside of their current state, up from 33.4% in 2020.

That said, affordability will remain an issue for many homebuyers as home sales prices rise 6.6% and mortgage rates reach 5.5% by the end of the year.

Market  View – September 1, 2022
• 714 currently listed homes for sale in the five county greater Lansing area.
• 296 homes with accepted offers. Awaiting inspections and/or appraisal.
• 487 homes listed as Pending. Have completed inspections and will soon close.
• 4553 homes that have closed since January 1, 2022.
• 7241 homes that have closed in the past 12 months.

Mortgage interest rates
30 year fixed – 5.55% ($5.45 per $1000)
15 year fixed – 4.85% ($7.59 per $1000)

 

Buyers and Sellers Adjust to Changing Interest Rates

Market Update

With home sales, the purchase price of the home means something different to sellers and buyers. Sellers are concerned with how much their home will sell for.  Buyers purchasing with mortgage financing are concerned about budgeting for the monthly payment.

For Buyers interest rates greatly impact the affordability of a home.
Mortgage interest rates below 3.5%, which had become a standard for the past five years, began to rise at the beginning of 2022.  As we close out the second quarter of the year (June 30) interest rates have escalated to 5.81%.

A rate of 3.5% on a 30-year fixed rate mortgage translates to $4.49 per $1000. A buyer borrowing $200,000 at 3.5% this past December would have budgeted for a monthly loan payment of $898. Borrowing the same amount today will result in a payment of $1175. A difference of $277.

For Sellers, higher rates will push some buyer out of the market.
Rising interest rates make it more expensive to get a mortgage. This lowers demand and competition for homes. As cautious buyers rethink what is affordable, sellers may be presented with fewer offers, which may not be excessively above asking price.

However, sellers shouldn’t worry. There will be a short slowdown as buyers adjust to the new rates, but there are still too few available homes to satisfy demand. Buyers facing ‘mortgage shock’ will also see increasing rental rates and again be budgeting for a home purchase.

Market  View – July 1, 2022
• 556 currently listed homes for sale in the five county greater Lansing area.
• 348  homes have accepted offers. Awaiting inspections and/or appraisal.
• 482 homes are listed as Pending. Have completed inspections and will soon close.
• 3244 homes have closed since January 1, 2022.

Mortgage interest rates
30 year fixed – 5.81% ($5.87 per $1000)
15 year fixed – 4.92% ($7.86 per $1000)

How Will the Russia-Ukraine War Impact U.S. Housing?

Market Update

7957715.largeAs Russia’s invasion of Ukraine continues, the real estate industry in the U.S. is beginning to ask questions. How will the war affect the economy and how will it impact the housing market? At the very least, global conflict is unnerving, but is there hidden opportunity for American homebuyers?

According to REALTOR Magazine, stocks and cryptocurrency have been volatile. As sources of payment for homes, these may impact the real estate market.  Inflation is at a 40-year high, and only likely to get worse. Household budgets are already being tested with rising oil, gas and food prices. Rents, home prices and new construction are more expensive. Lumber prices have soared 40% in the last year. Higher mortgage rates will slow homebuying demand, says Robert Dietz, chief economist for the National Association of Home Builders.

When consumers at any level get nervous, they tend to curtail spending, particularly for large purchases like homes. “The impact on the U.S. housing markets from the Russia-Ukraine conflict has been muted so far,” George Ratiu, manager of economic research at Realtor.com, told Fortune.com. But an escalation of the European crisis could lead to more trade route and supply chain problems and higher prices, he said.

As investors reallocate their portfolios toward U.S. Treasuries, it could cause interest rates to fall. But if oil prices remain above the $100/barrel level, inflation continues, and interest rates and adjustable rates increase, the impact on the housing market could be negative, causing home sellers to lower prices.

Housing Inventory Market View – June 1st

Current Lansing Area Sales Statistics, Finance and Taxes, Market Update

Rising mortgage rates and record home prices have become the norm for the opening months of the spring housing market. Frenzied buyer demand for the few homes offered for sale since mid-March has pushed purchase prices 20% above what they were listed at.

Sellers offering homes priced below $300,000 have been receiving multiple offers above asking price with escalation clauses and appraisal guarantees.  An escalation clause provides that the buyer will pay $2000 more (example) than any other competing offer up to a set price, often 20 to 25% more than the asking price.  An appraisal guarantee assures that the buyer will pay the difference between the mortgage appraisal and the offered price. With many offers, buyer have even been waiving the inspection option.

Interest rates on a 30-year conventional mortgage have risen from 3.5% at the close of 2021 to between 5% to 5.4%.  However, increasing housing prices and interest rates has not slowed down the Lansing area real estate market enough to be noticeable.  This is probably due to rising rental rates continuing to make home ownership the better option.

Market  View – June 1, 2022
• 458 currently listed homes for sale in the five county greater Lansing area.
• 302  homes have accepted offers. Awaiting inspections and/or appraisal.
• 476 homes are listed as Pending. Have completed inspections and will soon close.
• 2486 homes have closed since January 1, 2022.
• 7331 homes have closed in the past 12 months.

Mortgage interest rates
30 year fixed – 5.1% ($5.43 per $1000)
15 year fixed – 4.31% ($7.55 per $1000)

Housing Inventory Market View – April 1, 2022

Finance and Taxes, Market Update

This is no joke! Limited housing inventory will continue into the Spring of 2022.

Through the month of March, homes that would have once been considered overpriced have received multiple offers, exceeding asking price, within the first two days of having been made available.

It remains to be seen if rising interest rates, now almost a full percentage point above last year’s rate, will influence on buyer on upcoming offers.

Market  View – April 1, 2022
• 351 currently listed homes for sale in the five county greater Lansing area.
• 255  homes have accepted offers. Awaiting inspections and/or appraisal.
• 370 homes are listed as Pending. Have completed inspections and will soon close.
• 803 homes have closed since January 1, 2022.
• 7485 homes have closed in the past 12 months.

Mortgage interest rates
30 year fixed – 4.42% ($5.02 per $1000)
15 year fixed – 3.63% ($7.21 per $1000)

Low Housing Inventory Again!

Current Lansing Area Sales Statistics, Market Update

There’s evidence of another strong seller’s market as we move into February 2022 with not nearly enough listed homes to satisfy buyer demand.

This is typically what happens when a fairly priced home is offered for sale through the real estate Multiple Listing Service.  Photos and details about the property are immediately made available on every listing service (Zillow, Realtor.com, BHHS, etc.) across the country. Buyers who have asked to be notified, are automatically alerted, and real estate agents arrange immediate showings.  Within a few days, the seller selects one from the multiple offers that have been presented, leaving the remaining buyers to wait for another home to become available.  This has become a way of life in a market with low housing inventory.

Market  View – January 30, 2022
• 440 currently listed homes for sale in the five county greater Lansing area.
• 271 homes have accepted offers. Awaiting inspections and/or appraisal.
• 351 homes are listed as Pending. Have completed inspections and will soon close.
• 7479 homes have closed in the past 12 months.

Mortgage interest rates
30 year fixed – 3.55%
15 year fixed – 2.8%

 

The Housing Inventory Has Hit An All-Time Low

Current Lansing Area Sales Statistics, Market Update

The number of available homes for sale typically decreases in the months of November and December, but this year’s current inventory is lower than what has been considered normal.  According to sources that keep track of housing statistics, the number of active listings on November 28th showed a 23% decrease compared to the same time period in 2020 and a 42% drop compared to 2019.

Even with the weather getting colder, the demand for homes will remain strong. New listings added through the months of January and February won’t increase the inventory significantly as these will likely sell quickly to buyers hoping to avoid competition during the annual spring surge which in early spring.

Those expecting a market crash that will soon end the current seller’s market should decide if they want to be homeowners or renters. Low housing inventory and mortgage rates at less than half of what they were fifteen years ago will continue to drive the annual multiple-offer frenzy we’ve witnessed each spring for the past eight years.

2021 Concludes with Continued Housing Shortage

Current Lansing Area Sales Statistics, Market Update

The Lansing area real estate remains an active seller’s market with enthusiastic buyers jumping on new listings in spite of the traditional holiday slowdown. With limited choices, newly listed homes continued to receive acceptable offers within a few days.

Sales and Inventory of Residential Homes as of December 28th
496 currently active listings. (Entire Lansing area market area)
273 homes with accepted offers.
392 homes pending a closing date.
7452 homes have closed in the past twelve months.

Mortgage Rates at 3.05%
3.05% is the current 30 year interest rate closing out December.  This monthly mortgage payment will cost a buyer $4.24 per each thousand of borrowed money.
($100,000 mortgage = $424 monthly payment)

 

Low Inventory Continues…Home Values Rise

Current Lansing Area Sales Statistics, Market Update

Average home prices have continued to rise as shown by third-quarter (July – September) sales results. Mortgage rates are currently at 3.09% making it easy for buyers to make extremely competitive offers for the few available home choices.  Through July, August and September, sellers continued to receive offers exceeding the listing price and are often given an “appraisal guarantee” assuring that the buyer will provide additional, out-of-pocket, funds for the closing of the purchase.

According to third quarter 2021 sales statistics,  the average sales price of Lansing area homes increased from $194,103 at the end of September 2020 to $213,401 on September 30, 2021.  This is a 9.1% increase and represents an average home value increase of $19,298.  Average selling time for many homes is less than one month.  These figures include all sales through the Greater Lansing Association of Realtors.

 Check out our Third Quarter Sales Statistics Link (below) for an update of sales activity by community. (Please note that pending sales, properties under contract that have not yet closed, are not factored into these statistics.)

Third Quarter 2021 Sales Statistics


Market  View – October 28, 2021
• A strong seller’s market continues through the month of October.
• 675 homes listed for sale in the five county greater Lansing area.
• 413 homes have accepted offers, awaiting inspections .
• 617 home are listed as Pending. Have completed inspections and will soon close.

 

 

Is Lansing area Housing Becoming Overvalued?

Market Update, Seller Information

Home values in the Lansing area have risen by more than 12% over the past year.
This means, a home that sold for $250,000 a year ago would likely sell for $280,500 today.

This rapid rise in prices has many buyers and homeowners wondering if the housing market is becoming overvalued.

Is there a housing crash on the horizon?
This is not the first time the real estate market was considered to be overvalued. Home values escalated in 2002 through 2006, just before the nationwide housing market collapse.

Things are different in today’s market. During the last housing bubble, there was a huge surge in new home construction and extremely lax mortgage-lending standards.

In the current market, there an ongoing shortage of homes for sale across the mid-Michigan area. Instead of having too many houses on the market, we currently have a situation where the number of available properties falls well below the demand. This is the number-one reason why prices have risen so sharply over the past year or two.

Even though buyers continue to pay above asking price, that does not necessarily mean a crash is on the way. The ongoing problem with supply and demand will continue to force home values upward in the foreseeable future.

If real estate home values continue to climb, there could eventually be a decline in home sales due to many buyers being priced out of the market.  In addition, buyers may reconsider purchasing a home. Buyers worry that they will overpay for a home, only to see prices drop over the next few years. This can lead to a homeowner being “upside down” or underwater in the mortgage loan.

No one can predict future real estate or economic trends with complete accuracy.  So, home buyers simply have to think long term, when buying a home. Houses tend to gain value over the long term. That is what makes real estate one of the best investments over time.