While many nationally are predicting a sky-is-falling housing market in 2023, there is plenty of optimism for West Michigan residential real estate.
Walter Perschbacher, president-elect of the Greater Regional Alliance of Realtors, said Grand Rapids is simply seeing a softening of the market. Perschbacher also is vice president at Greenridge Realty.
“There are certain areas in the national market that are experiencing declines,” Perschbacher said. “But really, what we’re seeing is just a softening of the market. Demand continues to outstrip supply. We have not seen big growth in supply; that curve has not inverted.”
Instead, Perschbacher said homebuyers are taking a pause, suggesting they are either “cautiously optimistic” or “cautiously pessimistic” about where they end up based on recent economic trends. Despite the slight pause, he said homes in the Grand Rapids area still are garnering multiple offers and selling over asking price.
“The reality is, the last couple of years, homes sat on the market for hours or days. Now it’s days to weeks,” Perschbacher said.
At the end of 2021, a 30-year fixed rate mortgage could be had for around 3% but has recently settled at approximately 6.5%.
There is data to support the pause notion, with a report from Construction Coverage finding Grand Rapids home sales dropped 24.8% year-over-year in October. That comes after 2021 was a year of unparalleled interest rates and demand.
“As home prices have rapidly become more expensive, so has everything else: inflation as measured by the Consumer Price Index has topped 5% for 18 straight months, driven by increases in major expenses like food and rent,” according to Construction Coverage’s report. “The effects of inflation have left potential buyers with less ability to save up for a purchase.”
Next year, however, could be a tale of two halves, with the first and second quarters being slower, but the third