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Experts: 2019 residential market should mirror 2018
This year featured a slight decline in home purchases, but home values increased.
(As seen on WZZM TV 13) Experts forecast the residential market in West Michigan next year will resemble that of this year’s housing market.
Chad Haverdink, sales manager at Chicago Title of Michigan, said there was a slight decline in the number of transactions in home purchases in West Michigan compared to 2017. However, he said there were some increases in home values.
“So, the overall market is up if you take a look at the volumes of those transactions, even though there were fewer transactions this year than the previous year because of increase in sales prices,” he said.
According to Bob Wuerfel, title agency president at Lighthouse Title Group, the number of sales in Michigan was down by 5.8 percent, but the average price for homes went up by 10.5 percent through October. He said Grand Rapids saw a 3.09 percent decrease in sales/title closings, and sale prices were up by 8.83 percent, less than the state’s average.
“Lakeshore area also fared better than the state with only a 3.55 percent decrease in sales/title closings, yet similarly to Grand Rapids, the home prices were only up 6.16 percent, lagging behind the state average,” he said.
Lawrence Duthler, president and owner of Sun Title Agency in Grand Rapids, said the spring and fall seasons usually are the height of residential sales. However, he said the beginning of the spring and fall this year started out slow.
Duthler said some of the major contributors to the decline in home purchases this year are a shortage of inventory available on the market and interest rates.
With the increase in home values, he said there are not enough affordable homes, prices that range from $150,000-$300,000, available on the market to meet the demand of families moving into West Michigan.
According to HousingWire, a source for information on housing and mortgage lending, homes in Grand Rapids are on average going under contract in 13 days, picking up from 15 days last year. As a result, homes are not staying on the market for a long time.
Although Duthler said the rise in interest rates is affordable, it still hurts buyers who are buying homes at the height of the market.
“You have folks who are currently in their homes at an interest rate well below, typically, 5 percent, and if they are looking at a new home, the interest rate is going to be higher, probably one-and-a-half points or two points higher,” he said. “So, now (they are) hesitant to buy because their new mortgage is going to be expensive.”
He said the increase in interest rates is an effort by the Federal Reserve to balance the economy and protect it from inflation. In September, the Federal Reserve increased short-term interest rates between 2 and 2.25 percent.
This year alone, the Federal Reserve conducted three rate hikes, all at a quarter-point each.
Wuerfel said next year, like 2018, will be a mixed year because there is an uncertainty in stock, business and housing inventory availability.
“In speaking with various underwriters and banks, the consensus seems to be that 2019 for the title industry is forecasted to be down 5-8 percent,” he said. “While the builder/developer sector in West Michigan seems busy with many new developments moving forward, the existing home sales would appear to follow 2018 and decrease.
“Even as transactions are projected to decrease, home values will continue to increase with lower inventory, favoring sellers over buyers. As for the banks, with rates approaching 5 percent, the refinance activity will be down, while home equity/junior loans should continue to have solid traction in 2019 based on bank feedback.”