The spring real estate market in West Michigan is traditionally marked by buyers emerging from winter inactivity and sellers proudly bringing their spring-cleaned and landscape-greened properties to market. An overall increase in activity from sellers, buyers and realtors alike are all part of the buzz that happens in real estate this time of year.
But the spring market in 2021 feels a bit, well…different. Yes, the activity is all there, and the weather has been the market’s friend this year, too. The buzz is definitely happening, but the difference is what came just before this. Winter of 2020-21 was a terrifically busy time in the West Michigan real estate market.
While winter can sometimes be a bitter, sleepy and slower-paced time, this past winter experienced a breakneck pace of homebuying. It was marked by multiple offers, homes selling significantly over asking price, and competitive offer strategies including waiver of inspections, appraisal guarantees and nonrefundable deposits. The typical “new” feeling of a spring market has been superseded this year by the feeling of continuation of a bull real estate market that hasn’t let up since a delayed start last spring.
These factors have some people concerned. When will this end? Are prices too high? Is the market overheated? Is a crash incoming? How can we maintain affordability? Will this be like what happened in 2008? These questions and more permeate the real estate space — yet the market advances. And for the foreseeable future, I believe the market will continue to advance. Here are three reasons why:
- The fundamentals of the real estate market are strong
Basic laws of supply and demand and current circumstances mean the market will take a while to reach equilibrium. Unlike in 2007-08 when the supply of homes dwarfed the demand, we are now in our sixth year of demand outstripping supply. Traditionally, we’ve considered the supply/demand equilibrium to be defined as about four to six months of inventory. We have been below four months of inventory for six years and are currently at five months in many of our West Michigan markets.
- Attraction to West Michigan only continues to grow
The favorable business climate in West Michigan, growing diversity and relative affordability compared to other regional markets are all factors in a generational demand surge that has benefited West Michigan. With more people working remotely due to the pandemic and looking for second homes like never before, this demand will only continue to grow in our area.
- Monetary policy and global economics favor affordable interest rates for years to come
The Fed has committed to keeping the federal funds rate low, even in the face of inflation that is likely to come due to government spending over the last 12 months. We monitor this closely, but it appears that consumer interest rates will stay low. Low rates and the prospect of an eventual, albeit far-off, interest rate rise will keep the market moving at a fast clip.
The market dynamics this spring are like none we’ve seen for a generation. Expert realtors and the cadre of affiliated experts can help buyers and sellers navigate this exciting market. Those buyers and sellers for whom a change is in the winds should find this a great time — maybe a once-in-a-lifetime time — to be in the market.