Jeff Timmer. Photo via linkedin.com
The residential real estate market is laying down the welcome mat for spring after a record-breaking winter.
Jeff Timmer, a mortgage officer and vice president at The Bank of Holland, said the unusually frigid winter has delayed home purchases in West Michigan. Using information taken from the Grand Rapids Association of Realtors website and based on his own experiences with customers and local real estate professionals, Timmer predicts a winter-caused delay in home purchases will soon lead to a “stampede” of buyers.
“New home construction experienced a 30-day-plus weather delay in starting projects due to the very harsh winter,” Timmer said. “Buyers were unable to start shopping due to the long winter extending into March, so there will be a rush as the weather clears. (We have a) historically low inventory of existing homes for sale — 3.3 months, (the) lowest in five years. A normal home-for-sale inventory is 6.6 months.”
Interest rates are still fairly low, Timmer said, and a large number of homeowners refinanced their homes when those interest rates plummeted from 2008-2011 during the Great Recession. Those homeowners aren’t rushing to sell their homes, thus creating a lack of existing homes for sale in West Michigan.
Furthermore, interest rates have risen roughly one point since this time last year, he said, and although that means the affordability factor has gone up, the market is still seeing historical lows in interest rates. Also, West Michigan homes rose in value about 12 percent in the last two years, he said.
Combine the small increase in interest rates with a winter in which it was hard to sell homes and the fact that home prices have slightly rebounded, and it’s clear the market is still trying to sort itself out, he said.
“Right now what I see is there’s a lack of existing homes for sale. There’s not very many homes for sale through the www.grar.com,” he said. “Really, it’s a matter of people not necessarily finding what they want to purchase, having a house to sell, and then maybe (experiencing) the delay and saying, ‘I don’t want to sell because I don’t know what I want to buy’ — even though they do want to sell.”
Although currently there are fewer homes for sale in West Michigan, many are looking to build houses, which has created and will continue to create a boom in the local construction industry, Timmer said.
Historically, 50 percent of home sales in the United States take place between March and June, he said.
“In essence, there’s going to be a boom to buy. There’s many people that want to buy a house that can’t find one they want. I’ve heard that from a lot of realtors,” he said. “There will be more buyers in the marketplace than sellers. That will cause whatever homes do go for sale to (sell in a) seller’s market.”
The market ebbs and flows, but it’s probably going to be more expensive to buy a house two years from now, he said.
“If you’re seriously considering needing more square footage or wanting to move out of your current location … two things: One, I would contact a Realtor to determine the best course of action,” Timmer said. “And two, talk to a mortgage lender … to determine what you can do to get preapproved to buy a home (or) build a home (to) meet your housing needs.”