National, Local Real Estate Numbers Show Demand Continues to Outpace Supply

In its March REALTORS® Confidence Index Survey (RCI), the National Association of REALTORS® (NAR) says demand continues to outpace supply, buyer competition remains intense, and homes are still selling above list price. Let’s take a closer look at the numbers — both national and local— and discuss some predictions for the summer.

The national market numbers

Even as the 30-year mortgage rate rose to an average of 4.17 percent in March (compared to 3.76 percent in February), REALTORS® responding to NAR’s RCI survey said homebuying demand “was still broadly stronger in many markets although the strength waned compared to conditions one year ago.”

The numbers show that buyer demand continues to outpace the extremely limited supply. On average, respondents reported four buyer home tours during the month compared to an average of 1.4 listings. And NAR said buyer competition in March remained intense, “with respondents reporting an average of 4.8 offers for every home sold (4.8 in the prior month, 4.8 one year ago).”

NAR also found that 57 percent of buyers’ offers were above list price (48 percent in February), and half of those buyers made at least two previous offers and lost before succeeding on the third try.

However, NAR did report that in March, total existing home sales dipped 2.7 percent from February to a seasonally adjusted annual rate of $5.77 million. Year-over-year, sales fell 4.5 percent.

In a press release, NAR’s Chief Economist Lawrence Yun said the housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation, but he adds that “still, homes are selling rapidly, and home price gains remain in the double-digits."

Zooming in on the local numbers

In the greater Lansing area, the median sold price in April increased to $203,000. This increase, the highest it’s been in 2022, is a nine percent jump from March and 18 percent higher than the same time last year when the median sold price was $171,792.

A total of 551 new listings hit the market in April. While this is the highest number since September 2021, it’s almost 14 percent lower than April 2021. And despite the rise in new listings, active inventory is down 18 percent from April 2021, hitting its lowest level in more than a year.

REALTOR® Brock Fletcher, owner of The Selling Team with Keller Williams Realty, said his team is experiencing 7 to 12 offers on their listings over a 5-day marketing period, and contract prices are anywhere from $5,000 to $30,000 over the asking price.

“I haven’t seen any slowdown in terms of home values, buyer demand, or number of offers, mostly due to the fact that we are still dealing with very low inventory — about 350 active properties at any given time, which is only about 4 to 5 days’ worth of supply,” he said. “In my opinion, the only thing that would cause values to really drop would be a significant increase in interest rates combined with a tremendous amount of inventory hitting the market at the same time, maybe 3,000 to 5,000 homes, which we are nowhere near.”

While a massive influx of inventory isn’t predicted anytime soon, rising inflation and the Fed’s monetary policy are putting pressure on mortgage rates, which are expected to continue climbing throughout the year. According to a recent article in Forbes, experts from NAR and the Mortgage Bankers Association are forecasting that the 30-year, fixed-mortgage rate could vary from 4.8 percent to 5.5 percent by the end of 2022.

“Higher rates will impact buying power, but part of the emotion behind this is that people are comparing rates to the ones we saw over the last two years,” said Fletcher. “Historically speaking, today’s interest rates are still low compared to the double-digit rates in the 80s. Even in the early 2000’s when I purchased my first home, rates were above 8 percent.”

In an interview with Forbes, NAR’s Yun said, “Higher mortgage rates will inevitably pull home sales down in the coming months and slow home price appreciation.” However, while Fletcher agrees things may begin to slow down, he says it’s important to remember that real estate is local.

“In the greater Lansing area rental rates have outpaced mortgages by quite a bit and it’s become much more affordable to own than to rent,” he said. “Our home prices are also around $100,000 below the national average. So, while we may see the rate of value growth slow, I don’t see it dropping as much as it might in markets like Tampa or Austin where they simply can’t sustain the amount of growth they’ve experienced.”

Fletcher believes the summer market will continue to be competitive and fast-paced, and his biggest piece of advice for both buyers and sellers is to partner with a local REALTOR® who can serve as a trusted guide.

“This is not just a transactional process,” he said. “In fact, it’s become much more about relationships. Not just between the REALTOR® and client, but also the relationships with the other agents in the team, the network of lenders, the inspectors, the cooperating agents, etc.”

Fletcher has one more piece of advice for buyers who are sitting on the sidelines, waiting for things to slow down, prices to drop, rates to come down, etc.

“I think there are a lot of people wishing they would have bought last year when rates were lower,” he said. “So instead of trying to predict where things will go, it’s more important to look at everything from an affordability standpoint. If you want to buy a home — and are financially able to — don’t wait.”

For a list of area REALTORS® and lenders who can help with your next home sale or purchase, visit the Greater Lansing Association of REALTORS® website at www.lansing-realestate.com.

This article originally appeared on Lansing State Journal: Real Estate Numbers Show Demand Continues to Outpace Supply