What is going on in the real estate markets? Every day there seem to be headlines about the housing market. The trends both nationally and locally are at historic numbers that we haven’t seen in a long time. Let’s look as some recurring headlines and stats from the real estate market:
- Rental rates are rising
- Homeownership is dropping
- Home sales inventory is at a historic low
- Fewer people can afford to own
Rental Rates Are Rising
According to an article in The New York Times, the national vacancy ratio is the lowest it has been in 20 years. This and other factors caused national rental rates to rise 3.2 percent last year. Locally, Access Property Management has seen an increase in rental rates also. Like in any market, some neighborhoods rise while others fall, but in general, we have seen 5-10 percent increases in rent rates. Some areas increased as much as 15 percent!
Homeownership is Dropping
In the same article from the New York Times, it states that homeownership has been falling for the past 8 years, reaching 63.7 percent this year. Another article in the Wall Street Journal forecasts this rate to continue to drop to 61.2 percent in 2030, below the lowest since records began in 1965.
Homes Sales Inventory is at Historic Low
In Grand Rapids, our current housing supply is at 2.3 months. A healthy market that is moving along smoothly has 6 months of supply. In this news article from WZZM 13, GRAR Executive director, Julie Rietberg, says that when inventory is that low, you have double digit appreciation in the market. Ask any realtor in the area and you will hear about multiple offer situations, offers above asking price, and impatient buyers. The article states, “The average price for a home sale around Grand Rapids was $176,020 for the first six months of this – that’s up 9.6 percent from the same period last year.”
Fewer People Can Afford to Own
What is attributing to less people being able to own a home? According to the Wall Street Journal, a few reasons are tougher mortgage qualifications rules, higher rent to income ratio, slow wage growth, and student debt. When will our economy be able to overcome these factors to increase homeownership rate again? That’s where the experts are on opposite ends of the spectrum. What do you think?