There have been some pronounced changes in the market since mid-May of 2018. Prior to this May, real estate professionals had become accustomed to short market times, huge price increases and multiple offers. Although median prices are starting to decrease, there are still some multiple offers on “perfect” or lower-priced homes. However, this has turned into the exception rather than the rule.
1. SUPPLY :: More houses on the market, mainly because they are taking longer to sell.
There has been a small uptick in new houses coming on the market since last October. However, the biggest reason for inventory increases of almost 50% in Seattle is that homes are taking longer to sell.
Experts say that in a normal real estate market, we see 4-5 months worth of inventory, meaning it will take 4-5 months for buyers to absorb the active listings. Right now the NWMLS, in its entirety, reports 1.8 months of residential and condo listings, King County at 1.4 months, with West Seattle at 1.2 months of supply, and Seattle at 1.3 months. The entire NWMLS has been in a seller's market since February 2015, King County since November 2012, and Seattle since August 2012. Despite recent news headlines, in the grand scheme of things, we have made only a minor shift towards a more balanced market.
I believe that with the announcement of the new Amazon headquarters, we will see more inventory released on the market by Amazon employees relocating. As the supply and demand levels balance, I also expect to see more residents and landlords selling their properties to capitalize on their equity.
2. DEMAND :: There seem to be fewer buyers, and those that are active have less urgency.
I, and many others in the industry, observed that mid-May, fewer buyers were searching for homes. Prior to that, several lenders noticed a decrease in activity from the beginning phases of the pre-approval process. I have many speculations on why demand has decreased: local news, national political climate, increased interest rates, lower rents, price tipping points, etc.
Today’s active buyers seem to have lost their sense of urgency and are playing the “wait and see game”. Waiting for price
drops or the “perfect” house. However, while they are waiting, interest rates are increasing and their buying power is reducing. For many buyers, interest rate increases negate lowering home prices!
The statistics are reinforcing the observation of lower demand by the reduction in the amount of pending (-9.7%) and closed (-9.5%) sales of Seattle houses and condos from Oct 2017-Oct 2018.
WHAT THIS MEANS FOR BUYERS
It is more important now than ever to work closely with a trusted mortgage consultant to strategize your timing. Interest rate increases can have a HUGE affect your bottom line. With interest rates still reasonable, demand low, sellers having long market times and willing to negotiate, this is a FANTASTIC time to buy.
I can’t emphasize this enough!!
WHAT THIS MEANS FOR SELLERS
If you are planning to sell sometime in the next 3 years, you may want to seriously consider selling in the Spring. There is a lot of uncertainty about the direction things are heading. But prices are still high, interest rates are low, and it is still a great time to sell.These market changes are causing a big shift in pricing and marketing strategies for sellers and buyers alike. I would be happy to discuss those in detail over coffee at the Bird!
These market changes are causing a big shift in pricing and marketing strategies for sellers and buyers alike. I would be happy to discuss those in detail over coffee at the Bird!
Photo by Luka Reedy on Unsplash