Seattle Market Update
Here is what we are seeing in the real estate market: increased inventory, increased market time and price reductions. Multiple offers and offers over list price are rare now. What does this mean for buyers and sellers?
Sellers need to price their property to match the new market conditions. If the property doesn’t sell in the first 2-3 weeks on the market, it is time for a price drop. Sellers should also be prepared to pay for buyer’s closing costs, especially if the buyer is an FHA or VA buyer and sellers should not be surprised if they have to pay for repairs on defects called out in the buyer’s inspection.
Buyers have more inventory to choose from and more time for due diligence to research the neighborhood (schools, crime statistics, etc.) and condition of the home (structural/pest/sewer inspection, etc.).
There is a lot of confusion and resistance to what’s going on. Sellers are reluctant to adjust and drop their asking price when the property doesn’t sell. Sellers who ignore the new market conditions will remain on the market longer and homes that are sitting on the market longer almost always get less than market value. It is important for sellers to act quickly on these new market conditions.
Buyers are afraid to commit to what they perceive might be the top of the market. The fear of overpaying keeps some on the sidelines as they want to just wait and see what happens. However, this might be the best time for buyers to negotiate as sellers figure out the new playing field and are desperate to get their home sold.
We do not have a crystal ball and cannot predict where prices are going and what market conditions will be like in the months to come. However, we suspect the market has cooled because it needed to. The frenzy of the last few years is simply not sustainable. We see this change as a good change that will keep the housing market strong and healthy which is a good thing for both buyers and sellers in the long run.
Rents have declined in our area due to increased available inventory as a result of an increase in apartment building construction. More supply with the same demand = declines in rent.
There might be a push for more condo construction or condo conversions (apartment buildings being converted to condos) to meet the demand for condos. In fact, one building downtown which was to be an apartment building will now be condos. Read more about the Spire Building here.
There is very little new construction in urban areas for condos and single-family homes and the demand for these properties has not declined so we do not see home prices dropping in the long term after everyone adjust to the current shift unless employment, wages or other factors change.
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Did you know?
The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of their data points, which has changed dramatically, is the median tenure of a family in a home, meaning how long a family stays in a home prior to moving.
Over the last twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2014, that average is almost ten years.
The main factor for this change is the fall in home prices during the housing crisis which left many homeowners in a negative equity situation (where their home was worth less than the mortgage on the property). Also, the uncertainty of the economy during that time made some homeowners much more fiscally conservative about making a move.
It will be interesting to see how this number changes as a large portion of homeowners are not in a house that is best for their current family circumstance such as baby boomers living in an empty, four-bedroom colonial, or a millennial couple living in a tiny urban one-bedroom condo planning to start a family.
We’d love to hear from you
Any questions, comments, or feedback? Contact us any time.
Krisanne and Kerstin
Brooks & Heinze Team
at Skyline Properties, Inc.
Kerstin Brooks: 206.276.5827
Krisanne Heinze: 206.920.2541