Wherever I go, everyone has an opinion on the Seattle real estate market. There are those who think it’s been way too good and the crash is coming and are frightened into inaction. Then you find the ones who think it’s still okay, but we’ve moved into a slower time for sellers. Then there are others — usually transplants from other areas of the country — who can’t believe how active and profitable this real estate environment is,
They’re right, and they’re wrong.
The devil’s in the details, as no doubt you’ve heard. We’ve got to burrow into the data.
Not so simple
While those who say the market is down do have a point — it’s only in relation to a relatively recent look back. The numbers are down from the spring, but the early part of the year was insane. It was unsustainable, and buyers grew tired of it.
Sellers who price their homes according to what was being bought almost sight-unseen earlier in the year are either getting bad advice or are refusing to listen to better advice. Putting your home on the market with an unrealistic price will simply cause it not to sell. So they’re right that their home is not selling. They’re wrong in thinking they can get multiple offers, above asking price, with no contingencies, in days.
All the stories you are hearing about prices coming down in Seattle are due to sellers pricing their homes from sales back in March and April. The market has shifted, and to sell, we need to shift with it.
In truth, we’re still looking at a strong real estate market in the greater Seattle area, and in the Madison Park area in particular. As I write this article, there are 83 active listings in our area, with 29 under contract. The absorption rate (months of inventory) is effectively 2.8 months. Still, that’s a difference from earlier this year, and people have a hard time calibrating change. You have to stop thinking in the past and pay attention to new norms.
Where we are now
While prices have adjusted, we’re still, on average, getting 100 percent of a home’s asking price. Homes are spending, on average, only 17 days on market. In one instance this month, one of my brokers had a buyer who made an offer on a home that was one of five. If a home is priced right, you’ll probably still see competition. And this is in October, not traditionally the hottest time of year for selling a home.
Another important data point for our new normal is what constitutes a neutral market, and we’re still on the positive side of that. Analysts use four to six months’ worth of housing inventory as an indicator of a balanced or neutral market. Our market is well below that point, at 2.8 months of inventory; we’re not even close to a balanced market.
While other large U.S. cities, and their metro areas, are certainly seeing a cooling market, we’re not, according to the data.
The pace of development is still fast, which indicates continued market strength here in Seattle — look at all the cranes working downtown. And our biggest advantage over the rest of the country is the number of major employers and the jobs they create. People are moving here. They need to find places to live. We’re far from a crash.
What to do
The only thing we can control is how we react to these changes. If you’re selling, price your home realistically for right now, not six months ago. Get current comparable pricing on similar homes in the neighborhood. And get yourself an experienced broker. The experienced, data-driven broker can tell you whether you’re pricing too high or just right, based on the most current comparable home sales.
If you’re buying, those comps will tell your broker whether you can come in and negotiate with a heavy hand or if you need to be more reasonable. Look for a broker who has good, long-standing relationships with other brokers. If I’ve done a few deals with the broker representing the seller of a home my clients are interested in, it’s more likely she or he will let me know if there have been no other showings, or if the owners are willing to negotiate the price or other terms. As the market changes, having relationships and playing the game nicely with others will work in your favor.
Chris Sudore is managing broker at Coldwell Banker Bain | Global Luxury and a Madison Park resident. He can be reached at Chris@KingCountyEstates.com.