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This past year has defied just about every accepted real estate model. Nothing is normal, every day is new and changeable.
The Seattle market is one of the strongest and most stable in the country, but when you look below the surface, it gets a little trickier.
At this writing in late November, the data would tell you that we have a strong seller’s market, with 2.4 months of inventory. Real estate analysts consider four to six months of inventory to be a neutral market. But the numbers are deceiving, for a couple of reasons.
The biggest one is that, despite that statistic, the sales from January to late November dropped 31 percent from the same time frame in 2022.
There aren’t enough houses available. The ones that are get snapped up fast. If buyers find that unicorn, they want it and will do a lot to get it.
WHAT’S HAPPENING
On the local level, in our neighborhoods, we’re seeing the same lack of available inventory, especially in the under $1.5 million range. If a well-kept house comes on the market, it’s crowded with buyers and brokers and people are fast to make an offer, often all cash. It can be brutal.
Homes carrying a price tag above $2 million are moving a bit slower, but aren’t languishing. The largest factor in this lack of inventory is the higher interest rates on home mortgages. Rates may drop next spring, as economic indicators are showing that inflation is ebbing. That may change the landscape.
But for now, many homeowners who would like to move are sitting it out. Where once they’d simply buy a larger or more updated home, they’re opting to remodel inside, build additions or additional dwelling units (where allowable), finish basements if they have them, and add outdoor living areas to improve what they have or to get more space.
One of the trends affecting us locally is that the homes that do come up for sale are due to either a relocation completely away from the Seattle metro area or by those moving to the Eastside. The migration east of 520 is prompted by families looking for bigger homes and lots and their highly-rated public schools. The calculation is that what they’ll save on private school tuition will make up for the higher mortgage rate and that monthly payment. Fewer people are moving within our local neighborhoods this year than they have in the past. With lower interest rates, that would change, and we’d be back to a more normal local market.
CHALLENGES AND OPPORTUNITIES
If you’re planning to sell in the next couple of months, don’t get lulled into a false sense of security by the data that says we’re in a strong seller’s market. It needs to be in its best condition to sell. Buyers demand it and won’t accept anything less. If it’s run down and tired, it will languish. About 90 percent of homes are getting snapped within 18 days. You don’t want to be part of the 10 percent that sits. That’s when group-think sinks in, with buyers not wanting it because, obviously, no one else wants it.
I just had sellers who had to relocate out of state fast and didn’t have time to leave their house in mint condition for sale. Rather than sell it as-is, they left it to me. With a couple of calls to my network, we had that house freshly painted, installed new carpets, repaired everything that needed fixing, and cleaned up the trees and landscaping quickly. The sellers spent about $50,000 for this whole-house upgrade. We had it staged and photographed. The property sold within a couple of days on the market and made about $200,000 more than it would have because it was in move-in-ready condition. Buyers aren’t looking for the fixer-upper or the diamond in the rough.
Buyers have to be prepared for battle. That means your financing is sorted out and lenders lined up or you’ve got cash on hand. Be ready to move fast if the home is turn-key and you want to win.
The best preparation you can do, though, is to have an experienced broker by your side. With so few homes available, you need someone with an established network, local knowledge, and sheer hustle to get you into the kind of home you want. Every house that comes on the market shows a different set of data, and those differences dictate how to proceed.
The right broker will analyze each property and help you structure a deal that can win the home. I have buyers who want to move but haven’t found the right property. For them, I’m calling other brokers to find the off-market listings, asking potential sellers what it would take for them to sell, and doing everything necessary to get those buyers into a new home.
With everything changing so rapidly, many homeowners have questions about their real estate investment. My team and office are based here in Madison Park, this is where I live. I love to talk to my neighbors about real estate. If you’ve got questions about what’s right for you, now and in the future, let’s set up a time to talk.
Chris Sudore is a Madison Park Resident. Visit KingCountyEstates.com or email him at Chris@KingCountyEstates.com. He is managing broker at Coldwell Banker Bain | Global Luxury.