Given the recent shift, what does today’s market mean for sellers and buyers?
FOR SELLERS, it is always important to understand where your property fits into the competitive landscape. Currently, there is a wide variety of conditions in the marketplace, but overall this is the kind of market sellers love to see.
After years of persistent buyer’s market conditions, much of our market is now in balance, or squarely in a seller’s market. Today, 91% of the market, by price range, fits into these categories. Only 9% are in a buyer’s market. Even with this improving trend, not all areas and price ranges are moving as robustly as others (See Charts 1 and 2).
In the price ranges below $350,000 the market is quite active; in some cases it is very hot. Multiple offers are becoming more common again. We have many examples of homes selling at prices that were not achieved just a couple of years ago. In those areas that have fewer homes competing for buyers’ attention, we are seeing prices rise.
However, even in these undersupplied areas, there are still many properties that are languishing on the market. Buyers continue to ignore over-priced properties. It is still about pricing competitively.
In the upper-end price ranges, where the market is not moving as quickly, properties that are selling are priced at compelling levels. Recoveries typically start in the lower price ranges and move up. Over the past year, we have seen more price ranges come into balance. For example, a year ago, the only price ranges in balance were those below $250,000. That number is $100,000 higher today. The top price ranges will continue to see improvement over the coming months.
For many sellers, particularly trade-up sellers who are looking to buy larger or more expensive homes, they know the math is better if they move now before prices bounce up.
FOR BUYERS, it is important to know that most price ranges are attracting more buyers than sellers. This makes it competitive for buyers; and these conditions can tempt the unprepared to go places they wouldn’t otherwise be willing to venture.
Before starting the search process, buyers should be thorough in determining the must-have features from those that would simply be nice to have. Keep an open mind about improvements that can be made over time. For example, paint is an easy, affordable update. Features such as flooring, cabinets and countertops can be done over time. The right home may just need a little work to make it perfect.
At the same time, be aware of things that cannot be changed, or at least are very expensive to change. The location of the home is the biggest driver of price – and it cannot be changed. Also, if the home does not have the desired floor plan, a buyer should consider how much it would cost to achieve that better layout. The cost of that type of improvement can range from the modest to the prohibitive. Without great thought going in, compromising on these types of things in a competitive bid process can lead to buyer’s remorse.
Buyers willing to compromise on some things, while standing firm on those that matter most, will find success and a comfortable outcome.
This is a unique time to be a buyer. Prices around the country appear to have bottomed and interest rates are so low they tend toward silly. These factors combine to make homes affordable. As interest rates rise, less house will be available at the same mortgage payment. When prices also rise, a buyer can quickly be priced out of something that may have been affordable when prices and interest rates were lower.
This is ultimately why we are seeing a big jump in the number of buyers in the market. With the proper preparation, today’s buyers will be happy they purchased when they did.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from Northwest Multiple Listing Service Data. Statistics not compiled or published by Northwest Multiple Listing Service.
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