It may only be January 12th, but I have been immersed in real estate and it feels as if a month already went by. My time has been spent working with sellers to prepare listings while at the same time meeting with clients who need a game plan to purchase (in a very tight market).
On the Eastside we are seeing historic low inventory with just 0.5 months of supply (normal market 2-4 months). At the end of December there were only 188 houses on the market on the Eastside. This is the fewest of any month of the year for at least 30 years…..and possibly ever! Buyers had a few more choices in Seattle with 1 month of inventory, but this was still quite unbalanced and favoring the seller. Fast forward to today and we have just a trickling of new listings year to date. The prime listings are fully booked with showings scheduled every 30 minutes. With inventory so low, expect to hear about multiple offers and bidding over asking price.
Although the closed median price for houses on the Eastside is up 17% from one year ago, the payments are only up $127. The low interest rates have supercharged buying power. People generally buy based on payment, and the cost of waiting a year is not that great from this perspective.
Please see the pie chart below. In December 49% of all the houses on the Eastside sold for more than asking price in just 5 days. The median difference paid over list price was 7%. If you compare this to December 2019 you will see quite a difference. I have never seen such a strong market so late in the year. There is no doubt that Covid-19 delayed the kickoff of the Spring buying season. However, once it got started the momentum never stopped.
While no one can predict exactly where prices will go in 2021, we do know that the local real estate market has a pattern of seasonality. Buyers start coming out in January and February of each year and the highest numbers of homes are listed between April and August. The result? Annual price appreciation typically takes place in the first 6 months of the year and then flattens out for the second half of the year.
If you wait until the second half of 2021 there is a really good chance you will have to pay more for a home. Simple supply and demand will also dictate that prices will be higher later this year.
Condo market: Condos have not been selling quite as well as houses and we have twice the inventory. There is 1 month of inventory on the Eastside and 3 months of inventory in Seattle. This means there is a better selection and buyers can negotiate more than on a house. While Covid-19 has put a damper on condos we know this will change over time and this may be a buying opportunity. I am actually seeing a lot more interest in condos already this year and there is a noticeable change from the last quarter of 2020. I really have so much more to say on this topic….please contact me if interested.
Takeaway for buyers: Buying a home in our area takes proper planning and strategy so I recommend starting early. With such low inventory you need a highly experienced broker to successfully navigate the process. While prices are higher, lower interest rates mean that houses are almost as affordable as a year ago. Prices are expected to climb in 2021 and rates probably will not remain below 3% forever. Is this a good time to buy? The answer varies from person to person and I can help you figure this out.
Takeaway for sellers: We need you! This is one of the best times I have ever seen to be a home seller. While half of the houses sold in a week for over asking price, there are many homes that did not perform so well. Proper pricing, presentation, negotiation, and representation will yield the best results. Sellers may have the advantage but most need to purchase a home again. Where will they go and how will they compete? Contact me to talk about your property and plans. I can provide a lot more information relevant to your neighborhood and situation.
***Finally, I am hosting a webinar with famed economist Matthew Gardner on January 21st. Perhaps his “crystal ball” projection will help you make some decisions. Please see below for details and registration!***