Are we nearing the end of the buyer’s housing market in Seattle? Has the housing market recovered here?
If we look at Seattle’s most active zip code for real estate transactions, we can see that the median 3-bedroom home in 98115 sold for $439,975 in 23 days in 2012. This year, that same median 3BR home sold for $464,000 in 11 days! Multiple offers on houses in high-demand Seattle neighborhoods are now the norm.
So how on earth did sellers get the power all of a sudden? Well, there are a number of reasons. First, there isn't any inventory. This is partially because homebuilders slowed down, and partly because existing homeowners are either underwater or unwilling to sell at rock-bottom prices.
Investors also swooped in over the past few years and bought up all the foreclosed homes at major discounts (see my previous blog on institutional buyers in the single family market).
At the same time, homebuyer sentiment is on the up and up, and buyers are finally entering the fray, all at once. Responding to Fannie Mae's latest National Housing Survey, their chief economist commented, "Despite fiscal headwinds and political uncertainty, consumer sentiment toward housing is robust and continues to gather strength." This has to do with relatively low home prices coupled with insanely low mortgage rates, along with the expectation that things can only get better from here.
Specifically, 48% of survey respondents believe home prices will go up in the next 12 months, a high for the survey begun in June 2010. Only 10% of respondents believe home prices will go down, a survey low.
And when supply is low, and demand is strong, the frenzy begins. The desire to buy has grown, as 67% of respondents said that if they were moving, they would rather buy than rent. It appears as if everyone is simultaneously scurrying to snag a home so they don't miss out.
The big question is will they? Do you need to buy immediately in order to get a good deal (and a good rate on your mortgage)?
While inventory is nowhere close to historic levels, it should pick up nicely over the next few months during the spring buying season. Most properties get listed in March through May, so there will be plenty more to choose from if you can wait a month or two. The number of new listings may be even more pronounced thanks to this well-documented buying frenzy.
At this point, prospective sellers know demand is strong, and for many who were holding out, this could finally be the time to throw up the for sale sign. After all, plenty of homeowners who were underwater for many years are finally breathing again, and the kneejerk reaction is to sell the minute you get the chance.
One in four say now is a good time to sell a house, the highest level in two and a half years. People will probably act sooner rather than later, as 45% of those surveyed think mortgage rates will go up, while only 7% expect them to go down. Sadly, few are thrilled about the overall economy. Only 38% said the economy is on the right track and only 41% expect their financial situation to improve in the next 12 months.
This could spell opportunity for those looking to buy - just note that some of these existing homeowners will need a place to live as well, and may be competing with you when you make your offer on a house.
Contributors to today’s blog include Katherine Swanberg of TriStar Finance and Stephen Bighaus of Insider Lending.