Written by John Madrid, Managing Broker, RSIR
Change is on the horizon as we prepare to move through the holiday season and into 2019. As buyers and sellers prepare for the new year, let’s take a look at current trends and what’s ahead in the Seattle real estate market.
We remain in a seller’s market from an historical, inventory-based perspective, but some transition is in the air as homes are taking longer to sell. While some would surmise that greater market times may lead to depreciating values, sellers continue to capture appreciation.
Looking at trends from Northwest Multiple Listing Service Area 390 (which includes Madison Park, Washington Park, Broadmoor and Capitol Hill) for the period August to October, the average market time for single family homes increased from 18 days in 2017 to 21 days in 2018. The median sales price of these homes spiked 15.6 percent annually (from $850K in 2017 to $983K in 2018).
Inventory, among the best “state of the market” metrics, is rising. Months of inventory expanded from 1 month in August to October 2017 to 2.6 for the same period in 2018, placing us in a seller’s—but near neutral—market. (A seller’s market is less than 3 months inventory, while 3 to 6 months inventory reflects a balanced market.)
For Home Buyers
Buyers will find that homes in popular neighborhoods will remain in high-demand, but without the frenetic bidding wars encountered in recent years. This less competitive environment will empower buyers with opportunity in negotiation, whether it’s including more contingencies (which have often been waived to make offers more competitive in multiple offer situations) or asking the seller to make reasonable repairs identified through inspection. Sellers may also be open to reasonable offers made below list price when a home spends more than a few weeks on the market.
Condominium buyers will benefit from increased inventory and better values.
Finally, rising interest rates will reduce purchase power. (Consider that a 1 percent rise in rates translates to an approximate 10 percent reduction in buying power.)
For Home Sellers
Sellers should not price homes below market value in the hope of generating multiple offers and driving up the final sales price. Buyers will have more options, which will necessitate a good first impression: condition, staging and professional marketing will matter more than ever. Work with a seasoned agent to model sale price scenarios and price reduction timing before you list. With 2019 prices expected to increase at a single-digit pace, sellers can still realize historically strong price appreciation in the new year.
Downsizers will be able to secure today’s rates for a lock-and-leave, in-city lifestyle with variable closing times to facilitate a seamless move.
Lastly, architect and contractor availability will be less constrained, providing better improvement and upgrade opportunities.
Here’s to health and happiness in the new year.