Heidi, a 20-year Seattle real estate veteran, shares her insight into the ever-changing real estate market.
1) What is the driving force for this crazy “Seller’s” market and will it ever end?
The buyers are the clear driving force in this bonkers market. Yes, inventory levels are extremely low, but we’ve had pervasively low inventory levels for several years now. The inventory numbers are not dramatically “lower” right now than they were just a few months ago in late fall when the market felt substantially softer. What has changed in the equation is Buyer behavior. And right now the demand for homes is at a fever pitch. As for the latter part of your question, any human who has an understanding of markets knows the answer to that question is “of course.” Markets cannot sustain an upward trajectory indefinitely. So the questions (IMO) ought to be…when will a correction occur, how severe will it be, and how long will it last? Let me grab my crystal ball and I’ll get right back to you on those 🙂
2) Who’s missing out? Can an “Average” buyer even buy a home in 2021?
Sadly, the buyers who are having the toughest time in this market are the ones who are procuring financing with 20% or less down payment, and therefore are not in a position to comfortably waive their financing contingency—regardless of the price. Many buyers have well over 20% down payment (if not all cash!) and in order to be competitive they are choosing to waive ALL of their contingencies…including the appraisal. In all price points the buyers who cannot comfortably waive that financing contingency are the buyers who are having the toughest time. The good news is that any buyer who can qualify for a loan CAN buy a home, even in a crazy market such as this. The key is to have appropriate expectations surrounding the process itself as well as what their buying power affords, and then to be flexible and willing to make compromises. And of course, to make sure they’re working with someone like me who has been through these markets before and who can help guide them through the process 🙂
3) Is the “Sold, way over asking price” a specific niche or price point? – or is it market wide?
This is definitely not just a specific price point phenomenon. When you hear stories of homes selling for WAY over their asking price it’s important to probe a bit. Perhaps the delta between list and sale price is huge simply because the list price was “artificially” low, essentially creating an auction situation. Sometimes it is a subtle nuance in timing. Even in a “hot” market there can be these almost imperceptible swings in buyer behavior. Sometimes it’s because the house itself is truly special in some way. Our own pending sale at Roberts Way is a terrific example of this. We received 18 offers and just closed at a significant amount (Listed for $1,538,000, SOLD for $1,875,000 – $951.78/sf) above our asking price. In other words, there is no way to quantify how much to “expect” a home to sell for. Some homes right now aren’t receiving multiple offers and aren’t even selling for their asking price. It really comes down to how skillfully a listing is positioned into the market. Some listing brokers are better at this than others 😊
Homes that are nicely updated and beautifully staged (again, across all price points) are typically the most successful.
4) What differences can a broker make in this type of market?
Well, experience really does matter. I’ve been around long enough to remember what the “Dot-Com” housing bubble (and subsequent) crash felt like. Then there was that little “hiccup” that began in fall of 2008. With all due respect, a newer broker simply doesn’t have that historical market knowledge. It’s flat-out terrifying to be a buyer right now! I’m struggling a bit to answer this question actually, because I really do think I approach this process a bit differently than many brokers. I can get into some pretty deep-dive conversations with buyers as they are pondering offers.
Here’s a direct quote from one of Heidi’s recent clients: Buying our first home in a white-hot market was daunting, to say the least…having a broker we knew was always in our corner was essential—from strategizing terms for a competitive offer to win the home of our dreams, to market research that kept us grounded in the face of (sometimes emotional) bidding wars, to insightful visions of how we might renovate the *almost* perfect home over time to suit our lifestyle—Heidi was a wealth of knowledge, always delivered with a smile. If we were to do it all over again, we’d do it exactly the same and work with Heidi and her team! -Megan
5) What do you say to a seller? – “Tee it up NOW!” Or a buyer – “Lace up your boxing gloves”, in this market? Is there anything in between?
Lace up the boxing gloves is absolutely accurate for buyers right now, although I also say to watch for targets of opportunity. Markets make tiny little shifts all the time, and there are also homes that come on that aren’t properly positioned to take advantage of this market (read: priced too high) and we just stay engaged and make sure we are ready to pounce when it feels right. And yes, we are ready to escalate BIG if/when the situation calls for it.
Sellers…my answer is more nuanced. Tee it up for sure if you are ready. But don’t just jam it on the market now if it’s not prepped properly. Every situation is different, the seller side of the conversation has far more variables and complications. But yes, if you think you want to sell and have been waiting for the “right” time, I would say give me a call because now certainly seems about as good a time as any!