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OCTOBER NEWSLETTER
More Traditional Market Conditions Arriving *** See Dale's video below
“Though technically still a seller's market, it is more favorable to buyers than it has been in a decade." – from NWMLS OCT Market Update
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MY MISSION: To serve you with timely and relevant information so you can make wise decisions in real estate. Call me anytime.
For more frequent updates, see my social media and website
HAVE A SUPER MONTH!!!
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Dale explains the current SnoCo market... |
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CONTENTS - Executive Summary
- Should We Be Concerned About a Crash?
- Home Prices
- Supply & Demand insights
- Seller/Homeowner Conditions
- Buyer Conditions
- Interest Rates
- Helpful Resources (mortgage calculator, Buy Guides, Mortgage News)
- Arizona update and opportunities
- A Bit About Dale
- Connect with Dale
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WHAT’s HAPPENING? - OVERALL: MORE SUPPLY, LESS DEMAND producing more opportunity for buyers than past decade.
- SUPPLY: Number of homes for sale has DOUBLED! Up by 109% Yr over Yr (YOY) But keep in mind still lower than pre-pandemic levels of 2019 (by 13%)
- DEMAND: Closed Sales are down by 33% YOY
- REAL ESTATE "BATHTUB": Water level (Total Supply) is rising. Drain hole (Demand) is shrinking.
- MONTHS OF SUPPLY: Still technically a Seller’s market with 1.8 months of supply, but is trending in the direction of balanced. BAL = 4-6 mos.
- DOM: Homes are taking longer to sell than a year ago. Now at 27 days vs. 11 days last SEPT.
- MEDIAN PRICES: Up 8% vs. 1 yr ago. However, on a monthly basis we are seeing them decline as the market shifts. Overall for the year may still see a positive gain vs. last year, but the jury is still out on that. We'll see.
- PERCENT OF LIST PRICE RECEIVED: 98.6%, (down 5% YOY).
COMMENTS: - General: Market is shifting and normalizing toward pre-pandemic levels after a white hot Seller's market. Fluid situation. No crystal ball. All parties having to "recalibrate" expectations.
- Prices: Appreciation to moderate or flatten rest of 2022. We still have positive appreciation compared to last year same month. It could remain positive through end of 2022. One chief economist in the area predicts that YOY prices will start to trend negative by Spring 2023. Expects a "short" period of correction. Puget Sounders should weather it well since the average homeowner has over 50% equity in the home. 2023 could be bumpy on prices dropping, but majority of forecasters anticipate positive appreciation 2024 and beyond.
- Interest Rates: Rose sharply since January. Likely to rise some more, but not as sharply. Once inflation under control, likely to drop again. The drop in prices primarily due to the sharp rise in interest rates.
- Demand (sales): Slowed because less affordable payments due to higher rates and prices. Demand will resume as buyers jump in when dust settles on rates and recession. Buyer competition will likely increase then.
- Supply (active listings): Increased (doubled 109%) because Demand has slowed. Buyers have options now. However, supply is still lower than pre-pandemic 2019 levels by 13%
IMPACT: - Buying frenzy is over, but Demand still alive (some on pause)
- Opportunity for buyers with decreased competition. Sellers becoming more realistic and flexible, willing to consider contingencies.
- Homes taking longer to sell (DOM), though still in a Seller's market (Mos Supply)
- Sellers are getter lower than their asking price (SP/LP) on average. Must price appropriately to sell.
- Sellers are being more flexible. Buyers more bargaining power than prior.
- Housing will lead the way out of recession as the industry has huge impact.
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SHOULD WE BE CONCERNED ABOUT A CRASH? |
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HOME PRICES: What Experts Are Saying? |
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We mentioned in SEPT newsletter the potential for negative prices. The West sounds like it will be impacted more as it had cities that were overheated.
Locally, the median sale price continues to glide downward monthly, not crash. Positive YOY still, and may continue positive thru end of 2022. One chief economist in the area predicts that YOY prices will start to trend negative by Spring 2023. He states we are not to be concerned in Puget Sound area because the expectation is for fairly short period of correction, and homeowners in the PS area have over 50% equity in the home.
Nationally, we see are seeing declining monthly prices. Updated forecasts show average of .2% positive appreciation nationwide. Expect a bumpy 2023, but majority of forecasters calling for positive appreciation 2024 and beyond. See charts below for forecasts. |
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CURRENT SUPPLY & DEMAND (and impact) |
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We've been in an EXTREMELY ABNORMAL market during the two years of the pandemic. We are adjusting back to a more traditional market. In a shifting market, we must keep perspective. The last "normal" pre-pandemic real estate market was in 2019. That is what the market is shifting back towards after major events and dynamics had impacted 2020 & 2021. Though rising, supply is still lower than 2019 levels by 11%. Buyers have more options. Sellers still in a favorable market to sell. But homes are taking longer to sell. |
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SELLERS / HOMEOWNERS CONDITIONS |
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Still technically in a seller's market since Months of Supply is at 1.8 months. That's still to your benefit. However, with interest rates more than doubling since January, the monthly payment has impacted affordability. 3% rates are gone and, thus, so is the barrage of multiple offers. Homes are taking longer to sell than what we grew "accustomed to" the last couple of years. But, while 27 Days on Market, is slower than the 11 DOM from a year ago, it is still quicker than the last normal year (2019). Sellers simply got "spoiled" during the white hot seller's market. Those appreciation rates were unsustainable.
Today's successful sellers are pricing appropriately, prepping for good impression, addressing deferred maintenance, and being flexible on terms and repairs. They understand that the ideal cash offer or multiple offers at way over asking price and all contingencies waived are not commonplace anymore. In other words, they are serious sellers, not just throwing a number out there knowing a buyer will come knocking. Sellers who work with a knowledgeable real estate professional to assess the market, comparable sold properties, and competition to set an appropriate price will find their home sold in due time. Have an honest conversation up front about the market and expectations.
1. PRICE IT RIGHT: One of the first things buyers will notice is the price of your house. That’s because the price sends a message to home shoppers. Pricing your house too high to begin with could put you at a disadvantage by discouraging buyers from making an offer. On the flip side, pricing your house too low may make buyers worry there’s some underlying issue or something wrong with the home. Pricing is an art, not a science, and even more so now because home closings reflect contracts signed a month or two earlier and rates have been all over the board.
2: KEEP IT CLEAN: “When selling your home, it’s important to keep everything tidy for buyers, and you never know when a buyer is going to want to schedule a last-minute tour. Declutter, depersonalize, keep tidy with beds, dishes, overall cleanliness.
3. HELP BUYERS FEEL AT HOME: It’s important for buyers to see all the possible ways they can make your house their next home. An easy first step to create this blank canvas is removing personal items, like pictures, awards, and sentimental belongings. Remove any excess furniture to help the rooms feel bigger and make sure there’s ample space for touring buyers to stand and look at the layout. |
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OPPORTUNITIES: If buying is within your budget, this may be a good window of opportunity for you. PRICE REDUCTIONS, MORE SELECTION, MORE TIME FOR DUE DILIGENCE, MORE BARGAININING POWER, LESS COMPETITION, LOWER STARTING PRICE POINTS, REFI LATER ONCE RATES IMPROVE, TAKE ADVANTAGE SELLERS BEING FLEXIBLE NOW (concessions, rate buydowns, repair/improvement requests, etc.)
CONSIDER THESE THREE THINGS IF AFFORDABILITY IS AN ISSUE: - Modify search area
- Adjusting needs/wants
- Down payment assistance programs available
- Request seller concessions or rate buy-down
WARNING: Don’t try and time the market. Don’t count on rates dropping to those pandemic lows of 3% anytime soon. But I have heard from lenders and economists that there is realistic data indicating we’ll see an improvement on rates in the next 18-24 months, maybe sooner. If you have the ability to buy, now may be a good time for you to get into a home with the benefits stated above. Forecasters anticipate buyer demand (competition) to re-emerge once the dust settles and rates drop. Consider this scenario below....
THEN vs. NOW SCENARIO: See the graphic below. With Rates higher than last year, are you hesitant to buy? Take a look at the 10 year cost of buying this year at market price with a higher rate versus overpaying last year (like buyers had to do to compete) with a lower rate. The numbers may surprise you! Even though interest rates are more than double now versus last year, the total 10-yr cost for each scenario are not too different, simply because prices have dropped. In addition, with good negotiation skills, there is a good chance a buyer could acquire at below list price, as well as negotiate credits, repairs, seller-paid rate buydown, etc., making a purchase this year even more attractive than the scenario shows. Moreover, once interest rates drop, Buyer can refinance and reduce their payments further.
So, don't take yourself out of the purchasing game. There are still opportunities for you that make financial sense.
BOTTOM LINE: This may be a good window of opportunity for Buyers to get into a home without overpaying, if your budget can support the payment.
Remember the 4 Benefits of Homeownership: 1) Appreciation, 2) Debt Reduction, 3) Tax Savings, 4) Security 5) Hedge against inflation
Work with a professional to get a strategy in place. Feel free to contact me if you'd like to discuss a proactive plan to find your home! |
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SHOULD I BUY A HOME RIGHT NOW? -- See map below from FHA showing how home prices appreciated across the USA over the last 30 years (since 1991). Is there reason to believe thngs will be any different 30 years from now? Homeowner equity is the principal driver of wealth. See the graphic above that supports this.
Next step...Get pre-approved for a mortgage with a reputable lender. This helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home. Then let’s connect so you have the tools you need to succeed as a homebuyer in today’s shifting market. |
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HAVE YOU CONSIDERED.....ARIZONA? (2nd home/vacation/retirement property) |
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OPPORTUNITY could be knocking if you have been eyeballing Arizona for a vacation/investment property or relocation. The pendulum has swung even more so than WA, and buyers have solid bargaining positions now that overall demand has dropped and sellers are competing for buyers.
Prices are trending lower. Forecasters are predicting a drop in October for both sales volume and prices. If their models are correct, year-over-year sales volume will decline between 35% and 40% year over year. This gives you (Buyer) terrific bargaining power..
If a place in the sun interests you, keep an eye on AZ. I'm licensed there, too, and regularly spend time in the Grand Canyon State! Use the links below to search for properties or contact me for personalized search.
This could be a good time to start searching for your second/retirement/snowbird property. Full stats and commentary in link below.
Contact me DIRECTLY if interested in any of these or wish to chat AZ opportunities. |
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If curious about more AZ, this link shows all area info, demographics, weather, map/location, and homes for sale/sold, pricing, stats, schools, and more..
All areas of Arizona
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MARKET CONDITIONS & STATS (Arizona) |
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Source: ARMLS® COPYRIGHT 2022 |
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Map of Phoenix valley area |
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Fishing with the boys at Flowing Lake |
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We survived Bob's Corn Maze (Snohomish, WA). What a fun place to visit each Fall. Don't miss the homemade cinnamon donuts!
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Oregon road trip with my oldest son to see WSU / OSU Beavers football game!
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Stopped in Gill Coliseum for a pic with Gary Payton Sr. and Jr. Gary Sr played at OSU when I attended back in the day. I watched, He played! NBA - He played for the Sonics, etc. His son now plays for the Blazers. |
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Check out my website. I'll continue to add relevant content for you. Use the sandwich menu (three lines) on the top right of the screen once you are on the website. |
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Oh, and by the way.....I'm NEVER to busy for any of your referrals. I'd be happy to give 5-star service to your friends and family! Just click above or call me. :-) |
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Sources: -NWMLS Press Release - Sept 2022 -Keeping Current Matters -NWMLS FastStats -National Association of Realtors -ARMLS® COPYRIGHT 2022 |
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