March 27, 2023
Lately it seems we’ve got to keep our heads on the proverbial swivel to keep up with the data, information, and general noise available to us every day. On economic issues alone, daily updates on interest rates, inflation and employment numbers, the stock market, and now bank failures all contribute to our general outlook and by extension the decisions we make as consumers.
Playing in the local real estate sand box is no different. A certain amount of agility and flexibility is needed to stay ahead of the curve. Just when we start to settle into a new set of market realities the market absorbs some new variable and the situation on the ground shifts again.
About a year ago our over-heated seller’s market started a rapid cooling process due largely to rising mortgage interest rates. The price of money ate into buying power, buyers hit the brakes, inventory grew, and prices started falling. The situation was exacerbated by sellers who, facing falling prices and the prospect of losing their low mortgage rates, became reluctant to list their homes. Multiple offers and bidding wars quickly gave way to a more normal market pace and negotiation process. That was then…
In today’s reality buyers, becoming acclimatized to the new interest rates, are drawn to home prices that are stabilizing at levels 15-20% off their peaks from last spring. At the same time, inventory – the eternal issue around here – which grew to about 2.5 months of available stock back in December, was at half that level in February. The convergence of these factors is driving up competition for properly priced homes in great neighborhoods and – you guessed it – we’re once again seeing multiple offers and homes selling above their asking prices. For some context, in February 2022 87% of transactions across the Eastside closed above their asking prices. When things cooled, that percentage dipped to 6% as recently as December. And while we’re not back to the “frenzy” level, 17% closed above their asking price in February 2023. Things are shifting yet again, and we’re just coming into the traditionally busy spring market.
Dega vu all over again? Who knows? What I do know is that the skills honed helping clients successfully navigate the market madness of the recent past are once again paying dividends in today’s market. I also still believe that today’s buyers will have their decisions to buy now validated by the strength of our market down the road. And if the prospect of selling in a low inventory market with little competition brings a few more sellers off the sidelines we might really have something going on here.
The key for buyers and sellers is knowledgeable and CURRENT on what’s going on in your specific neighborhood or the one you are targeting. Let me know how I can help.
Rip.
