It’s a once-in-a-generation real estate market in Seattle this year, with record-low inventory and unbelievable prices.
What’s a low inventory? Well, we consider a healthy inventory of homes to be five months of sales. In other words, if you take the number of homes sold in an average month and multiply it by five, you want to find that same number of homes up for sale on the current market. That’ll mean buyers have plenty of options, and homes will sell for reasonable prices.
But this spring? Not even close.
We have only a quarter of a healthy inventory. If you check all the listings in Seattle, you’ll find only 1.3 months’ worth of houses. Things haven’t been this low for 22 years; what we’re seeing this spring is a once-in-a-generation market.
What Low Inventory Means
Low inventory means fewer options, more competition, and higher prices. We’ve had to tell buyers to be patient because so few houses are coming on the market. When you’re facing only a quarter of your usual options, it’s either settle for less or wait for future listings. And when it comes to real estate, you don’t want to settle.
Another result of low inventory is competition. It’s especially fierce here in Seattle, the fastest-growing major city in America. Homebuyers are moving here in droves, fighting for any available real estate. Some are coming with six-figure incomes and well-stocked bank accounts, and they want a home and don’t care how much it costs.
This, in turn, leads to higher prices. You can count on any home selling above its listing price these days. $30,000 – $100,000+ over asking is not unusual. One house last month, listed at $3.1 million, ended up selling for a whopping $4.6 million.
The median price for a Seattle home this year is $535,000, up 18.9 percent from last year. The price increase make it especially difficult on first-time buyers. It’s hard for them to find entry-level homes, and it’s also hard to even find moderate, middle-range homes.
What to Do
There’s a temptation to sit tight and wait a few years. A temptation to hope the market calms down and the competition drops. But there’s a good chance that won’t work out, unfortunately. This city’s growth doesn’t show any signs of slowing, and if you wait, you’ll find the same competition three years down the road, plus even more expensive homes due to the natural rise of real estate. And the current low interest rates won’t stick around forever, either. They won’t even stick around a few years.
The best option, in most cases, is to wade into this fierce market and get your hands dirty (or partner with us and let us get our hands dirty). It’ll be tough, but it’ll be smart.
What to Expect
You decide to look for a house. What now? What should you expect from homebuying in this market?
Expect to face multiple offers on every house. Expect escalation clauses. Expect to waive inspections, and financing in some cases. Be patient. Be willing to think out of the box. Be flexible and willing to look at areas you had not previously considered. There are many great, affordable neighborhoods in Seattle, and we can tell you the pros and cons of all of them. We want to help our clients with vision so they make a wise decision.
This process will take a while, but don’t get desperate. Buy once you’ve found the right house at a fair price; remember, this is your home, but it’s an investment, too. It’s a building block in your future. Partner with us, and we will make sure it’s the best possible decision you can make.