Friday, February 23, 2018

Finding Value in a Tight Market

1425 SF $329,900
Locally were are having a bit of late winter snow and that is putting the brakes on some showings. Those of you reading this from frigid climate zones are probably snickering, but a few flakes flying in the wind and people round these parts freak out. It's not the light snowfall that does it, it is the not knowing if this is the "Big One". So people prep for worst and cancel any unnecessary travel.

It's hard to say but the number of active listings is as tight as it has ever been. This makes for tense shoppers as too many buyers are vying for way too few properties. I am hoping for a bit of an uptick in listings this spring to help alleviate the pressure. Potential sellers should be wary of higher rates. This is soften the buying power of buyers. This means fewer buyers will qualify to buy the potential seller's listing and what ever home they decide to buy after selling, will be harder to qualify for. Sellers are in a prime spot right now as the market slowly begins to shift into neutral conditions. Waiting too long to sell could lead to losing the seller's advantage we have right now.

A more neutral condition is good for the market at large so I welcome more sellers coming online and the frustrated buyers will like it too. I am feeling confident in the spring outlook so buyers hang in there, the sellers will come.

One part of the market is already feeling the neutrality and that is the 600k plus range. Here buyers will find more choices and less competition. The higher up the range buyers look the less competition they have. This is typical as incomes required to purchase more expensive houses tend to be well above average. But this market goes a little beyond just the demographics of income. The is just a slight surplus of homes in the upper ranges.

Where the market needs help is in the 120% of median and below. Inventory gets ridiculously tight down in the sub $350k range. One level homes are even more scarce. We have double demand for one level homes as they often are targeted by young people just starting out as well as the large retiring Baby Boomers and 'empty nest' Gen Xers, downsizing.

2028 SF $309,900
There is good news however. I am seeing a piece of the market where buyers can get a much larger house for LESS money. Right now the Baby Boomers are driving the prices of small one level homes through the roof. Older people often prefer a home without stairs. I am seeing 1400 SF ranch style house selling for more money than a comparable age and condition 2000 SF two story home. This means that buyers looking in that low to mid 300k range might want to look at 20 year old two story homes with 1800-2100 SF as that is a bit of a sweet spot in the market right now.

I have a pair of listings right now in the same culdesac in NE Vancouver, one is pending sale and was listed at $309,900. 4 beds, 2.5 baths and 2048 SF. It needed a touch of work but the seller got the house to FHA qualifying levels. Two doors down on a near identical lot, I have a listing that is a 3 bed 2 bath ranch with 1425 SF listed at $329,900. It is in a little better condition, but look at that price difference. Were the two story in identical condition then it may have pulled $329,900 but again way more footage for a comparable price.The little house will sell, because of huge demand for one level homes. A similar scenario played out near the end of last year in the same neighborhood; a 1600 SF ranch sold for $325k and a 2100 SF two story a block away sold for $315k both were in very similar condition, in fact the two story was a little nicer.

So there is the silver lining for median price range buyers, if you are not worried about navigating stairs then you are well advised to look in that 1800-2100 SF two story range.

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