Market has become a mixed bag...

June is the start of the summer season for real estate and sellers that want to move out this summer in time for a new school year or just during the fair weather, now is the time to list. Typically the local market sees a modest boost in activity during the summer months and that can be good for both buyers and sellers. Sellers get a few more buyers looking and buyers get a few more houses to consider. It's a good thing all around in a market that has tightened up especially int he sub 400k range locally.

Despite what people may hear watching local and national news outlets, not every sector of our market is a raging seller's market. In the median to sub-median price ranges under $400k seller's are controlling the market with multiple offers and little room for negotiation by buyers. Seller's are still in a favorable position on homes priced up to $500k but above that inventory starts to get flush.

Clark County is sitting on 6-7 months of inventory in the $500 - 750k range which is neutral leaning a bit towards buyer's favor. From $750k - 1M things get worse for sellers with roughly a year's worth of inventory and buyer's are in control. Above one million dollars we have a bloated inventory that would take more than four YEARS to deplete if no new listings are added at the current rate of consumption. Seller's in this price range are truly at the mercy of buyers. 

News media outlets tend to focus on the entry level and mid range prices that are still very hot, but many sellers in the upper range are a bit disillusioned about the market and some are shocked to find unfavorable conditions. This bodes well for entry level and mid range sellers that can still get top dollar for their small house and capitalize on a flush inventory for their larger move-up home.

The real estate market is a moving target and sellers are wise to consult a local pro with experience in the neighborhood they live in. Real estate is a local market and conditions can vary widely between price ranges, housing type, and location.

Local Market Report

The MLS numbers for 2018 are showing some interesting trends. For the first four months of 2018 I am seeing a typical bump in activity on both sides of the market, supply and demand in roughly equal amounts maybe a slight gain for buyers in what has been a stubborn seller's market. Inventory is still tight but not as tight as last year, listed units outpacing sales by 50% will help pad the inventory and is clearly leading to a flattening of prices.

The median sold home price county-wide trails the sold average by roughly $44,000 a 12% gap. With a large pool of over 2000 sales, this is a reasonable indicator that the market is moving from entry level to mid-level buyers.

The entry-level has little inventory and many buyers have been nudged out of the market by the combination of high prices and rising interest rates. The middle market is seeing some traction as mid level buyers are jumping in to lock in a manageable mortgage rate.

There was a buyer's gain in March followed by a seller's gain in April so things seem to be about the same with sellers still holding an advantage in this market.

The both the median and average sold price is fairly flat over the last 4 months. Our market is being influenced by the rising interest rates.

Marketing time remains short with the median less than a week. This bodes well for sellers, but may also indicate sellers are more willing to accept lower price when listing price is "puffed up." Sellers are equally anxious to sell as they have the same rising rate concern as buyers.

Overall I see the market flattening for the rest of the year. Analysts seem to agree that middle single digit price appreciation is anticipated for 2018. If inventory remains tight, sellers will continue to have a slight advantage at the negotiating table. Buyers however, have gained some leverage in the market and the flattening of prices surely is a strong indicator the local market is moving towards neutrality. I like a mild seller's market, it is healthy and most importantly, sustainable.

Labor Day is Here.

Labor Day marks the unofficial end of summer. Locally the mercury won't notice as we are expecting some very warm temperatures this weekend. As for real estate, this marks the end of the summer seasonal peak for home activity and that means buyers that have been struggling to find a suitable property in their price range may get a little relief.

No we are not going to suddenly plunge into a buyer's market, but it is moving from a strong seller's market to a weak seller's market and that bodes well for frustrated buyers. The back to school time also tends to put some buyers in a holding pattern. Those buyers will to stay in the hunt may find substantially reduced competition from other buyers and sellers that may be willing to work on price or concessions that a few months ago were nigh impossible to negotiate.

Buck up buyers, this could be your moment. Enjoy the holiday weekend, stay cool, and don't give up, there is a home out there.

Market Still Needs Listings!

This market still needs listings. Anyone thinking about selling their home should be advised that the market is saturated with buyers struggling to find and secure a property to buy.

I don't believe that we have so much an unusual number of buyers, in fact recent trends are beginning to clip the number of eligible buyers through higher prices and higher interest rates. But inventory is so tight pressure remains on the market. We truly have a supply side problem and it appears homeowners seem inclined to stay put and keep their homes.

It is quite unusual to have such favorable conditions for sellers and yet sellers are not bringing properties to market. Sellers seem content to sit on their property. Of course it won't take a huge number of properties to get this market in balance so their truly is a narrow window of opportunity for sellers to capitalize on these conditions. Right now a seller that lists a property for sale in the under $500k price range here in Clark County, will likely see a quick series of offers with favorable terms for the seller. Once sellers start bringing more property to market, this sellers favor will quickly diminish into a more neutral market with a near equal number of buyers and sellers.

If interest rates do begin an upward trend that seems to have already started at the end of last year, then this market could transition from sellers to neutral and ultimately become a mild buyer's market.

Now is a great time to list property.

2015 Becoming a Serious Seller's Market

I wrote this post late last year that 2015 could be the last chance to snatch up a "deal". Things seem to be leaning towards a full throttle seller's market. There are still great opportunities to buy but mainly due to great interest rates. Remember buying a house in an appreciating market means that equity grows faster.

Originally posted 12/26/14

That headline should have got your attention. We have seen modest to robust appreciation across the USA over the last two years in the real estate market. The mortgage rates have been ranging from really low to ridiculously low and the economy has been slowly moving towards full recovery.

This has kept real estate as a value. Prices have run from the basement in 2010-11 rising to the point now that they are about where they were in 2007-08. Rates are the real story however. They unprecedented long run of sub 6% rates has kept housing active despite and overall economy that has run from dismal to fair.

2015 could represent a turning point however. If this economy gets into full swing, we very well could see the Fed back off the loan guarantees and rates could end up where they really should be in the 6% range. Coupled with the last two years of appreciation that would move the home affordability index much higher and lock out many buyers that can buy today but couldn't with 6% mortgage rate.

As an FYI 6% is still a very good rate and well below the 50 year historical average of 6.8%

Buyers should take care of their finances and get ready to buy in 2015 if they want to secure a housing "deal". The deal may not be so much a price deal but a rate deal. I have said it many times before and I will say it again here, rates kill buyers much more than price.

2014 has shown us that the entry level clean house was king. These little 1400 square foot 3 bedroom 2 bath homes have pushed up towards the $200,000 in the local market while just 10-15% percent more money buys a house nearly twice as large. These low rates have brought out the entry level buyers in force. Any upward movement in rates will "thin the herd" at the bottom and that could mean a serious appreciation slowdown at the entry level. I have seen the starter houses already showing signs that the economic ceiling has been reached. The middle however should continue to move up in appreciation with a modest but healthy rate of growth.

The real estate market doesn't just move in broad based motions. There are subtle differences for neighborhoods, price ranges, style, etc. Prices can be moving up in mid size house while remaining flat at entry level. That is my prediction for 2015 if we see interest rates move up into the 6% range. The market a few years ago allowed two minimum wage earners to buy the median priced home in our local market (Washington minimum wage at $9.32/hour). That is off the table now and that means a lot of buyers can no longer afford a house. This is why the bottom of the market has seen a leveling on appreciation. As the economy ramps up, middle income earners are getting back on the job, better wages, etc. that will help push the gap between entry level and mid-level back into proper proportion.

I believe the value proposition for 2015 will be in the upper middle and lower high end homes. Locally that means $350-500k. That is probably where the "deals" will be found. I am no Nostradamus, but that is where things appear to be headed. 2015, it's time to jump in. 

Sizzling Summer is Tricky for Buyers

Things are really starting to get healthy for this real estate market. For the last 18 months I have been talking about how the bottom has really gained traction. The entry level market transitioned to a seller's market a little over a year ago locally. I have said that a healthy bottom will feed growth to the middle and then up to the top. Thus, summer 2014 looks strong for the middle market as well. Even the lower part of the top of the market $500k-$750k is seeing much needed activity. High end homes are still a buyer's market but things are starting to equalize. Under $300k is a solid seller's market.

I have noticed that many buyers have not quite made the transition with the market. Some buyers are still out there making low ball offers on well priced entry level homes. From late 2009 till mid 2012 buyers could really beat up a seller on price. That ship has sailed my friends. Buyer's in the under $300k market, (notice how I am saying under $300k now instead of under $200k like I said last year), will need come in strong with offers on well priced properties. It is imperative that buyers find an agent they like and trust.

There are some overpriced listings in the market. Some sellers are trying to squeeze a little extra out of the hectic environment in the entry level to low-middle market. A good Realtor® will be able to identify an overpriced listing and convey an opportunity to go soft on price. That same agent will caution a buyer to come in strong when the property is well priced.

I have worked with buyers recently that failed to follow my advice and lost out on great opportunities. These were buyers that were either referred to me or ad calls. They didn't know me yet, so they had not built up a high trust level yet. There was one particular instance in which the buyer refused to pay full price. The home was listed well under 200k. There was literally a conga line of buyers walking through this house. We had to wait in line to view it and others were waiting behind us. That my friends should be your first clue! The buyers loved it. They even brought the whole family to check it out. They needed help with closing costs so I advised them to come in $5k over asking and then ask for a seller paid closing cost credit back to full price.  They could not bring themselves to pay full price. They offered $3,000 over with $5,000 back. There were four offers and none of them netted the seller the full price (all were close) and the listing agent told me they were steadfast on getting net full price. An opportunity for highest and best went out to all bidders. I told my buyers they have a rare second chance but now they would need to come in even stronger. $7k over with $5k back. They held firm with their original offer. They did not get the house. Had they offered the $5k over with $5k back the first time around, they would have got the house. The seller would have taken it because it netted the full priced and the other four offers did not. Once it went out to highest and best the seller ended up getting more than full price. Some buyers need to get kicked in the teeth a few times before they realize that the market is brutal and there are more buyers than sellers in the under $200k price range.

As I mentioned above, their are some overpriced listings even in that coveted sub $200k range. I have another buyer that is in contract on the townhouse I listed for him. I know this young man well and we have a strong trust among us. I sold him that town house a few years ago. He has been struggling to find an ideal home. There was this one house that we looked at that was just a bit overpriced $198k. Great little house, nice location but operative word is "little". After beating the streets for several weeks we came back to the overpriced listing. The buyer really liked the house it had everything he wanted and needed but at $198k it was just too spendy. I told my client we have an opportunity to squeeze the seller on this one. We came in net $10k under with an offer of $192k with $4k in seller paid closing costs. Seller countered two grand higher and we are in contract!

There are many fine real estate agents out there that understand the market. Buyers are well advised to talk to several potential agents and choose the one they feel is looking after their best interests. There are also a lot of lazy agents that don't want to take time to show homes. Buyer's should not hire a pushy or lazy agent. When they find an agent that will show properties and identify the overpriced properties from the well priced properties, they should stick with that agent. The biggest takeaway should be this; when a buyer finds a house they really love...their dream house, if you will, they ought not take a risk with a soft offer, come in strong and get that house!