Market Trending Up on Values

The tight inventory I wrote about last week has translated into a perk for sellers as prices continue to feel upward pressure with more buyers than sellers. Lending is still tight so the buyers are not always the strongest and sellers should be advised to look deeper than price on each offer. As I have said time and again the best offer may not be the highest offer.

All of that said, here is the data for the first quarter of 2015. The Regional Multiple Listing Service says that Clark County Washington has 3.2 months of inventory. That is indeed tight. The median price was $255,000 over the first three months of the year. That is $10,000 higher than the same three months last year. Days on market are getting shorter and shorter as supply continues to shrink against a steady stream of ready buyers. As we move into May we might see a surge in inventory that will slow down the price frenzy.

Lending is tight and that is making it tough on the first time home buyers facing higher prices and onery lenders. The robust activity in 2013 and 14 on the entry level homes has in fact provided a nudge up for the middle market sellers. Top of the line properties are seeing some much needed sales as well.

The fly in the ointment is this tight lending situation. Regulators had a field day after the crash in '09 and that is having a negative impact on the market as buyers find difficult guidelines and tougher mandates to get a loan processed and funded. Although many of the changes to the banking regulatory and lending practices have had positive results, in typical government fashion they have gone over board and may lead to worsening conditions.

Let's hope not. Buyers are well advised to act swiftly when the see a house they like and if it looks like a sharp price, it probably is. Don't try to haggle the seller down, he probably has three offers to look at. There are still some sellers that have overpriced listings and these sellers will find the market to be cruel. Buyers will bid up good values but they won't bit on that hydrogen filled, puffed up price that some sellers think they can float into the market.

Things are good out there folks, but things are tight also. You may want to get while the getting is good, as they say.

Inventory is Tight

Inventory is very tight right now in many markets across the country. Here in Clark County, Washington that is very much the case. Buyers are snatching up all the clean, well priced and move in ready properties in the first couple of days they are on the market. Multiple offers on these homes are becoming the normal rather than the exception.

When it comes to homes that need some attention and minor repairs, these tend to hang around a bit longer. These are the homes that buyers can acquire without getting into a bidding war with half the county. The market over the last year or so has been filled with eager buyers looking for move in ready properties. The fixers are not seeing the rush of buyers.

As a Realtor®, I often find myself with frustrated buyers that have been outbid or too slow to act to get a house. I try to show them properties that need a little TLC but are still financable but some buyers just don't want to deal with any "fixing". One idea that can help these buyers is to seek the fixers that have a willing seller and get the seller to make the repairs before closing. Buyers that are up against a financial barrier have to remember that they may not get the perfect move in ready, big house on the small dime. There are often choices between a smaller property that is cherry or a bigger property that needs a little work.

The important thing to realize is that as prices continue to nudge their way higher, the buyer only gets in a tighter spot. Unless that buyer gets a huge promotion or takes a new job making allot more money the housing prices are rising faster than income.

Some buyers need to consider buying a smaller home to start and then use the equity they gain over time to leverage a larger property a few years down the road. Real Estate can be a very good way to build wealth and having the benefit of both a home and an appreciating asset is a major step towards financial independence.    

The Strongest Offer Isn't Always the Highest Offer

Sometimes a seller is faced with the desirable dilemma of having multiple offers on their home. Initially the tendency is to think the highest offer is the best. Generally that would be true, but not always. If the seller is trying to move to a new house they are purchasing they have to think about the big picture. If the sale fails, then that could cost them money on the house they are moving into or even cause that sale to fail. Sometimes the best offer is the one with the least obstructions. That all cash offer with a five day inspection period and two week close might work better for the seller than a USDA financed offer with a ten day inspection and a 60 day close that's $5,000 higher and right up against the buyer's maximum approval.

Usually the highest offer is the one the seller takes but there are times when a "cleaner" offer that is a little less money is the better route for the seller. In this seller's market, buyers should try to structure their offer to suit the seller's needs. The buyer's agent is well advised to talk to the seller's agent a try to figure out what the seller is looking for in an offer. Not so much the dollar amount but the terms. Sometimes sellers have a natural inclination to refuse to pay closing costs for a buyer. Even though an offer can be structured to net the seller the same amount he wants, some sellers have illogical or emotional reasons for not taking a particular offer that is otherwise very strong. In a multiple offer scenario the buyer may not get a second chance to present the best offer possible or to modify terms to suit the seller's idiosyncrasies.

In this fast selling market buyers need to be thoughtful about their approach to an offer.