For years, the chatter has been about the soaring real estate market. With double digit value gains and very few listings to choose from, Sellers enjoyed a market that favored them by a considerable measure. Now, as we begin a new year, to the casual observer, it appears that the tables have turned. It could be assumed that the market has flipped to favor buyers. While prices have cooled, and inventory has increased, market corrections have benefited both the buyer and seller.
Because inventory has decreased over the last several months, market changes that would normally favor a buyer have not resulted in a significant market change. While inventory increased in 2018, over the last four months inventory has decreased 43 percent. This reduction of inventory has provided a continued advantage to sellers. If considering how few listings there were at this time last year, there still aren’t enough homes for buyers to choose from.
(4 months of reduced inventory [light green])
Although prices remain high, the soaring increase in values has cooled, resulting in a market that appeals to buyers. Depending on what part of the Puget Sound region you live in, last year, we were discussing value increases between 10 and 20 percent. Now, if comparing this year to last, values are up five percent. Soaring increases are fun and can be lucrative if you are selling and have incredible timing. Still, a gradual increase is welcome and how a healthy market should act. Buyers have taken notice and understand the benefit of owning a home in our region. While values have cooled, there has been no great plummet, so values remain strong and stable.
(Stable average price per square foot)
(Average sale price)
Although the time to sell a home has increased, a balance exists, which is good for both a buyer and seller. After months of selling above list price within days, the average seller may now need to reduce their price before a buyer is in contract. However, because the market is still strong, with the help of their listing broker, a seller may still negotiate to a full price sale. Since the average home seller is now looking at 42 days on the market, buyers now have more time to look for a home. While more than 30 days sounds like an eternity and is a far cry from what we saw last year, if priced well, sellers still have the edge. With buyers receiving breathing room and sale prices still strong, this is not a sign of a troubled market. Rather, one that is healthy and putting itself in a strong position, possibly for years to come.
(Longer Market Time + Average Sale Price is 98% of List Price)The Puget Sound real estate market is something to behold. For years, we were the talk of the country, with soaring values. Then suddenly, last April, it all seemed to come to a halt, when buyers seemingly had, had enough. To some, the market slowdown was thought to be the beginning of the end of this fantastic ride. However, after a couple months, when the realization that there was no bursting bubble, the market picked back up. Now, the Puget Sound region is working towards a balanced market. One where buyers can buy, and sellers can sell. What a novel idea to be in a normal real estate market. Now, it is a sight to see with a strong economy, a beautiful region and the return of something we haven’t seen in a long time, a normal real estate market.