Altitude Homes | Keller Williams Realty

Tag: Buyers

  • A Look at Inventory Levels…

    A Look at Inventory Levels…

    I consider myself a geek.  I love geeking out over numbers and in Real Estate there is no shortage of numbers to geek out over. For those of you that have read or watched my market updates in the past, you know that one of the indicators I like to watch is “Months of Inventory”.  This can help you figure out if you’re in a balanced market, a seller’s market or a buyer’s market. In general, 0-3 months worth of inventory is a Seller’s market, 3-6 months of inventory is a balanced market and anything over 6 months worth of inventory is a buyer’s market.  Many of you will remember our buyers market was defined as 2008 – 2011.

    Real Estate is cyclical.  After having done this now for close to 14 years, I’ve seen the cycle.  I’m working on my second one.  I watched as the market ran up 2003 – 2006 . . . fell 2007 – 2011 and have been watching it rise since 2012.  Change IS in the air my friends.  No one can accurately predict when that change will come, but it will come.  Some people think it’s already starting, and in some areas of the country, they may be right.  Some people think it’s a year or two away.  Regardless the change will come.

    The other thing Real Estate is, is local.  I have a client who’s home was on the market for 30 days before she received an offer.  She was stressing and calling me nearly every day saying “When are we going to get an offer?” and “My neighbor’s home sold in 6 hours” and “My friends told me their neighbor’s home sold in a day”.  Of course no one is saying “My home took 3 months to sell” or “I tried selling and couldn’t”, but those two scenarios are just as likely and the others.  NEWSFLASH:  Every house doesn’t sell.  Every house doesn’t sell in 1 hour or even 1 day or heaven forbid, even 1 week.  In the case of my client, average market time for homes in her area in her price range was 28 days.  We got an offer on day 31.

    When I say that Real Estate is local, I mean it’s local.  Your neighborhood, is different than the next neighborhood over.  Your home even though it might be the “same” as your neighbor’s is different. When you say “They got an offer in 6 hours” what were “They” selling?  Right now in Pierce County, if you have anything relatively nice under $250,000 you can probably expect it to sell fairly quickly.  If “Their” home was a 3 bedroom 2 bath home for $235,000, priced well, staged well in a desirable community and school district, it probably DID sell in 6 hours.  But you can’t compare that to a home that’s listed for sale at $450,000.  They are two different animals.  The pool of buyers for a $450,000 home is smaller than the pool of buyers for a $235,000 home.  It’s just a fact of economics.

    So what I did was put together this handy chart showing you what inventory levels are like in different price ranges for ALL of Pierce County.  Again, Real Estate is local.  So if you happen to have a $235,000 home in Pierce County, that doesn’t mean that where your home is has exactly 1.3 months worth of inventory.  Elbe for example will have more months of inventory than University Place.  People are lining up to buy homes in University Place, people pass THROUGH Elbe on the way to Mount Rainier.  (Sorry to both of you that live in Elbe and are reading this)  Real Estate is Local.  Real Estate is Cyclical.  If you want specific information for YOUR home, let me know and I’m happy to put together a personalized report just for YOU.

    Notice that as you get above $400,000 in Pierce county, inventory starts to rise.  As a side note, I did this same analysis in King County and not until you get above $1,250,000 do you have more than 2 months worth of inventory.  Crazy town.  It’s a Seller’s market in every price category up through $1,500,000 . . . which is where I stopped because I didn’t want to make myself throw up.

    Have a look, comment below!  Click on the image for a larger version…

    Months of Inventory by Price Range in Pierce County, Washington
    Months of Inventory by Price Range in Pierce County, Washington
  • Multiple Offer Strategies for Home Buyers

    Multiple Offer Strategies for Home Buyers

    In the market we are having an inventory challenge with our real estate market. There are simply not enough homes right now for sale to meet the buyer demand. Many homeowners are sitting on the sidelines, happy about what the increase demand is doing for home values, but they don’t want to tap into their home’s growing equity by selling their home and moving up for fear they either can’t find a home that was worth their leaving or they will have to compete with other buyers. First time homebuyers are sitting on the sidelines, not sure how to make a move.

    Although the perception is that few opportunities exist in the market for buyers right now, this is a market that you can take advantage of. Here are misconceptions about the market and the facts:

    Myth: Fact and Strategy:
    All homes are selling as soon as they come on the market. I won’t be able to react that fast! Although many homes are selling within a week of hitting the market (which provides enough time to see the home once or twice, do a preinspection, and write the offer) there are some homes that languish on the market for two weeks, a month, or even longer. The average days on market in our area right now is 24 days.
    All homes are selling for multiple offers! Many homes are selling for multiple offers, but for some homes with a limited buyer pool or even homes that simply place second or third in the listings that came on the market during the week may not receive multiple offers. And some homes with multiple offers only have two or three offers. Not all homes get 20+ offers.
    Homes are selling for 30%, 40%, or 50% above list price! I don’t know what price range to search for a home in! In our market, the list price to sales price average is currently 105%. That means that homes, on average, are selling for about 5% more than what they are listed for. Although we need to discuss your personal strategy, if your budget is $400,000 for a final sales price for a home, we should be looking around the $375,000 price point based on these averages.
    If I sell my home I am worried I am going to have to settle for something I don’t want or be homeless. This is a common concern, but there are options such as a short-term rentals or even renting your home back from the buyers. I realize moving twice isn’t your ideal situation, but renting for a month or two from a homeowner via Vacation Rentals By Owner (VRBO) or AirBNB may give you the breathing room you want AND will put you in a better position when you do make an offer since you won’t have to sell your home first.
    The market can’t go up much more. I think I will stay put. The market can absolutely continue to go up. In the 80’s it was unfathomable that the Dow Jones Industrial Average would break 10,000 and now we are almost at 20,000. In our area, median sales prices have increased 20% over March 2016 median sales prices. That means if you bought a home for $350,000 last March it could be sold for $420,000 today. You don’t want to be kicking yourself a year from now if prices increase another 7%, 10%, 15% or more. And remember, the more home you own, the more equity a gain will bring!
    If I have to move out of the area, I won’t be able to make a move quickly if I buy a home. First time homebuyers may be concerned about moving from the flexibility of renting to owning a home. However, most property managers require a lease of six months or a year, so if you were in a lease and had to move, that is similar to the challenge of having to sell a home that you purchased.

    If this has you thinking that buying or selling now is an option worth exploring, call or text (253) 222-2626 or send an email to john@altitude-re.com.  All it takes is a little strategy to potential reap some big rewards!