With Limited Inventory, Buyers Prepare for Competition in Seattle Housing Market
For sellers, the Seattle-area market is rife with possibility!
Throughout 2016, home prices increased significantly — in fact, it made headlines as the most expensive year for Seattle real estate in history. Those who had real estate investments to list on the market were sure to enjoy significant returns, but the fact of the matter is, most people weren't selling their property... often-times because there's no place for them to move to (and they would also be paying top-dollar).
According to an article published in the Seattle Times, housing inventory hit all-time lows in Seattle, which is the primary reason for the price increase. Meanwhile, there was also an influx of buyers who were interested in purchasing real estate in Seattle and throughout King County.
Housing Inventory Data in Seattle
What is perhaps most frustrating about the low inventory levels is that the majority of the few homes that are on the market are in the suburbs of Seattle. There is hardly any inventory in the city, which makes it difficult for those who want to live and work inside the city limits.
- In December 2016, there were 1,600 homes on the market in King County. The majority of those homes were located in the suburbs.
- In December 2010, there were 7,400 homes on the market in King County.
- The December 2016 inventory numbers represent the lowest inventory levels since tracking of these levels began in the year 2000.
In addition to the lack of homes on the market, there are very few developers looking to build new construction homes in Seattle and the surrounding suburbs as well. Given the fact that rentals are at an all-time high, and considering the change in home buying patterns & consumer behavior since the market "crash," developers do not see the same desire amongst consumers to design and construct new properties in the King County region as in years past.
Impact on Seattle Real Estate Market
The low inventory levels have practically sent Seattle home buyers into a feeding frenzy. (Attend any open house in Issaquah, and you'll see first-hand how hectic the market is in the suburbs as well.) The demand levels are skyrocketing, and prospective home buyers are willing to look past just about anything in order to get into a house in Seattle or in the King County suburbs. Typically, detracting features might scare away buyers, but they are simply willing to ignore any faults in a home in order to invest in a single-family property in the community.
Homeowners who list their properties on the market will often find themselves in a potentially overwhelming scenario in which they receive dozens of offers in a matter of hours.
Most of these offers are going to be over asking price — and not just by $10,000 or $25,000. Many sellers in the most competitive Seattle suburbs and neighborhoods are looking at offers that are $150,000 more than their asking price, and it's hard to decide on which offer to select for a purchase agreement. (Sellers are wise to make sure their real estate agent has ample experience with managing multiple offers from home buyers.)
Conversely, buyers are finding themselves willing to purchase any home that is listed on the market. Many buyers are desperate enough that they will provide an offer that's well above the asking price without even seeing the property. They recognize that the only way to even have a shot at purchasing a home in Seattle is to offer highest and best as quickly as possible, in hopes that they can capture the attention of the homeowners before more inviting offers arrive.
Unfortunately, however, buyers who are fatigued from with they perceive to be "Multiple Offer Mayhem" sometimes are forced to make risky decisions such as waiving inspection contingencies.
Current Real Estate Market Conditions
While home prices increased significantly in 2016, market experts note that the increases will stabilize throughout 2017 as economic growth slows down. Regardless, the Seattle housing market is expected to be one of the fastest-growing and most desirable markets in the nation, following behind other hot markets such as Orlando FL or Stockton CA.
The home prices may stabilize slightly in Seattle, but forecasters predict that competition will remain high as inventory levels stay low in the near-term. There is a chance that real estate developers will note the high demand for single-family homes in Seattle and throughout the Puget Sound, and begin adding more planned developments to the region in order to combat the low inventory levels. There's virtually no room left in the city of Seattle for these new construction properties, but the surrounding suburbs in King County have space available, such as Snoqualmie and North Bend.
In January 2017, the median sales price of a home in Seattle is about $550,000. It's important to note that many homes are selling for far more than this, depending on their size and location in the metropolitan area. While the low inventory levels present a challenge to real estate agents, who have buyers practically begging them for the most recent listings on the market, the market shows promise for the coming year. Economic growth and demand for single-family homes
Economic growth and demand for single-family homes is sure to fuel changes in the real estate market for buyers, while sellers will still continue to enjoy a booming market that allows them to generate a significant return on their real estate investment.