Saturday, October 19, 2019 / by Elizabeth Sorensen
As you all know, we have been in a steady strong seller’s market for a long time now. And although we are still in a very hot sellers market, there are a few things I’d like to point out and what that means to you whether you are selling your home or still looking to buy a home.
Heading into the 4th quarter of 2019, low inventory continues to be a headwind for increasing sales prices in Spokane County. We are still hovering at just over a month of inventory. Remember, a balanced market is about 5 ½ months of inventory. With this continued low inventory, we’ve continued to see home prices rise over the last year. The average closed home sales price has risen over 11% compared with this time period last year in 2018. The average closed sales price in September 2018 was $260K, whereas, this last month the average closed sales price was $290K.
What I want to point out today is the “old as time” principal of supply and demand- low inventory creates more demand so we’re continuing to see home prices escalating. Our pending ratio is just under 60%. This is crazy! This means that over half of the homes you see out there with “for sale” signs or on Zillow- already have a contract on them!
Also, Yr to date, total sales are down over 9%. Last year this time, sales totaled 6387 homes vs. only 5824 homes in 2019 thus far. This is partly due to continued low inventory, but another factor that is really critical for home sellers to understand is buyers are getting really burned out. There are many buyers out there who have been looking for months trying to find the right home and now due to increased prices, are unable to afford the home they want or can qualify for.
We always see a little lull in the market as we head into Fall, kids are headed back to school and many families put selling or buying a home on hold during this period. However, we are definitely starting to see a softening in the market. Analysts are predicting interest rates to slow and many are forecasting a recession. Obviously, this is going to affect home prices and inventory as well. So how does this all impact you??
Well, if you’re a seller, it is important that you stay rooted in reality and not overprice your home. Many sellers are simply unrealistic about what their home is worth and think they can list their home above market value. Buyers were willing to pay way over market value for a home, but we’re seeing less and less of this. They are burned out, they’ve missed homes, been in, and lost more than one bidding war. Many buyers have given up completely and are waiting for the market to swing the other direction. They simply can no longer afford the home that meets their needs. We are seeing more and more overpriced homes that are sitting longer on the market with no offers and therefore we’re seeing more price drops before getting any bites at all, more expired listings, and less and less multiple offers- especially in the higher price points. It is definitely still a hot sellers market, but you’ve got to price your home accurately. Homes priced competitively are still selling quickly and there are still multiple offers IF you do not overprice your home.
If you’re a buyer, especially if you’ve been discouraged and given up the fight, now is the time for you to jump back in the ring. Take advantage of low interest rates and sellers who may have started too high and are doing price reductions to get their home sold. We will see less buyers in the market in the fall and winter months, which means less competition for you and less multiple offer situations. Sellers who priced their home too high in the summer are finally coming to their senses and pricing their homes at a realistic price. Now is the time to take advantage of that and find your home.
Now I am just discussing Spokane County homes in general. Obviously there is an infinite number of micromarkets, price ranges, etc. that vary greatly from these numbers. For instance, luxury homes are definitely sitting longer and we’re seeing an increased inventory in these properties. Certain areas, such as the Spokane Valley, have a higher than average number of sales.
If you’d like a market analysis for your specific price range, neighborhood or even your particular home, reach out to me! I’d love to talk to you about our current market and where we’re headed and what it means for you!