I'm sure you've been seeing a lot in the media over the last several months, or even years, about the strength of the real estate market, especially in the Spokane area. You've probably seen a lot of "it's a hot market!" or "it's a seller's market!" but you may be curious about what this means, how this happens, or what you can expect from buyers and sellers.
To begin, a seller's market is a real estate market in which the seller is strongly at favor. That is a simple definition of a seller's market, and we're going to delve deeper into how this actually happens and what you can expect.
When we look into the nuances of a seller's market, this type of market happens when there are significantly more buyers looking to buy homes, and making offers on homes, than there are available homes on the market. In fact, the more this phenomenon has been happening, the more homeowners have been afraid to list their home for sale, for fear that they won't be able to find a new home that works for them.
Nationally, a seller's market occurred as a result of a couple of things. Naturally, the housing market ebbs and flows, experiencing times of slow movement and more stagnant home values, along with times of fast movement and quickly escalating home values. You can take any ten year period in our nation's history and see that this has happened.
In addition to the normal cyclical nature of the market, we are experiencing a unique side effect as a result of the 2008 recession. During that time period, many homeowners lost their homes due to foreclosures and short sales. Those same people spent years rebuilding their credit and saving money, and finally have become ready to buy over the last couple of years. Normally, this group of people would have a home to sell, when they are buying their next home, however because of what happened during the recession, they are only looking at buying a home. This means that homes aren't being replaced in the market. Said another way, there is much greater demand and a lot less supply than normal. You didn't think you'd be getting this much of an economic lesson, did you? ;) These are important factors to know, because how our national economy functions has a direct impact on the behavior of the housing market.
Beyond the national economy, there are local factors that we must pay attention to. Spokane is unique in many ways. It is a medium sized market, where there is lots of room to grow and expand, and it's close to the state border. The geography is important to note because a buyer has the option to choose between two different states to reside in, and both states operate very differently in terms of cost of living, politics, and culture. In addition to location and size, Spokane is a growing city with a booming economy. Many businesses are opening new offices in Spokane, the military employment has grown significantly and continues to do so, and there are many amenities that Spokane offers without it being a very expensive or overly populated place to live. If you weren't already aware, the Spokane area has become a place where many people are relocating to, especially from California, Portland, and Seattle.
So as you can see, there are many factors that contribute to creating a seller's market in the Spokane area, and it's important to discuss what to expect from buyers and sellers in this type of market. As someone selling your home, you can expect to have lots of interest in your home, and you may even receive multiple offers from buyers to buy your home (although this is not a given). One thing that is often not widely discussed is overpricing. There are still many agents and many homeowners who think they can price a home for whatever price they choose, and that the market will accept that price. Unfortunately, overpricing a home, even by just a few thousand dollars, can cause your home to sit on the market and not sell. Given how quickly homes tend to sell in our market, this really puts the spotlight on your home and communicates to buyers, "something is wrong with this house."
In addition, as a seller, you can expect that buyers may want to be a little more picky in the home inspection phase. If a buyer feels like they paid a premium for your home, especially if they escalated the price above your list price, they will likely want to get something in return from you. This means that they may ask for a longer list of repairs, or may ask for you to cover a large amount of their closing costs. Keep this in mind, and don't take it personal. This is very normal, and it typically is not a personal attack at your or your home.
As for buyers, you can expect that homes are still moving quickly. This doesn't necessarily mean you'll be expected to pay 7-10% above list price to buy a home, but it does mean that you still may have to offer higher than list price to secure a home, and you still may be competing in multiple offers. Although we are headed into winter right now, that doesn't mean prices will drop and you can make offers lower than list price (unless otherwise advised by your agent). However, if you've been disappointed about buying a home and feeling like you can't get anything to work out, now is the time to push full steam ahead! A lot of buyers drop out of the market over the winter, which means there are less buyers out there looking, because many aren't willing to deal with the cold and snow.
I hope this has helped to give you a better and more comprehensive understanding of what a seller's market is and what to expect in that type of market. Reach out to me anytime with questions at 509-844-5843 or Keri@SpokaneHaven.com.
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