Published October 12, 2022
Fall 2022 Western Washington Market Update
October 13th, 2022
Published by: Wes Jones
Published by: Wes Jones
If you’ve been paying attention to housing market news, reading my emails, or following my social media channels, you’ve probably heard about decreasing sales, rising interest rates, and increasing inventory. Do these factors mean we’re heading for a housing market crash? According to the experts, as well as my personal opinion, the answer is no. Instead of crashing, our housing market is correcting.
During the crazy housing crisis caused by historic low interest rates, increased flexibility of remote work, as well as many homeowners redefining what was most important to them, prices skyrocketed. In fact, the average home price increased by 10.2% from July 2021 to July 2022. It should come as no surprise to any of us that the crazy pandemic market wasn’t sustainable. According to Moody Analytics, 210 metro areas were overvalued by 25% or more.
If you’re looking to sell your home soon, what does this all mean for you? Fortunately, we’re still in a seller’s market in Western Washington with relatively low inventory levels, but you have to be careful about how you price your home. If you make the wrong move, your house could sit on the market for a long time, and you may have to decrease your price. Buyers are more price sensitive than I have seen in my career.
In a correcting market like ours, it is more important than ever not to price your home too high. If you do, you could end up “chasing the market.” In this scenario, your initial price is too high, and buyers won’t look at your home. You could try lowering your price, but by that point, the market may have changed again. A seller may need to lower even more than if they would have priced it right the 1st time. Chasing the market down can be an absolute nightmare!
One strategy that works in a shifting market is to price your home slightly below market value on purpose. It seems odd, but this will guarantee that your home is the most attractive deal in your area. If everything goes according to plan, buyers will flock to your house, and the competition among them will naturally bring the price up to or above market value. The risk with this strategy is that if only a few buyers come to your home, there might not be enough competition to drive up the price. However, this is a fantastic option if you need to sell quickly.
Another option is to lower the interest rate down for the buyer by making a payment towards their loan. It's called buying the rate down-many don't know that this is possible and both THE BUYER AND THE SELLER can participate in this! "
This can be done for the entire life of the loan to the tune of a 1/4 to 1/2 discount softening the blow of increased interest rates. It can also be done with a more significant impact over the short term via a 2-1 buydown. Year 1 the buyer gets 2% points off the normal rate. Year 2 gets 1% point off the current rate. Year 3 it adjust's back to the originally agreed upon rate.
I am a fan of the 2-1 buy down as I believe there will be an opportunity to refinance into a lower rate over the next 2-4 years. So take advantage of a lower payment for the first 2 years, then look for a new loan afterwards. Sellers are advertising the 2-1 buy down as a great way to attract more attention to their home by SIGNIFICANTLY DECREASING A BUYERS INTEREST RATE.
When I talk to buyers today, few of them object to today's pricing. The hurdle they are having to get over is the new higher interest rates which cost them significantly more money. Buyers are paying up to 40% more on their monthly mortgage payment today vs 6 months ago! A payment towards a lower interest rate, or even a 2-1 buy down could mean the difference between a home selling and sitting. I am a really big fan of this strategy and
For those sellers worried that they missed the peak, well unfortunately they did. The truth is, we never know until about 2-3 months later when the peak, or the bottom actually occurred. That is why there is never truly an option to time the market perfectly.
Even though prices have come down from the peak of last March, let's put something in perspective — HOME VALUES IN WESTERN WASHINGTON ARE STILL NEAR RECORD HIGHS! From the beginning of the pandemic (Mach of 2020) values are up over 35%. When we look at year over year sales trends, we are about equal. That means homes are selling for roughly what they were in September and October of 2021.
The bottom line is that sellers can still achieve fantastic results in this market as long as they do their research, have some patience, and price their homes correctly. You may not get multiple offers, it may take a little longer, you may have to prep your home a little more than before, but if you are realistic, you can still get a fantastic value for your home compared to historical values. If you would like to discuss which strategy might be best for you, don’t hesitate to call or email me. Make it a great day!
During the crazy housing crisis caused by historic low interest rates, increased flexibility of remote work, as well as many homeowners redefining what was most important to them, prices skyrocketed. In fact, the average home price increased by 10.2% from July 2021 to July 2022. It should come as no surprise to any of us that the crazy pandemic market wasn’t sustainable. According to Moody Analytics, 210 metro areas were overvalued by 25% or more.
If you’re looking to sell your home soon, what does this all mean for you? Fortunately, we’re still in a seller’s market in Western Washington with relatively low inventory levels, but you have to be careful about how you price your home. If you make the wrong move, your house could sit on the market for a long time, and you may have to decrease your price. Buyers are more price sensitive than I have seen in my career.
In a correcting market like ours, it is more important than ever not to price your home too high. If you do, you could end up “chasing the market.” In this scenario, your initial price is too high, and buyers won’t look at your home. You could try lowering your price, but by that point, the market may have changed again. A seller may need to lower even more than if they would have priced it right the 1st time. Chasing the market down can be an absolute nightmare!
One strategy that works in a shifting market is to price your home slightly below market value on purpose. It seems odd, but this will guarantee that your home is the most attractive deal in your area. If everything goes according to plan, buyers will flock to your house, and the competition among them will naturally bring the price up to or above market value. The risk with this strategy is that if only a few buyers come to your home, there might not be enough competition to drive up the price. However, this is a fantastic option if you need to sell quickly.
Another option is to lower the interest rate down for the buyer by making a payment towards their loan. It's called buying the rate down-many don't know that this is possible and both THE BUYER AND THE SELLER can participate in this! "
This can be done for the entire life of the loan to the tune of a 1/4 to 1/2 discount softening the blow of increased interest rates. It can also be done with a more significant impact over the short term via a 2-1 buydown. Year 1 the buyer gets 2% points off the normal rate. Year 2 gets 1% point off the current rate. Year 3 it adjust's back to the originally agreed upon rate.
I am a fan of the 2-1 buy down as I believe there will be an opportunity to refinance into a lower rate over the next 2-4 years. So take advantage of a lower payment for the first 2 years, then look for a new loan afterwards. Sellers are advertising the 2-1 buy down as a great way to attract more attention to their home by SIGNIFICANTLY DECREASING A BUYERS INTEREST RATE.
When I talk to buyers today, few of them object to today's pricing. The hurdle they are having to get over is the new higher interest rates which cost them significantly more money. Buyers are paying up to 40% more on their monthly mortgage payment today vs 6 months ago! A payment towards a lower interest rate, or even a 2-1 buy down could mean the difference between a home selling and sitting. I am a really big fan of this strategy and
For those sellers worried that they missed the peak, well unfortunately they did. The truth is, we never know until about 2-3 months later when the peak, or the bottom actually occurred. That is why there is never truly an option to time the market perfectly.
Even though prices have come down from the peak of last March, let's put something in perspective — HOME VALUES IN WESTERN WASHINGTON ARE STILL NEAR RECORD HIGHS! From the beginning of the pandemic (Mach of 2020) values are up over 35%. When we look at year over year sales trends, we are about equal. That means homes are selling for roughly what they were in September and October of 2021.
The bottom line is that sellers can still achieve fantastic results in this market as long as they do their research, have some patience, and price their homes correctly. You may not get multiple offers, it may take a little longer, you may have to prep your home a little more than before, but if you are realistic, you can still get a fantastic value for your home compared to historical values. If you would like to discuss which strategy might be best for you, don’t hesitate to call or email me. Make it a great day!
