Fundamental Real Estate Truths and How Using the Right REALTOR® Ensures Your Success
We all know there are certain fundamental truths in life. For example, the sun rises in the East, 2+2 always equals 4. Also, it does rain a lot in Seattle, BUT our summers are bar none, the best in the US. So too are the fundamental truths in real estate. You've heard the expression: “location, location, location! Which essentially means identical homes can increase or decrease in value due to where they're located. Things like proximity to employment centers or transit, quality of schools, views, access to amenities, etc., can make a home more OR less in demand, and therefore more OR less valuable. Another truth is that interest rates affect both consumer sentiment and purchasing power. For every 1% change in interest rate, a buyers purchasing power increases or decreases by 10%. This slide shows the difference in mortgage payments on an $800,000 loan at 7.5% vs 6.5% and 5.5% When rates were super low, buyer demand increased along with affordability. This contributed to this sustained month-over-month double-digit rise in sale prices during that period. Conversely, when we see that rates rose last year, sale prices went down, but are back on an upward trajectory. Rates impact seller sentiments too. Many would be sellers feel ‘locked in’ by their current rates, fearful to give them up only to have to buy a more expensive home with a higher associated mortgage rate.
This is contributing to our shortfall in supply, bringing us to another real state truth. Supply and demand dictates how the market behaves. Our area has lacked supply for years with currently less than one month's supply of homes. For context, anything less than 2 months favors sellers, a balanced market has between 2-4 months inventory, while buyers can expect an advantage when there are 4 months or more of housing available. Now, with the holidays behind us and the Spring market upon us, more buyers are out there competing for the limited number of homes. Competition and multiple offers are back with agents in our office report 10, 20, even 30 offers on a single home and a final contract price, well above list. So, what does this mean to buyers and sellers?
First, ignore these truths at your own peril. Regardless of market conditions, working with an experienced REALTOR® can help you successfully navigate these challenges. I help buyers gauge the potential demand of end value of a particular home, assess the competition and discuss a variety of tactics to help you win. I help sellers best prepare their home and set an appropriate asking price, and devise a marketing strategy to attract the maximum number of buyers.
So don't delay! If you're in the market to either buy or sell, reach today so we can craft a strategy for your success.
Call/text 425-495-0926 - or email me anytime! ginam@windermere.com.
