Shrinking Inventory Puts "Stranglehold" on Sales Around Western Washington

Here's a Quick Summary of the April Real Estate Market

• Residential Home PRICES ARE UP +10%

• Number of Homes Available INVENTORY IS DOWN -25%

"The real estate market is going absolutely gangbusters," remarked OB Jacobi, president of Windermere Real Estate. "The remarkably low number of homes for sale can be blamed for the drop in sales," he emphasized, adding, "The uptick in interest rates at the end of last year has clearly done nothing to slow things down."

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The Best Time To Sell Your Home

Real estate brokers are often asked...."When is the BEST time to sell a home?"

According to multiple studies, most recently by Zillow, the magic window for selling your home is early May. See a portion of their article here republished here:

The Best Time to List? May is the New March

• U.S. home sellers listing their home for sale in the first half of May earn almost 1 percent more on their final selling price and sell their home roughly 20 days faster than average.
• The best two-week window to list a home for sale to both earn more and sell it faster used to be in mid-March, and has now moved into May in the face of tight inventory in many markets.

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Legend speaks of a magic time in the housing market, an elusive roughly two-week window each year in which homes first listed for sale in that period both fetch higher sales prices and sell more quickly than at any other point in the year.

The exact dates of this magic window change from market-to-market, but the window’s effects are so potent even homes in the most downtrodden markets tend to sell faster than the national average. Our first experience with this ever-shifting magic window was a few years ago, and we documented our findings for the world in the best-selling book Zillow Talk.

But the market has changed a lot in a couple years, and that elusive magic window has moved in many markets, for the most part from late winter/early spring to late spring/early summer.

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March to May

In 2011 and 2012, just as the housing market was turning the corner from recession to recovery, the savviest sellers knew listing a home in mid-March was best. Listing just before the swarms of spring home shoppers descended on the housing market meant these sellers’ homes were likely the newest homes on the market.

But in the years since, the housing market winds have changed. Inventory is incredibly tight in many markets, and renters are waiting longer to begin their home shopping journey in large part because rents themselves have only gotten more unaffordable. The magic window that used to appear in mid-March now typically shows up in the first half of May (table 1).

Listing during this time frame allows homeowners to both maximize their sale price, netting them almost 1 percent more on their final sale price (or roughly $1,800 for the typical U.S. home), and sell their home more quickly – almost 20 days faster than average.

Among markets where the effects of the magic window appear most potent, inclement weather seems to be a common thread. In Seattle and Portland, for example, perpetual sprautumn showers (any season that isn’t summer in the Pacific Northwest is generally quite sprautumnal, trust us) tend keep home shoppers pent up until the start of May. And it seems potential home buyers in Minneapolis, Detroit, Boston and Denver likely don’t appreciate shoveling their way to an open house in the dead of winter.

The tool below (figure 2) lets users discover the precise timing and effects of this fleeting magic window in their market. It details the magnitude of the boost or reduction in selling price and the average time homes spend on the market depending on the window in which a seller chooses to list their home for sale.

Originally Published on Zillow by Jamie Anderson who is a Data Scientist at Zillow

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MILLENNIALS AND FIRST-TIME BUYERS WILL BE A MAJOR PART OF THE 2017 HOUSING MARKET

I believe that 2017 will be the year that Millennials get into the market in full force; we will also see substantial growth of non-Millennial first-time buyers. In recent years, many first-time buyers have remained “on the fence”, but the likelihood of continued interest rate increases, in concert with a tightening labor market, will drive many of these buyers into home ownership.

2017 WILL REMAIN A SELLER’S MARKET

While I expect inventory levels to rise in 2017, it will remain a seller’s market. New construction will pick up steam in 2017, but not to levels that will provide sufficient support to a stretched housing market. Sellers will likely find that it will take a little longer to sell, but demand will still outstrip supply on the back of a job market that continues to tighten.

EXISTING HOME SALES AND HOME PRICES WILL RISE IN 2017

Existing home sales in the U.S. are expected to rise to 5.57 million units in 2017. I am forecasting existing home prices to rise to a median of $243,000 in 2017—an increase of 4.5% from 2016.

NEW HOME SALES WILL CONTINUE TO SEE DOUBLE-DIGIT INCREASES, BUT PRICE APPRECIATION WILL BE MORE MODEST

In 2017, I anticipate sales of new homes will continue to increase by about 12.2%; new home prices will see a more modest 3.1% increase as construction costs weigh on prices.

HOUSING AFFORDABILITY REMAINS A CONCERN IN MANY WEST COAST MARKETS

Some markets continue to see home prices escalating well above income growth. This is unsustainable over the long term, so I expect that the rate of home price appreciation will soften in some areas. This doesn’t mean prices will drop, but rather, the rate of growth will begin to slow.

THERE SHOULD BE A MODEST INCREASE IN THE NUMBER OF HOMES FOR SALE

In 2016 the laws of supply and demand were turned upside down in a majority of markets along the West Coast. Home sales and prices rose while listings remained anemic. In the coming year, there should be a modest increase in the number of homes for sale in most major West Coast markets, which should relieve some of the pressure.

THERE IS NO IMPENDING HOUSING BUBBLE IN THE COMING YEAR

I continue to hear concerns about an impending housing bubble, but I believe these fears to be unfounded. While price growth will likely slow in certain areas, there is no indication that the floor will fall on housing prices anytime soon. Everything I’m seeing points towards a modest shift towards a more balanced market in the year ahead.

MORTGAGE RATES WILL INCREASE TO ABOUT 4.6 PERCENT BY THE END OF 2017 EXISTING HOME SALES AND HOME PRICES WILL RISE IN 2017

Although interest rates remain remarkably low, they are expected to rise as we move through 2017. I am forecasting the 30-year fixed rate to increase to about 4.6 percent by year’s end. Yes, this is above where interest rates currently stand, but still very low by historic standards.

COURTESY OF: WINDERMERE REAL ESTATE | MATTHEW GARDNER, CHIEF ECONOMIST

JANUARY 2017 ECONOMIC & HOUSING FORECAST

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Related Post: The Ultimate Home Buyer's Checklist