Already 200,000 Homes Sold In 2021. Is That A Good Thing?
It depends on who you ask...
With the 2021 spring selling season just around the corner, home owners can’t help but wonder if now is the best time to cash in on the sale of their largest asset, their home. After all, we ARE still in a pandemic right?
Who knows what to expect when trying to sell your home during these times….
Homeowners in King and Pierce County have been selling their homes for thousands of dollars above their asking price, the majority of time.
I know that many in the Twin Lakes neighborhood of Federal Way for example, have watched their neighbors put For Sale signs up, only to see them taking them down days later, after accepting an offer above their target price point.
It is no wonder that since the first of the year, almost a quarter of a million homes have been sold throughout the state of Washington.
Eager sellers are taking advantage of the gigantic surge in market activity that has brought qualified buyers onto the market in droves. More on that below.
More Homes Sold This Year Than In 2020 (So Far)
The latest Northwest MLS data tells us that Jan.-Feb. 2020 saw 4% fewer home sales than Jan.-Feb. 2021.
This translates to just over 7,000 more homes sold in 2021 than in 2020, during the same time period.
Not only that, homes are selling much MUCH faster so far in 2021. compared to the same time period last year. Over one week faster, on average.
Why? Hard to tell.
Based on my personal experiences with clients both in Alaska and in Washington state since the pandemic started, there seem to be a few reasons.
The main one being supply. There continues to be a housing shortage, not only throughout Washington state and the Pacific Northwest, but throughout the entire United States. This persisted even before last March, when most of the country was first introduced to COVID-19.
“The pandemic certainly compounded the housing shortage dilemma.”
With even fewer homes on the market than before, during a time when people are reluctant to sell due to all of the uncertainty surrounding us these days, buyers have been left with very slim pickings.
It appears that since there is such a large backlog of buyers looking to pounce on the right home, as soon as one hits the market, (especially in the Federal Way or Tacoma areas) home sellers have been met with more offers than they can handle!
This has led to: A) homes receiving dozens (literally...at least 12+) offers within DAYS of being listed for sale, which drives the price WAY up; and B) discouraged house hunters who are more eager than ever to win the next inevitable bidding war.
As 200,000 home sellers have already discovered, both of these are ideal conditions for selling in less than 30 days for TOP market value.
A Reason To Upsize
Another reason for the surge in closed sales, despite less homes on the market is also COVID-19 related.
Many businesses are downsizing office space, at least somewhat abandoning the “brick and mortar” business model, and adopting hybrid solutions for the post pandemic world to come.
In other words: most people will continue to work from home at least some of the time.
As a result, many homeowners are looking to upsize to accommodate for this lifestyle change, especially parents of school-aged children (who are also working from home if you didn’t know).
“If we’re going to be spending more time at home, I figured we might as well try to get into a more comfortable place”
- Seattle, Capitol Hill Neighborhood Homeowner
This fact is highlighted throughout Seattle especially, as we are seeing a migration from the downtown Seattle areas into more suburban residential towns like Federal Way, Auburn, Fife, and Covington.
We can estimate that Federal Way real estate prices (and surrounding) will continue to climb as more decide to make the same move to the burbs’ and as the light rail station nears completion in Downtown Federal Way.
Residents find that homes in these areas tend to provide more square footage, and an extra bedroom or two, for a comparable mortgage payment -- a better alternative, in comparison to their 1-2 bedroom townhome or condo in the city.
Renters Turning to Buyers….The Monthly Costs Are The Similar
Not to mention, RENTS ARE SKY HIGH. Would you believe me if I told you that you could own a home in the Federal Way area for the same monthly price to rent a condo in or near downtown Seattle?
This fact is what is causing many lifelong Seattle renters to gravitate toward homeownership, and this has added fuel to the flames of this hot sellers market-- if the cost is the same, if you have the means, and if you get to appreciate the pride of homeownership….the question becomes why not buy rather than rent?
SO… is it a good or a bad thing??
With all that said, the question of whether or not 200,000 home sales within the first 60ish days of the new year is a good or a bad thing depends on what side of the fence you are on: home buyer, or home seller.
Home buyers are on the market in droves due to the historically low interest rates, which at the time of this article are hovering below 3%... still… which is locking home buyers into affordable mortgage payments.
Going back to the previous section, this is another reason why many renters are now realizing that they are in a position to OWN. Why pay $1,800 per month to rent when you can pay $1,850 per month and be an owner instead?’
Buyers With Deep Pockets
The problem with this is, as I mentioned, that buyers have flooded the market. The competition for purchasing homes is so high that it has been extremely difficult for first time homebuyers especially, to get their dream home under contract.
For example, over a two-month span, showed one couple over 30 homes, we made an offer on at least 4 of them, got into bidding wars and LOST on out on all of them due to being outbid.
These buyers gave up completely on their home search because of it, and many of my colleagues have told similar stories about buyer clients losing out in a bidding war to another buyer, with deeper pockets.
On the other side of the coin, as I write this, home sellers throughout the greater Seattle area are seeing their homes sell in record breaking fashion, after very fierce bidding wars.
This is pushing their home’s price to a number far above list price in many cases. Not a bad deal if you want to make tens of thousands of dollars extra!
This brings many in the industry, including myself, to wonder if people are stabbing themselves in the foot by paying upwards of $40K more than the home’s determined market value… but more on that in a separate article...
So The Winner Is….
Clearly the true winners are the sellers in this market...and the successful buyer that emerges successful from the bidding war..... but that is only if the market doesn't make a drastic downshift in the next couple of years.
Is Now The Right Time To Sell?
?Contact me today to take the first step in ensuring that you sell for top market value, and faster than you think -- like thousands of homeowners throughout King and Pierce County in 2021!
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