I feel bad for Buyers

By
Real Estate Agent

I feel bad for Buyers.

Why? Because they believe all the hype about the "Buyer's Market".
They expect to find the deal of the century, with all their closing costs paid, there will be absolutely no deferred maintenance, it is painted & has all the appliances and they will have plenty of time to choose from the huge number of homes available.

The reality in my recent experience is quite different:
First time buyers have a LOT of competition right now. Homes under $200,000 are getting multiple offers (I know of one bank owned ficer that had 20 offers!). Pretty homes are getting offers in the first few days on the market.
And Seller's whose homes are getting this kind of response are resistant to making huge concessions.

I think the problem really comes from Language: the term Buyer's Market, or even worse, The Market.

"The Market" may be considered as a whole for averaging and trending. But it give s a very non-specific picture to buyers who have specific needs- beds, baths, square footage and PRICE. "The Market" for waterfront homes with over 3,000 square feet on acreage is incredibly different from "The Market" for entry level 3 bed, 1 bath homes near I-5.

Here is what I mean:

For all of Thurston County (as of June 5, 2009)

Active Homes: 1,638
Pending Homes: 680
6 months of Sold Homes: 1,097
Expireds/Cancelleds Homes (6 months): 1237
Days on Market Average: 104

This translates to about 9 months of inventory; square in the Buyer's Market territory as far as the statistics go. (A 6 month inventory level is considered a Balanced Market, with even Supply/Demand) But this covers the entire range of availability- which is way too broad for a clear picture of what is happening.

Sold Price Range: $57,000 to $850,000
Average Sold Price: $264,223
Days on Market Range: 0 to 981

See? That kind of range tells me nothing for the specific client I am helping.
In order to get a sense of what is going on for actual buyers who have really specific needs (like price) we have to narrow in.
Anecdotally, we know that the homes at the lowest price range sell faster with higher demand. But what part of the county? And what is entry level?

a map of the urban core of Thurston CountyLet's imagine a pretty typical first time buyer for the Olympia/Lacey/Tumwater area.
They want to look for a home under $200,000 but are willing to consider up to $225,000 since that is an affordable monthly payment for a 2-income family.
They also need to be close in to the city to be able to get to schools and job, plus easy access to the freeway to get to Fort Lewis.
This puts them in the north half of Thurston County.

That is a pretty vague picture.
But take a look at the results:

Active: 178
Pending: 193
Sold (6 months): 259
Expired/Cancelled (6months): 214
Average Days on Market: 80

Inventory Level: 4 MONTHS

This is no longer a picture of a Super Buyer's Market. This is heading firmly into Seller's Market territory. And look at the difference in the time it takes for the houses to sell! Almost a whole month shorter.
Compare the number of Active to Pending: There are more pendings than actives in this niche.
And look at the number of Solds in this segment of the market compared to the whole of Thurston County: 1,097 vs 259.
Nearly 25% of all sold homes were in this part of Thurston County, in this price range!

This certainly casts a different light on the First Time Buyer portion of "The Market".

Let's flesh out this Buyer's needs list. We will add the following criteria to Price & Area:
At least 3 bedrooms
At least 1 1/2 bathrooms
At least 1200 square feet

THE RESULTS:

Active: 98
Pending: 126
Sold (6 months): 156
Expired/Cancelled (6 months): 104
Average Days on Market: 88

Inventory Level: 3.75 months

So you can see why I feel bad for Buyers. Because I work with a lot of first time buyers and that is where a huge amount of all the activity is right now.

Yes, I know not everyone loves numbers. And statistics can be a bit overwhelming.
But Buyers need to know about these kinds of trends. Because the Sellers do.
And if you are looking for the kind of deals I know you want, you need to know about the competition.

 

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If you would like help finding your first home, give me a call! You are welcome to take a look at everything that is available for sale in Olympia, Lacey, Tumwater and nearby on my website. I would love to sit down together and get you started!

 

Comments (5)

Anonymous
John Orfao

Great insights into a market in transition. I did a market analysis in Horizon Pointe today. The average list to sold price was 100.05%.  It was not what I was expected.  The sudden rise in mortgage rates and indexed rate pricing may throw some ice on buyers decreasing demand and eventually swing the market back a little more in their favor. We'll see.

Jun 05, 2009 05:46 PM
#1
Paul McFadden
Responsive Pest Control - Seattle, WA
Pest Control, Seattle, WA.

Sarah: Thanks for the post and analysis. I read recently that just because there are pendings doesn't mean much these days. Deals are still falling through at a pretty high rate due to complexities. I'm not surprised homes are selling at close to list price. I think that's because they're priced to sell. The bottom line is the customer needs to work with a professional real estate agent. If they do that, they should eventually get what they want! Thanks again!

Jun 06, 2009 02:53 AM
Paul S. Henderson, REALTORĀ®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Sarah, That is exactly what I am running up against. People wanting to look at homes $30k over their qualified loanprice, the house being on the market less than 2 weeks, and making offers $35k less than the asking price with closing costs. I refereed them to another agent of their choice...

Jun 06, 2009 04:50 AM
Sarah Nopp
South Sound, WA

John Orfao- I am pretty happy with how Horizon Point is holding up. Even with all the REO and Short Sale activity, there is some good strong demand in there. Maybe it was good for the neighborhood that the building stopped for a while.

Paul McFadden- I am seeing a bit of the fall through too, but fewer than 6 months ago. As long as new lending regs don't pull the rug out, I think we should be fine for a bit- long enough to get a sense of balance maybe!

Paul Henderson- Thankfully I haven't had to deal with any 20% below list offers lately, but I kind of expect to write and receive offers starting at 10% below list-net. A good place to start in my mind :)

Jun 06, 2009 05:12 PM
Sandy Nelson
Riley Jackson Real Estate Inc. - Olympia, WA
your Olympia area Realtor

Sarah,

I agree with your assessment, that the first time home buyer market is tight. On the one hand we have more inventory of homes in the $200,000 range than in the past few years, but due to the first time home buyer tax credit, as well as low interest rates, we have more buyers competing for these homes, including non first time home buyers as well as investors.

Jun 09, 2009 02:43 AM