This graph illustrates the dramatic decline of new inventory on the eastside. Because of the lack of new permits being issued and builders concentrating on selling current inventory, this lack of new construction will put pressure on the overall market.
Other Market indicators:
We will continue to see prices stabilizing erasing concerns about buying a home only to see the value drop the new month.
About 20 -30% of buyers are looking for new or like new homes, this will create higher demand for homes built after 2005 or 2006 and/or homes that have be recently updated.
The market took a huge turn in April. On the eastside, I see homes under $500,000 continue to be to the hot sellers this summer. The $8,000 tax credit, lower home prices, and record low interest rates have pushed the buyers on the side lines into the market. The optimist are buying now, the pessimists will start buying in the fall. But to get the tax credit the home must close by 12/1/09.
I also see about half the available inventory is junk and/or over priced. The good homes, priced right are selling. It's just that the media has not talked about this yet.
Many sellers have finally gone through the grieving process. They watched the real estate market prices, hoping values would rise sharply, justifying their desire to hang on to pricing their homes well above market value. It's not going to happen. Now these sellers will be lowering their prices to market value and some good homes will be selling. Don't use days on market as an indictor of quality.
Short sales and foreclosures continue to set the bar low for overall values. Buyers that are willing to wait out the longer process of buying one of these homes will feel they got a deal. However, most of these homes are sold ‘as is' and may require a lot of work.
Short sales may have long term consequences for the sellers. The debt may not be completely forgiving and in the future a debt collector may come after them. Check with a lawyer or financial advisor that understands this issue.
Appraisers are getting a bad rap in the press. The May 1st rule changes have everyone on guard. I see many sales requiring two appraisals from the lender. This causes a longer time in escrow and in some case prevents the deal from closing because the offer is higher than the apprized price.
After searching for a week, I had an out of country client who has been watching the Seattle market for two years, decide not to buy because they felt there were no deals to be made. The good deals are now gone or some sellers owe too much to be able to sell at market value.
Right now it is competitive buying. Recently, I've had five sellers who wanted to make an offer only to find the house they wanted had just got an offer or we ended up in a multiple offer situation. Think market value instead of finding a deal.
Six months ago I thought prices would stabilize this quarter and now there is evidence that this is true. The next six months will be harder to predict. But like a mentioned earlier, I feel the optimists are buying now, the pessimists will start buying in the fall. For the rest of this year and into next year there will be a high demand for quality homes that are market priced.
Two things are clear. For sellers: Gone are the days of putting up a sign and waiting for the buyers to show up. For Buyers: It's competitive again. You need to be qualified and ready to move at a moments notice.
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