Here's a summary of what's happening in Residential Real Estate in Whatcom County since COVID-19 arrived on the scene. Good news first, prices are still holding thus far and the numbers are not as bad as one would expect considering we are in the middle of a state wide Stay at Home Order with much of the same type of thing going on in most of the states across the US and even most countries around the world.
Median Asking Price on Listed homes - $499,950 in April 2020 vs. $499,000 in April 2019- pretty much the same but up 0.2%
Number of new Listings coming on the Market - 243 homes in April 2020 vs. 385 in April 2019 - down 36.9%
Number of Total Homes for Sale - 492 homes in April 2020 vs. 513 in April 2019 - down 4.1%
Number of Homes that Pended - 188 homes in April 2020 vs. 290 in April 2019 - down 35.2%
Number of Homes that Sold (Closed) - 179 homes in April 2020 vs. 242 in April 2019 - down 26%
Prices. Whatcom County Average Sold Price - $466,971 in April 2020 vs. $444,129 in April 2019 - Up 5.1%
It is a positive testament to society's desire to keep the show on the road and continue to "live" that the numbers are not much much worse. One could expect real estate activity numbers would drop by 80 to 90% or more. We are doing much better than that. The COVID-19 lock down did have a bigger negative impact on April's numbers than my interpretation of the real estate stats for March indicated. What I mean by that is that March 2020 Pended Transactions (number of homes where the seller has accepted an offer from a buyer and the home is under contract to sell) where down 18% from March 2019 Pending Transactions. Based on that, I expected Closed Sales in April & May to be down around 18% as well. This month's Pending Transactions are the strongest indicator of what the next's month's Closed sales are going to be. However, the number of Sold homes (Closed Transactions) was down 26% in Whatcom County in April 2020 compared to April 2019 which is a much bigger number than the 18% drop in March's Pendings predicted. This shows that a significant number of buyers either chose not to close, or because of job loss, or cut back of hours, their lender was not able to fund their loan. Whatever the cause(s) it added up to a higher than normal failure to close rate in April 2020 in addition to the 18% drop in number of Pending residential transactions in March 2020.But even the 26% drop in the number of homes sold is not as bad as I thought the numbers would be considering we are in the middle of a state wide Stay at Home order. It is interesting the bath Asking Prices and List prices have continued to rise so far.
There is some good news for buyers and sellers.
For sellers, Sold prices and Asking prices are still holding and in fact the Average Sold price has gone up 5.1% over last year so far. And there is still an extremely low inventory of listed homes for sale - less than 2 months supply. What that means is, if nothing else came on the market and if homes kept selling at the rate they are selling - all the listed homes would be sold in less than 2 months. And as you can see in the above numbers, the reduction of new listings coming on the market (down 38%) is larger than the reduction of homes coming off the market (# of homes Pending down 35.2%) so the inventory is still shrinking. The Average List Prices for the month of April are not yet available but will be out sometime during the next week or so.
For buyer's, the interest rates are incredible and at record lows. And COVID has slowed down some of the competition. There's still multiple offers on good deals but there's fewer multiple offers to compete against. And, I don't know exactly when but there is at least a hope that prices may soften and that hope will help with your negotiations with sellers. I do not necessarily recommend waiting for this expected drop in prices. It is a prediction - how much and when are unknowns, and great interest rates today are a fact. An increase in loan interest rates may have a larger impact on your monthly payment than a drop in prices. That said, at least there are some real world indicators that prices should go down at some point in the not too distant future for those that have been patiently waiting for the next down cycle to begin.
My recommendations are pretty much the same as my recommendations is my March Market Report. I do predict that prices will peak sometime soon simply because the buyer pool is shrinking. The number of people that can qualify for a home loan today is a lower number than it was 2 months ago and it's just a matter of time before the shrinkage in the buyer pool impacts prices. Reduce the demand enough, and prices typically go down. Right now, our inventory is still super low and there are more buyer's than affordable homes so prices are holding (actually still increasing so far this year). Depending on how fast and how much the buyer pool shrinks, that is not going to last forever. If you have property to sell, or if you are thinking or down sizing I recommend taking action and doing so sooner rather than later. And downsizing is not limited to a "smaller" home - it includes any downward movement in value. For example moving from a more expensive market to less expensive market or from a high end neighborhood to middle range neighborhood. From strictly a maximizing financials point of view, you want to sell you higher value home before prices drop. A key to utilizing the up and down cycles in the real estate market to your financial advantage is to downsize toward the top of the market cycle and upsize around the bottom of the market cycle.
Call if you have any questions or want more information....or even if you just want to chat.