Cutthroat competition. I won’t sugarcoat anything for you, we like to be real with our clients here. Last year, I wrote about the state of the market and how all the economic indicators were pointing towards continued off the charts growth. An excellent economist I follow has written about how the real estate bears would be proven wrong in 2020 at the beginning of the pandemic, and boy was he right! Zillow’s economists have thrice adjusted their expectations for 2022 up, up and away to over 21% expected growth this year, wait, I mean by MAY!
How can this be sustainable? Well, for the same simple reasons I wrote about last August. Too many people, not enough homes. When demand outpaces supply, prices rise. Competition is fierce. In February of this year, the median home in King County sold for 105% of it’s listed price. Not too bad right? Well in the 2 million dollar plus range, the median home in February sold for 115% of their listed price! That’s median by the way, not average.
Our office does a lot of business. For context, we intake roughly 160 new potential clients per month. Our brokers write lots of offers, so we have a great thumb on the pulse of the market. We see what wins homes and what homes go pending for before they close. We routinely see desirable properties sell for 20-50% above list price. Cash. No contingencies. One of our brokers wrote a cash offer releasing 3.8 million dollars in earnest money to the seller 2 days after mutual, and they did not win!
Why am I telling you this? To discourage you and make it seem like homeownership in Western Washington just isn’t realistic unless you are wealthy?
Absolutely not. I’m telling you this because you need to know what is happening in the market. Education and proper expectations are critical to this process. We want you to know what you are up against. The reality is prices are not coming down. Even with interest rate increases, people willing to spend upwards of an annual salary in cash to secure a home are not going to be bothered by their monthly payment going up by a few hundred dollars.
Being on the outside of this is difficult and frustrating, and we realize that. We are in it with our clients, and we see the roller coaster that they ride. Once you are in though, that ride is a rocket ship of equity.
You may have to write multiple offers before you get a home. You may have to do things that feel uncomfortable to secure a winning offer. These are decisions that you will need to discuss with your broker, and your broker (even if it isn’t one of us) should be able to competently explain the pros and cons of every step you will need to take. If they cannot, you need to find a new broker. This market is too dangerous and too risky to step into with an inexperienced broker who cannot dive deep into the ins and outs of contracts, offer negotiations and searching with you. The last thing I want you to do however, is to make the WRONG decision, to wait for a “leveling out” of the market based on anecdotal insights from friends or brokers who do low volume. If you are going to wait, know that prices will continue to increase. Know that competition for homes is not going away. If you make that decision as an informed individual, we 100% support you and will be here for you when you need us.
I am telling you this in no uncertain terms so you can understand the state of the market over the next 3 years. Until the federal government decides to deficit spend on public housing, this is our reality, and will remain our reality. We’re all grownups here, and can handle hard truths.
Get in the market. Steel yourself for multiple losses. You. Will. Get. A. House. You just have to have the right mindset, and the right broker. Once you get in, you’re in. And we can make that happen.