The guesswork is now gone from the summer trend as we settle into the middle of the summer market craze. Unfortunately, the Puget Sound Region is not experiencing the craze that investors and sellers were keen to capitalize on the past few years. Buyers are getting their first breath of fresh air after years of skyrocketing rates.
Prices remain high across the state and the region, except King County, which was one of four counties that did not see year-over-year gains in median sale prices for residential and condo sales. The median sale price for June 2019 was $637,000 – a 1.9% drop from June 2018 where median prices sat comfortably at $650,000. Part of this decline is due to a defiant buyer pool unwilling to make concessions and pay above list price for homes they do not believe are priced correctly. Buyers also have the market on their side, as more inventory and cooling prices are giving them newfound negotiating power and time to make a decision. Buyers have gained confidence and now have a moment to breathe in a summer market – something the Puget Sound hasn’t seen in years. Inventory levels in King County for June 2018 are starting to reach levels that haven’t been seen since 2012. Supply has remained largely consistent through May and June, a very slight increase from 1.71 to 1.77 months, a contrast to the 1.29 months of supply in June of 2018.
It is important to note that while inventory levels are climbing, they are creeping upwards and keeping King County within an overall sellers’ market. The MLS states the “balanced market” is 4-6 months of supply. However, these numbers do not apply to the Puget Sound Region, where geographical limits, stable economies, and desirable climate maintain a quicker market pace. Experts categorize the Pacific Northwest “New Normal” as 2-3 months of inventory to maintain a balanced state. King County appears to be teetering on the edge of what could be considered the “new normal” but, inventory is slowly increasing and remains below what could be considered a buyers’ market, even for the PNW.
While the focus for years has been on King County, Pierce County has been steadily growing and recently took the crown from Seattle naming Tacoma as the hottest housing market in the U.S. As buyers are losing patience and moving to more affordable places. Tacoma is cheaper, for now, but this new wave of buyers is already raising median home prices and providing the opportune market for investors. From May to June, median home prices in Pierce County jumped $7,000 to $372,000. Inventory also dropped from 1.36 months in May 2019, to 1.26 months supply in June 2019, matching the supply from one year previous.
It’s more important now than ever to utilize the resources of a brokerage in negotiating contracts, pricing, contingencies, etc. With a market that is evolving and changing, and buyers and sellers becoming increasingly on a more level playing field, both sides need to be negotiating the market correctly. The MLS has also seen an increase in unjustified price drops, due to sellers panicking over a lack of offers in a short time frame. Your broker should understand the specific market for your property, plan for the appropriate market time, and price your home at an amount that reflects the value while maintaining a competitive market option.
The Heaton Dainard Investor’s Approach
Contrary to what the market data shows, Heaton Dainard experienced a jump in closings for the month of June, all of which sold for an average 100.5% of list price. The month of June also brought 5 pending houses with an average of 9.6 days on market. This is far below the market average of the tri-county area, which is directly related to using advanced resources to price and market these homes effectively.
Another important aspect of a market correction is the opportunity to buy. As investor’s, it’s easy to get caught up in the numbers and think that a market correction means less profits. Market corrections are a major asset for investors taking the leap into a competitive market. Buyers have the chance to navigate better deals, price drops, and take more time to make sound investment decisions. The stable job market in the Puget Sound Region, coupled with plans of expansion from a number of large tech companies, such as Amazon, Apple, Google, and Facebook; real estate across the region will be high demand and property values are expected to start climbing again in the future. Interest rates remain low, now the time for investors to start purchasing rental properties, multi-family units, and other long-term cash flowing investments.
Are you looking to invest in the Puget Sound Region? Contact Us today and we’ll help you get started!