Spring 2017 Housing Market
Are you thinking about buying a home? Or have you been one of the many already in the process and find this market extremely frustrating? Let us share what we have been experiencing and give you some tips on how to compete in the current market.
Since last year, the inventory (homes listed for sale) is extremely low, so for every listed home, home owners are receiving multiple offers, especially if the price is below a certain price point–the lower, the price, the more offers. See our following statistics and activity for specific price points in the Gig Harbor and Fox Island areas within the last 180 days.
$350,000 and under $350,000 to $500,000
12 active, 15 pending, 85 sold (116 total) 45 active, 76 pending, 167 sold (288 total)
33 of 116 are under 10 days on market 106 of 288 are under 10 days on market
57 of 116 are under 30 days on market 152 of 288 are under 30 days on market
43 of 116 are over 30 days on market 136 of 288 are over 30 days on market
Ratio: 1.25 (seller’s market) Ratio: 1.68 (seller’s market)
$500,000 to $750,000 $750,000 and over
90 active, 94 pending, 147 sold (331 total) 94 active, 31 pending, 48 sold (173 total)
89 of 331 are under 10 days on market 34 of 173 are under 10 days on market
137 of 331 are under 30 days on market 54 of 173 are under 30 days on market
194 of 331 are over 30 days on market 119 of 173 are over 30 days on market
Ratio: 1.04 (seller’s market) Ratio: 0.33 (buyer’s market)
For buyers, especially first time buyers or those who have limited savings available, securing a home is very challenging. Home owners do not necessarily choose the highest offer, but rather choose the offer with fewer contingencies and stronger financial standing. Following are a few of the most common limiting contingencies with suggested strategies to overcome those limitations:
- The buyer asks the seller to pay buyer’s closing costs. This is not uncommon and in this market, is typically accompanied by an inflation in offering price to cover the difference, a good strategy if the buyer is short on cash funds.
- Inflated offers. This is happening to secure the purchase, but it can result in a low appraisal situation that could possibly require the buyer to come up with extra cash at closing. A knowledgeable realtor must know the buyer’s budget and strive to submit offers that will not cause the buyer to overbid and become cash short at closing.
- Low amount of earnest money. Although the seller still receives the full amount of the negotiated contract amount offered, the more money the buyer can put down as earnest money, the stronger the offer appears, and this amount is credited back to closing costs.
- Limited cash for down payment. This can be an issue if the buyer offers more than asking to secure the transaction, then the appraisal comes in low, requiring the buyer to come up with the cash difference. The lender can only loan on the appraised value, and the seller does not have to agree to drop the price of the home in this instance. Make sure you have the extra cash to pay this difference when offering more than asking.
- Offers contingent on selling an existing home. Not only could this extend closing, but it could also cause the transaction to fall through, making it the least attractive offer. A bridge loan would be a solution in this instance allowing the buyer to secure a new home before selling their existing residence. (Note: This is not offered by all lending institutions, so ask your realtor for referrals as well as your lender.) Also, see our blog on Sell High, Buy Low.
- Offers contingent on financing. Undoubtedly the most important first step in the home buying process is to at a minimum be preapproved by a lending institution. Most lenders will even go as far as preliminary underwriting, which will save time during the closing process. See our blog on Comprehensive List of Preapproval Needs.
Additionally, even some of the most important contingencies are being waived to secure the transaction, including waiving the home inspection. We do not advise this waiver, nor are we stating that if any of these conditions occur, you will not be able to secure a home. Of course, the most appealing offer to a seller is a cash offer with no financing and no contingencies. That is a hard one to beat in any instance! The key here is to be aware of the market and to stay positive knowing that you may have to offer on several homes before securing one.