All real estate is local, goes the saying. The number of sales, inventory, days on market, price per square foot, and a host of other factors function to create even hyper-local hot or cold spots.
Then this last presidential election happens, and that rule goes out the window.
However you feel about the election of Donald Trump — and the aftermath that’s still playing out — it’s immediately affected the Seattle real estate market.
Sales fell off, fast. A lot more dramatically than November and December of the previous year.
We had seen a steady sellers market this year, especially in the sweet spot of homes selling for $450,000 to $1 million. From Nov. 25 to Dec. 14, we had just 12 home sales in that price range, well down from even the month before. Two more sales were recorded just over $1 million.
Waiting and seeing
The Trump Effect is creating an unprecedented slowdown in home sales here as buyers are taking themselves out of the market to see what happens over the next few months. Despite the low number of available homes on the market — remember, low inventory usually spurs buyers to make faster decisions and pay close to or above asking prices — buyers are sitting back, waiting and seeing what happens after the inauguration.
Some in the industry point to the recent 1 percent rise in interest rates for the slowdown. There may be some truth to that, but effectively, a rise from 3 percent to 4 percent means financing is still relatively inexpensive. Higher mortgage interest rates — 6 and 7 percent — were common to well-qualified buyers as recently as 2008.
However, we’re also seeing the cash buyers sitting on the sidelines, so there’s something more going on. All other business indicators like the stock market say it’s a good time to buy. From talking to home buyers, it’s clear they’re simply uncertain and feeling anxious — they have little confidence in what will happen over the next few months, and are putting off major buying decisions as a result.
I’m working with a seller who has what, in any other time in the last few years, would be the perfect home for this market. Asking $899,000, it’s a trophy listing that has everything going for it. Property in the same price range in similar condition were under contract within a matter of days, with few or no contingencies, and achieving the asking price or above mere months ago.
We had more than 50 showings in 70 days of market time without an offer, but also without a complaint about the price. In fact, several brokers told me the price was spot-on and they were shocked it was still an active listing. When I’d talk to the buyers’ brokers, they’d relay the kind of excuses experienced brokers know are more justification for waiting than true objections. This same experience is playing out across the market — good houses that would have moved quickly in the previous months of the year aren’t getting offers.
My experience, added to the low sales data, tells me buyers aren’t feeling confident about making such a commitment right now. I’ve heard several times from buyers that they’ll just keep renting for another six months or a year until things shake out.
Assess your options
The data tells us that our competitive local housing market screeched to a virtual halt likely due to the bizarre election, from the last days of the campaign to the contentious aftermath. The state of the union has been unsettling. No wonder people are cautious.
From a sellers’ perspective, it can be really frustrating. If your home is priced right and in good condition, you had high expectations going to market. They may not have been realized yet. The good news is the homes that did sell did so without major price reductions. So we can extrapolate that pricing isn’t the problem.
The timing is the problem. As a seller, you have two options:
Be patient. Anything can happen on a given day in real estate. Someone at some point will need housing.
Take your home off the market and re-evaluate how the market adjusts after the new president is sworn into office.
After talking with my sellers, assessing their needs and priorities, and diving into the data together, the decision was made to pull that $899,000 sweet-spot property off the market and re-strategize in early spring of next year. Meanwhile we’ll see what market does, analyze the data, and be ready when buyers regain their confidence, take themselves off the bench, and get back in the game.
By Chris Sudore