The real estate market in Seattle is still in high gear. We anticipated having the traditional lull this summer, as vaccines have allowed people to take their long-delayed family vacations and some exhausted buyers have stepped back to regroup and re-energize. While that’s indeed happened, the market is still very active, even if it’s not as insane as it has been for the last year.
This does mean there is less competition this summer. Instead of more than 20 competing offers on a turnkey home in the right neighborhood, there may be two to five (+/-) other buyers. Though it’s less competitive, it still can take a lot to win the home you want. For sellers, the problem isn’t selling, it’s finding a place to land once the sale is done.
To give you some perspective, analysts define a neutral market as having four to six months of inventory. This summer, our neighborhoods have less than one week of available supply.
Everywhere I go, everyone has a story about the insanity in the market over the past year. Inevitably, they ask me if they should buy or sell right now.
My answer is the same for everyone. It all depends on your goals, needs and wants.
Plan for the long game
What to do right now depends on this question: What is your long-term plan?
Determining what your long-term goal is will be different for everyone. The variables include how long you plan to stay in your home, how much equity you have in it, employment and salary considerations and your overall financial situation.
It’s easy to get caught up in the frenzied pace this market creates, but the smart thing to do right now is to take a deep breath and think. Figure out what you are trying to get out of this market, and how that will impact where you want to be in your life — physically and financially — in five to 10 years. You don’t want to get caught up in the win-at-all-costs mentality and then regret overpaying simply because you had no other choice.
Your home isn’t just where you hang your hat; it’s a powerful financial instrument. If you have a financial planner, this is a perfect time to ask them questions about how your real estate investment works with the rest of your portfolio to achieve your long-term goals.
Short-term planning counts, too
An experienced broker will help you make the short-term plans that will get you to your long-term goals.
Traditionally, many people have to sell a house to buy the next. It’s stressful in a normal neutral market. In the red-hot seller’s market we’re in, it’s more of a tightrope walk. For brokers, it’s traditional to list the home and work with the sellers to find the new one. In this environment, it’s time for a transitional model, rather than the traditional one.
Selling the house won’t be a problem, but winning another house in a highly competitive scenario can be. My team and I work with our selling clients on all of their options. If selling the home now makes sense for their long-term goals, it is vital to anticipate plan A, B, C and even D.
Plan A would be to follow the traditional model, to sell and then buy.
Plan B could be to buy first, then sell, knowing you have a place to land. Depending on your liquidity, salary and the equity you have in your home, you may already have cash on hand or be able to take advantage of financing through a bridge loan or a cash-out refinance. This gives you cash for a down payment on a new home before you put your existing home on the market.
In Plan C, it may make sense to sell now, get the highest and best price for your home, and rent for a few months to a few years to let things settle. One couple I worked with moved into a parents’ basement. They sold their home quickly and got 30 percent over their asking price. They decided getting the cash out of that home now was worth it.
Maybe another plan makes the most sense. I’ve met with repeat clients who were investigating selling, and it ended up that refinancing to get cash to remodel their present house was the smartest choice for them. It would have been an easy sale for me, but it wouldn’t have helped them achieve their long-term goals.
If you got beaten up this past spring, this may be the best time to get off the bench. Though it is still competitive, it is not as cutthroat as it was earlier in the year. There are sure to be more buyers returning in September, as school starts and we all get back into our regular consumer habits.
We’re not seeing as many listings with offer-review periods that end up in ever-escalating offers from 20 or more buyers. Instead, there are more “first-come, first-serve” listings that are getting great offers immediately. Some are selling before they are even on the market.
This is where having a plugged-in, experienced broker with great relationships can give you a boost.
There’s another looming wave of buyers on the horizon — the folks who bought in second-home markets and got out of town. Full-time remote work is coming to an end. Employers are calling workers back to the office, even if it’s a hybrid model. I’m seeing them selling those second homes and their Seattle homes and going all-in on a larger primary residence with home offices, workout rooms and outdoor spaces within easy commuting distances. There’s a wariness that restrictions could happen again, and they want their primary residence to accommodate more time at home comfortably.
For buyers and sellers, it is more important than ever to work with a smart, scrappy, experienced and strategic broker. You need someone to advocate for your best interests and help you create a short-term plan that will allow you to meet your long-term goals.
As always, my home, my office and my team are focused here in Madison Park. If you’d like to set a time to talk through any matters involving buying or selling your home, my door is always open. From all of us at King County Estates, we want to thank our devoted clients, families and community for your tremendous support during this time.