This last month I had the privilege of working with 3 sellers on three different listings and they all closed in the last few days. All 3 had multiple offers and all 3 went over the original list price. So what does this mean for you. As a seller you need to know that your home or investment property is in high demand right now. Two of these sales were duplexes and each went at least 12% over asking with few contingencies. The residential condominium in Kirkland went over asking as well, showing a recovery in the prices of condominiums in Kirkland (SEE Previous blog on condo price’s HERE). As a buyer you may consider starting your search now, as prices will hold steady for a long time to come, in my opinion.
As a broker, I regularly get asked “Are we in a bubble?” or “are prices going to crash like 2008?”. Or a buyer will make the statement “I’ll wait till prices crash”. The answer is a resounding “NO, prices will not crash!” Let me tell you why-
Most everyone agrees that low inventory, high buyer demand, & low interest rates are the main drivers to higher & higher housing prices. While it is true that available inventory for buyers is at historic lows, & low interest rates give buyers more buying power, most writers are missing one very important factor that will perhaps be the biggest driver of price increase’s going forward – DEMOGRAPHICS– the coming wave of First Time Home Buyers.
I’ll explain this coming wave in a minute but first lets go back in history to see how Demographics can affect housing Prices. Most people call The Crash of 2008 through 2014 ‘The Housing Crisis’ but it’s roots were not in housing. It was a bank induced financial meltdown that in the end affected home prices. Banks made bad loans, homeowners had little or no equity, and builders built too much inventory. Then, because of this bank corruption, no one could get a mortgage and few could sell because they had no equity. In short, too many houses, no buyers (unless they had cash) and no mortgages; the exact reverse of what is happening today. But there was a silent factor in this Perfect Storm that few recognize: fewer First Time Home Buyers. Because of an event unrelated to real estate that happen 30+- years earlier – Rowe vs Wade. You see, in 2006 the average age of first time home buyer was 30 to 32 years old, so they were born in 1974 to 1976. With the legalizing of abortions, birth rates plummeted for 6 or 7 years, resulting in fewer first time home buyers starting in 1973 & 1974. Couple this with builders over-building leading up to 2008, and what happened is now history. See chart below
Now, lets fast forward to 2021, the average age of the first time home buyer has increased to 33 (National Association of Realtors®). Looking at the chart again, we see that an average of 3.8 million people were born in 1987 -1988. (That’s over 700,000 more than the 3.1 million average in 1974-1976). And, as the chart shows, the number of buyers will increase for the next 3 years, peaking in 2023 (Born in1990), just barely return to today’s levels by 2028 to 2030 and then peak again in 2040. So, as many &/or many more average age first time home buyers for the next 20 +years! And, this generation of home buyers has more wealth than first time buyers in the past!.
So what is going to happen? The silver lining is that in 2020, US home-builders were just beginning to deliver enough homes to satisfy an average years demand. The Mortgage crisis of 2008 – 2004 wiped so many builders out that we were almost 3 million homes behind by 2020. And except for the speed bump of COVID in spring quarter 2020, builders are now set to finally deliver at least enough homes to keep up with demand. If builders are able to keep up the pace and build what today’s post-COVID buyer desires, we may see some of the pressure on prices lessen. If you are a buyer, one can only hope. If you are a seller, rest assured, in my opinion, your value is safe for the foreseeable future.
The market continues to be hot and I was so busy with listings and offers that I could not get this post out for you to see. Hopefully you all received the separate emails for each listing, as I hope you are on the mail-out list! If not, reach out & I will get you on the list!! Hey, reach out even if you are on the list, I would love to hear how things are with you!
This duplex listing at 2018 S 233rd St Des Moines, WA 98198 (MLS 1729913) received multiple offers and went under contract in less that 2 days -At a price significantly higher than asking!. If you have a trophy property like this, wheteher it is an investment or your family home, now may be the right time to sell.
2020 started off as any ordinary year. We had made our New Years resolutions (& broken at least one!). We had pondered our goals and travels for the next year. Real estate was no different. The previous year had been strong, a slight sellers advantage due to low inventory and low interest rates. A slight seasonal dip with the promise of a strong spring market. Then WHAM! COVID took us all by surprise. The initial lock downs created havoc everywhere; work, school & home. In the real estate world, sales cancelled or stalled, open houses went away, potential buyers and sellers spooked. But after a short month or so the market changed. Buyers, eager for deals came out. People were now able to work remotely & needed space. Commute time was no longer as big an issue. The result was an exodus from the urban areas to the suburbs and beyond. Multiple offers, waived inspections, and other buyer concessions became not just normal but ‘required’ if you wanted the deal. This market change has lasted throughout the holiday season into January as buyers had no travel plans and little else to distract them. And no change is expected in the near future. According to a recent press release by the 23 county NWMLS, house & condo prices increased by 12.2% to $488,000 from December 2019 to December 2020. Single family homes set the pace with a 12.9% jump with condo’s far behind at 1.8%. This is no surprise as houses with more space are suddenly more in favor than their smaller counterparts. See below for more detail on your area, or reach out and we can chat more specifically about your area or home style.
year over Year change
23 County MLS
Source NWMLS – info deemed reliable but not guaranteed
Renters, Investors, First Time buyers – Read This!
An unexpected outcome of owners and renters fleeing urban areas in search of more space has emerged in the recent dropping of condominium prices. As quickly as houses in the suburbs and exurbs have shot up in price, the condominiums they have left have dropped in price. Even 30 to 45 days ago,
Ok, lets admit, 2020 has been a weird year. It started out like any other year; year end planning was done, trips were planned, goals were set. Then BOOM!
First came political wrestling, then COVID & shut downs, then George Floyd and the subsequent unrest, then more COVID, then fires just a little too close, then the election, then a Supreme Court judge dying, then more election upheaval and now more COVID & lock downs. Definitely a year of change and depending on how you are wired, either chaos or full of blessings.
As we enter the end of this tumultuous year, I encourage you to count your blessings and share them with those close to you at Thanksgiving. Here are some of mine:
My God & my country -I hope you love your God & our country as much as I do
My family – Starting with my wife Katherine & my 91 year old parents to our 4 kids & two grand kids, to brothers / sisters / nieces and nephews, I feel blessed to be part of their lives and grateful
Our friends – Both near and far; close or barely know each other; client, business associate or competitor, Katherine and I cherish each and every one of you. You are the reason we move forward in spite of the year, worry a bit and smile alot ! 🙂
So as we all celebrate Thanksgiving, from a safe distance of course, lets all reflect for a moment and let those who are important to us know it!
Quite regularly I get a call from someone I know that goes something like this…”I am looking at buying a house in _______ (name your state) and I meet this agent at an open house. We looked a few houses and we wrote an offer. Now they are asking me to do this and I don’t understand”. or … “they are not doing a good job, what do I do?’ or ??? You get the point. Something is not going right in a real estate transaction. Since I am not a party to the transaction and bound by the Realtor Code of Ethics to not interfere in other agents business, I usually can only console them and tell them it will all work out. I can ask a few questions, give a recommendation or two for them to take back to the agent.
But what I really want to ask them is why did they not call me and have me make a referral? Using both Coldwell Bankers internal Agent Referral platform and my numerous contacts, I could have found an agent with a good track record that fit the level of service they were looking for. I always call the agent and ‘interview’ them, see if it’s a good fit because hey, my reputation is on the line. But more importantly, when something comes up, I now have a right (actually an obligation) to pick up the phone and get some answers. I am a party to the transaction, I can ask to see a contract on their behalf. I can make a suggestion.
So, for those still reading, the main take-away here is even when you are buying somewhere else, call me and I can point you in the correct direction and / or make a direct referral. It will cost you nothing and give me the power to help you if needed.
Katherine and I are usually quiet when it comes to the causes we support. But Coldwell Banker’s recent corporate partnership with St Jude’s is one we want to shout about. St Jude’s is on our list of organizations we support yearly and now, with each home purchase or sale, we have committed to an additional donation. You can help by buying or selling with Kurt and rest easy with the knowledge that your trust in Kurt will also help a great cause.
After taking a COVID induced break this spring, the local real estate market has heated up and in September it seems to have gone over the top. As reported in earlier market updates, buyers have come out in droves and sellers have hunkered down. This created the ‘perfect storm’ for both price appreciation and market time. Buyers came out looking for deals and were armed with more buying power due to low interest rates. Looking for more space, they are paying more and reducing contingencies. Those few sellers who dare to sell, are getting more for their home.
As shown below, all local areas have seen double digit 12 month price increases and continue to show low time on market. As I look at these stats weekly, I will report that a good share of the gain has come since the lows reached in April and May 2020 due to COVID uncertainty.
What the future holds is anyone’s guess, but if you are a buyer, statistically, it will only get worse. Demographics show a wave of house hungry younger folks reaching the average first home purchase age and new home builders were just beginning to meet the annual demand before COVID. The shortfall that started in 2008 – 2009 will continue to move prices up. Sellers, on the other hand, have a bright future. Those fortunate enough to not need to buy a replacement home, or moving to more affordable digs, will benefit from sustained price increases for the near future.
Thinking of Buying or Selling?? Reach out and we can schedule a chat about your specific needs.