Buyers! I know you’re exhausted; I know that the last few years have been a challenge, to say the least. It’s been hard to watch so many qualified, ready, able, and willing buyers losing home after home, even while putting their best foot forward. The number of devastated buyers that have finally sidelined themselves, feeling that no matter what they did, homeownership just didn’t feel like a possibility due to the incredibly competitive market…NOW IS YOUR TIME!
I understand it’s hard to jump back into the market after years of trying and failing, being one of 20+ offers on every home you write on. Getting the phone call, “I’m so sorry, the sellers selected another offer, but I appreciate your interest,” it’s downright devastating! But, the market is shifting!
In the last five months, we have seen loads more inventory than we have for the previous few years. The Eastside currently has 1.6 months supply of inventory compared to .03 months’ supply of inventory a year ago; that’s a 411% increase. More inventory brings more options for buyers, more options mean less competition, and less competition means you can now take more time to identify a home that meets all of your needs. This is a huge step forward for buyers.
Another fantastic perk in a changing market is the acceptance of contingencies in offers again. Gone are the days of writing an offer hundreds of thousands of dollars over asking, waiving all your rights, releasing a sickening amount of earnest money upfront, and having zero ways to back out of the contract should you have a financial hardship, an unexpected change to your future plans or even just cold feet. The ball isn’t completely back in your court, and there are exceptions to every rule, but as the market continues to stabilize, buyers see an advantage that they haven’t seen in years!
So, with talks of a looming recession, rampant inflation, global unrest, and interest rates increasing faster than we can keep up with, why is now the right time to buy?
It’s important to know that a recession doesn’t necessarily mean a housing crisis, especially in our area. We are safeguarded in our neck of the woods; we still have many big tech companies in the area and many new startups. The Greater Seattle housing market was just ranked the country’s second most stable housing market, only trailing Utah. Google, Meta, and Amazon, among many others, continue to grow their campuses and hire more employees. Although there’s a chance that we may see a slight dip in prices over the next six months to a year, this is not a certainty. We know that interest rates are on the rise, and we are seeing rates that we haven’t seen since the ’90s, and it doesn’t seem like they’re slowing down anytime soon. Sure, if you wait for a recession, you may be able to find a home at a lower price point, but the interest rate at that time will likely offset the cost savings, and your payments will end up being higher than they would be today. The cost of waiting a year is significant. When looking at the same house in August of 2021 and August of 2022, with the same median price of $1.3MM, with an interest rate of 2.84% in 2021 and 5.88% in 2022, the principal and interest payment rose from $5,369/month in 2021 to $7,430 in 2022, a monthly increase of $2,060. This increase will be even more significant a year from now as we continue to see rates rise. Whatever cost savings you may see (if any) on homes in the next six months to a year, the increase in interest rates will likely counteract that and make it minuscule at best.
It is common to want to wait things out and see what happens. It’s human nature not to want to feel like you’re overpaying. I have been in this business since 2015 and have had more clients than I can even count who tell me that they’re going to wait for a correction in the market before they decide to continue forward on their homeownership journey. Many of these same clients have reached out years later to tell me that they should have heeded my advice and purchased when they were looking years before because they are now completely priced out of the market and will never fulfill their goal of homeownership. The same can be said from the other side. I have many clients who felt like they overplayed years ago and would never see a return on their investment. Many of these same clients have been shocked to find out that the house they felt they overpaid for years earlier has now earned them hundreds of thousands to even millions of dollars in equity!
Many people don’t realize that you don’t need to have a 20% down payment to purchase; there are home loans out there for everyone. FHA loans only require 3.5% of the purchase price, VA loans for active and retired military require zero down, and even government-backed loans require little to no money down. Want to speak more in-depth about becoming a buyer in today’s market? I would love to chat!