11 offers and 38% above the list price… incredulously, these are the averages for my single family home listings this year. By any historical measure, this is not a normal spring market, even for our area. In fact, in my 20 years in the business, I have never seen anything like this.
The sobering reality for anyone wanting to move here is that inventory is at record lows, fueling intense competition, driving up prices and compressing marketing periods. In fact, due to COVID real estate protocols, it is not unusual for prospective buyers to be limited to only 30 minutes to tour a property before writing an offer. This is not a market for the weak of heart.
What is important to understand is that we have been and continue to be in a seller’s market and there are no signs of things changing anytime soon. Sellers remain hesitant to part with their homes given the uncertainty of being able to find a replacement, avoidance of a large capital gains tax, worries about the resolution of COVID and historically low costs of ownership including record low mortgage rates. Buyers, flush with cash from recent stock market gains, are increasingly disenchanted with crowded urban living and fear that mortgage rates will be going higher. What we are left with is virtually no housing for a growing and well-financed group that wants in.
Unfortunately, anyone that has been on the sidelines waiting for prices to cool has found themselves priced out of our market. Winning bidders on properties often have substantive down payments, no contingencies and a financing package fully underwritten. To give you a sense of just how competitive it has become, a 785 square foot cottage offered for sale in the Laurel District is in escrow for close to $1,000,000… an indication of what may soon be the minimum price for a starter home in our local market.
What does this all mean for someone who wants or needs to be in today’s market? If you are a potential seller, there has never been a better time to realize top dollar for your home at nearly every price point. In my view, homeowners are receiving future prices today.
For prospective buyers beginning to evaluate the area, utilize online resources with the assistance of a Realtor. Given the limited number of showing opportunities for active listings and the speed at which they go into contract (usually a one week marketing period) , it is not unusual for in-person showings to be reserved for pre-approved buyers only.
If you have decided you are ready and are just waiting for “the one”, fasten your seatbelt… it will be a fast and often scary ride. Do your homework ahead of time. Begin by getting pre-approved with a reputable local lender and even better, get through the underwriting process. Focus your research on homes that are priced 20-30% below your budget. Review 3D tours, photos, videos and floor plan drawings online. If you are local, drive and walk through the neighborhoods of prospective properties at different times of day. Use the time during an in-person showing wisely… it may be your only chance to see the property before the offer date. Finally, should you decide to make an offer, be prepared to stretch to the top end of your budget with no contingencies and often within days and sometimes hours of seeing a home for the first and only time. If none of this sounds appealing, you’re in good company.
It is my sincere hope that we soon see more balance in our local real estate market as the uncertainty surrounding COVID begins to dissipate. Until then, feel free to contact me to discuss successful buying or selling strategies in today’s challenging environment.