Sell ‘Em if You Got ‘Em
Well, the end of the first quarter has come and gone and, if you were involved with the market at all, there were no surprises. Feb’s trend of increased pendings turned in to March’s closed sales and March’s pendings jumped by 38%. In fact Pended Sales have more than doubled during the first quarter of the year.
It is fascinating to me to see that Pended Sales in March were actually higher than the total number of homes on the market. Homes in King County are selling almost twice as fast as they are coming on the market.
Now, here is an interesting perspective. Look at the trends by quarter of the last 12 years:
Sold homes and Pended Sales are not quite at pre-recession levels, so this rate of sale is not unheard of. In fact, it is pretty normal from a long term perspective.
What is skewing the market so radically is the lack of inventory. As mentioned last month inventory is at a 12 year low. (I posted a fantastic analysis from Inman last week http://www.inman.com/2015/04/02/why-is-housing-inventory-so-low/#.VSASwZ9G11o.facebook).
The proportion of sales:available inventory has not been this high for at least the 12 years of data available here.
Regardless of the reason what it ultimately means for the investor is that you can expect inventory to stay tight. Investors that can find ways to bring inventory to market should be rewarded for their efforts for the foreseeable future in King County.
In my counseling of clients I have been letting my buyers know that this spring and summer are going to be increasingly competitive and will require a well thought through plan before writing an offer. Although, a well-executed plan can mitigate much of the damage (every client I had in the 1st Q got the home they bid on with none paying more than 3% over list), I am letting people know that if they can wait until fall they might gain a seasonal advantage as well.
In my consultations with people considering selling I am recommending that they get to market sooner rather than later. There is no way of knowing when the rise in interest rates will begin to manifest itself by dampening buyers’ enthusiasm. Seasonally you can expect more inventory to be added to the market as the summer goes on. Wait too long and you could be selling into increased competition.
Pricing correctly and marketing listings strategically is no less important in a seller’s market. Finding the sweet spot that attracts the most buyers and managing the offers correctly can give the savvy seller way above average returns – King County average was 100% of list price in the 1st Q – our sellers averaged 107% using some fairly simple techniques.
As always, this analysis is a very high level overview and is for King County as a whole. If you work other counties, or specific neighborhoods and would like to see an analysis customized to where you work feel free to drop me a line.