We always hear our grandparents say “back in the day, life was so different”. The way of living was different, the cost of living was different, and home-buying was different. The world is changing and if you don’t keep up, To find out how home buying has changed over the years we need to first compare how it was in the past and how it is now.
The real estate industry, especially for home buyers, has undergone some big changes and a few major upheavals over the past few years. Some of these changes are due to the advent of COVID, and others are just the result of natural cycles. Whatever the cause home buyers need to know what has changed in order to know what they will be facing so that they can be prepared. Here, then, is an overview of how buying a home in Seattle has changed over the past 5 years.
Inventory Has Decreased
One important way buying a home has changed over the past few years is that inventory has fallen. Thee are more buyers than there are homes for sale, that is, not enough product to meet demand.
Formerly, in what was considered a “healthy” real estate market, you’d find around six months’ worth of unsold inventory. “That means it would take six months for all the homes on the market to sell at the current sales rate. But unsold inventory nationwide was less than half of that in recent months, according to National Association of Realtors data, and even lower in sizzling markets, such as Atlanta.”
While this low-inventory phenomenon is expected to improve in the coming months, right now inventory remains low. And this has resulted in keen competition, multiple offers, and rising prices (which we’ll look at below). To find out more about inventory in Seattle, talk to a local agent at (206) 578-3438.
Competition Has Grown Fierce
In particularly hot markets, the competition is so fierce that successful buyers feel almost like sweepstakes winners. Nearly 50% of home sellers receive multiple offers – up from 40% during the dog days of the recession.
As we mentioned, buyer competition for homes, owing in large part to the low inventory, has grown pretty fierce. And anyone buying a home in {market_city] needs to take this into account.
Here’s how industry insiders explain it: “In particularly hot markets, the competition is so fierce that successful buyers feel almost like sweepstakes winners. Nearly 50% of home sellers receive multiple offers – up from 40% during the dog days of the recession.”
This keen competition has also meant more and more frequent offers above the asking price. And this in turn has resulted in fewer sellers taking the first offer they get.
Desirable Homes Sell More Quickly
And, as you would expect with low inventory and keen buyer competition, desirable homes sell far more quickly than they did just a few years ago. This is another important consideration when you’re buying a home, as well as another reason to work with an experienced Seattle agent.
Consider that formerly “available inventory would sit on the market for longer. Just before the initial recovery [from the last recession], a mere 22% of homes sold in less than two weeks; now, 28% of homes sell that quickly.”
Prices Have Risen Dramatically
Your parents probably paid around $80,000 for the house you grew up in. Nowadays real estate investors are paying twice that amount, if not more! Household income increased as well. According to the U.S. Census Bureau household income increased 127% from $23,618 in 1985 to $53,657 in 2014. So it comes to show that in past life was cheaper and incomes were low, making home values affordable.
Further, as we indicated, anyone buying a home is now likely to pay more because home prices have been on an upward trend. The rate of the increase in prices is slowing, but are still going up.
Home prices, according to the NAR, rose 14.7% in 2021, but across 2022 the price increase is expected to slow to 2.8% nationwide. “Other experts’ predictions vary, but the projected percentage gains are still in the single digits. Fannie Mae projects a 7.4% increase. Freddie Mac pegs it at 7%, and the Mortgage Bankers Association projects a 5.1% bump.”
So, however you cut it, home prices have gone up and will continue to increase. To find out about price trends in your market, contact a Seattle agent at (206) 578-3438.
The Millennials Have Arrived
Buying a home in Seattle has also changed over the past 5 years because of the huge influx of millennials – now the “biggest group of first-time homebuyers” – into the buying market. Two salient changes stand out . . .
First, walkability has become a hugely important concern. Walkability involves having “ a mix of common daily shopping and social destinations within a short distance. . . . [H]omes with above-average walk scores fetch a premium of between $4k and $34k in typical metro areas.”
Second, home shopping and buying a home have gone largely online, with the Internet becoming “the tool of choice for house hunters.” Of course, home buyers used the Internet before, but “the way property shoppers use the Internet has changed.”
“[M]any homebuyers already have a shortlist of specific properties that pique their interest, culled from [various online venues]. There’s still plenty of need for agents and brokers, but in many ways, their role’s main focus has evolved. They’re no longer the sole information providers and curators. Their skills as experts, negotiators, and facilitators are in as high demand as ever.”
Online Mortgages Have Become More Common
Another way buying a home has changed over the past few years has to do with mortgages. In the past, buyers would go to a bank or other brick-and-mortar lender to find out about mortgage options and to apply for a mortgage. But that’s not so much the case now.
“Today, the younger generation turns to the Internet to shop around for a mortgage. The things this generation loves about the internet are also true of the online mortgage industry. They love simple user experiences, quick digital communication, and on-demand service for when they’re ready to buy.” It’s no surprise, then, that more than half of the top mortgage lenders are now non-banks.
A Good Seattle Agent Is More Important
In light of the changes laid out above, perhaps the most important change in buying a home in Seattle over the past 5 years is how much more important a good local agent has become for buyers. Especially with low inventory, keen competition, and rising prices, a local agent’s expertise has become critical in such a market. So if buying a home is now your goal, be sure to contact us today at (206) 578-3438.
