buyer’s market

Could Buyers Be Ready To Get Off the Sidelines?

Falling home prices have sent many would-be buyers to the sidelines. In many cases, record low interest rates and rising rents may prompt some of them to take a second look at buying.

Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security. But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice.

Until recently, home ownership was no bargain compared to renting, according to his analysis. A 33 percent drop fall in home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.

But that analysis doesn’t include the total cost of owning versus renting. A full accounting includes closing costs, maintenance, insurance and property taxes, tax savings from mortgage deductions, gains or losses from home equity, among other factors. Renters have to think about broker fees and future rent hikes. Both have to make assumptions about future trends in housing prices and rents.

When you take those factors into account — someone who plans on staying put for seven years would come out ahead by about $9,000 if they bought a median-priced home rather than being a tenant in a median-priced rental, assuming that rents keep rising by about 3 percent a year and that house prices stay flat in 2012 and 2013 and begin rising in 2014 at about 3 percent a year.

If you would like to investigate this more, shoot me an email or call 206-713-3244

What’s Wrong With This Picture?!

Buyer’s Market! That is what the majority of consumers believe we are in… a buyer’s market! Though that may be true in most areas, the statement must have context. Let’s take a look.

The amount of homes available on the market in King County is running at 4.2 months (based on closed sales). In other words, if no other home came on the market, and buyers purchased homes at the present rate, there would be no homes left after four months.

Traditionally, markets have been labeled as Seller’s (3 months of inventory or less), Buyer’s (6 months of inventory or more), and finally, balanced markets (4-6 months).

Below is the inventory in King County based on closed sales.

What doesn’t get identified is the quality of the inventory. Parts of King County, particularly areas of the Eastside are very short on inventory. What is presently on the market is sometimes less than pristine. To exacerbate the low inventory problem, distressed properties are making up more and more of the inventory pie.

Below is the inventory in the 98008 zip code based on closed sales.

The West Lake Sammamish area (98008) in Bellevue has 2.4 months of inventory. In most consumer’s minds, this would qualify as a “seller’s market”. Only 34 of the 71 homes available are not short sales or bank owned. That is 50% of the market!

Are we really in a “balanced market”? When buyers, who are eager to pull the trigger on a home, are stymied due to the lack of supply, can we still call that a balanced market?

What consumers need, are well priced, great conditioned homes that can be sold with traditional buyers and sellers (not requiring bank approval or other considerations).

If you know of someone considering making a move, I would love the opportunity to sit down and talk to them.