Seattle is fast becoming known as one of America’s hottest housing markets and home prices are reflecting the coinciding increase in demand. The average price of a single-family home jumped 12% to 15% in a year-over-year comparison of S&P CoreLogic Case-Shiller Home Price Index. This means a house that sold for $550,000 in October of 2016 would be listed at over $600,000 in October of 2017.
Available houses in Seattle are not only getting more expensive but are becoming increasingly difficult to find. Geekwire discovered a boarded up, run down house in the city’s Ballard neighborhood listed at a whopping $595,000 on Redfin. When Geekwire reached out to Redfin, they learned the house had multiple pending offers and was estimated to sell for $626,331. High priced tear downs like this one are often the result of a low housing inventory.
“With housing supply in Seattle at historical lows, the pressure placed on buyers to make tough, risk-ridden decisions is amplified. Brokers have to make sure their clients enter the market with eyes wide open,” said Tyler McKenzie, owner and designated broker of John L. Scott Real Estate West Seattle.
While this spike in cost and drop in availability makes it an ideal time to sell in Seattle, it can be rough on first-time homebuyers who aren’t bringing the profits of a home sale to the closing table. Additionally, many first-time home buyers are up against cash offers which adds another layer of competitiveness.
“I recently succeeded in helping buyers purchase a home for which there were ten competing offers. On the day our our pre-inspection, three others were underway,” continued McKenzie. “My role as a broker is to help clients make informed decisions concerning offer strategy. In this market, that may mean waiving contingencies a balanced market would not require of them.”
Challenges like these may be why we’re seeing a drop in the number of first-time home buyers. Not just in Seattle, but across the country. Typically, first time homebuyers have made up 40% of the nation’s home buying population. However, according to a CNBC article and National Association of Realtors’ (NAR) annual Profile of Home Buyers and Sellers report, that market share has been in decline and was sitting at 34% in 2017. The fourth-lowest share in the survey’s 36-year history. NAR’s Chief Economist Lawrence Yun shares that the persistent inventory shortages have also played a part in undercutting many new buyers chance of become homeowners.
So how can first-time home buyers increase their odds in hyper competitive real estate markets like Seattle?
- Be patient. It’s very possible that you may not be purchasing the first, or even second house you place an offer on. But you’ll get there if you stay with the process.
- An experienced agent is your greatest ally in tough markets like Seattle. When homes are selling well above asking price a REALTOR® can make the best use of your time and money by ensuring your search is focused on attainable properties.
- Take a second look at your “have to have” list and decide which items can be reclassified as “would love to have” so your search criteria is realistic.
- If possible, put in an offer with a downpayment that exceeds the average 20% and be ready to let go of some contingencies you might otherwise insist on.
First-time buyers should try not to be intimidated by the market. While buying a home in places like Seattle might mean more hurdles, it is still an attainable and worthwhile goal for prospective homeowners.