January 30, 2020
When I opened up my web browser this morning to check the latest real estate news, the headline blaring back at me stated, “PENDING HOME SALES SKID 4.9% in DECEMBER.” If I didn’t know the market and I didn’t go beyond the headline, I’d probably think this was bad news. My thoughts might turn to “Oh, no, people aren’t buying homes! We must be heading toward that “bubble” so many people are talking about!” (As a matter of fact, I’ve had a few people recently ask me about “the bubble.”) And while the headline is technically correct, it’s always important to know the reason behind things.
First, there is not here. 4.9% is the national number and with a nation as diverse as ours, there is certainly going to be a wide range. Next, then is not now. Just looking at the difference between December and November home sales doesn’t tell me much. In fact, if you just take a look at King County, pending home sales (transactions that are under contract but haven’t yet closed) between November and December dropped by a whopping 24%! Closed sales, on the other hand, dropped by less than 1%. We can also surmise that, in general, home sales do slow somewhat in December since people are more focused on Christmas parties and travel than buying a house, which means it usually makes more sense to look at year over year trends, which, in King County, stand at 3.02% for closed sales and 7.23% for pendings. (Just to reiterate how different numbers can tell wildly different stories, listings year over year are down 38.75%!)
What’s more, while statistics for January are not out yet, anecdotal evidence has shown that we started the year off with a bang, with several agents reporting a return to multiple offer situations, many of them above asking in some cases, on listings that had sat on the market for months. Yes, people are ready to buy in 2020 and with interest rates under 4% and no sign that they’ll increase this year, people will continue to be ready to buy.
So what does this all mean? If you’re a seller, there’s not need to wait for the start of the traditional selling season in March/April. If you want to sell, let’s do it!
If you’re a buyer, well, the news is not as good, especially in our region. Amazon and other businesses continue to add jobs at breakneck speeds, especially on the Eastside as fears of a head tax in Seattle loom large. (Amazon has leased 3.6 million SF of office space in Bellevue and is on track to hit more than 5 million SF by 2024 for the estimated 25,000 new workers they will hire.) Furthermore, builders are unable to come close to demand with only 4000-4500 building permits projected this year compared to an estimated 8000 new families moving in to the region. All of this is naturally having an effect on how long people are staying in their homes, up more than 100%, from an average of five years to almost 11. All that said, people still have to move which means new houses are constantly coming on the market. It may mean you have to look farther south than you’d hope, but with rents rising as well, it also makes sense for people to buy.
My managing broker actually said something profound last week that sums it all up. Unless you’re an investor, buying or selling a house should be a lifestyle decision, not a market decision. If you’re happy where you’re at, stay in your home. If you want to move, move. The market is always shifting, and as long as you see yourself staying in your new home for three years or more, it almost always makes sense to buy.
If you’d like to sit down over a cup of coffee and dive in to your own personal situation to see if it makes sense to buy or sell at this time, give me a call. I’d love to help!
