December 2020 stats
The demand for homes remains on the rise. There was a substantial 39.3% increase in new homes coming on the market during December 2020, compared to the same month a year ago, for the entire NWMLS system. King County had more than a 60% increase in new listings compared to a year ago. Buyers eager to own homes quickly absorbed this added to inventory.
A total of 5,260 new listings came on the market. This was the most extensive new-listing activity since 2010 when the number was 5,460. Yet, demand is even higher. Across the NWMLS, for single-family homes and condos that closed last month, prices jumped nearly 12.2% from a year ago, increasing from $435,000 to $488,000. The averages are different on the Eastside. In Kirkland, the average home price is $1,031,089. In Redmond, the 98052 zip code average home price is $841,592 and in the 98053 zip code, this number is $895,671. In Sammamish, 98074 zip code the average home price is $922,461 and in the 98075 zip code, this number is $1,057,799.
Seller’s Market?
Some believe that it is the best of times for sellers and a very challenging time for buyers. Sellers can be very picky because there are almost always several eager buyers resulting in multiple offers. Buyers are being forced to add value to their offers in ways other than price. This phenomenon is not without its challenges. For example, suppose the appraisal comes in lower than the purchase price. In that case, the buyer may have no option other than to drop out because the lenders lend based on the lower of the appraised value or the purchase price. Due to multiple offer situations that often include escalation clauses, buyers find themselves stretched to the maximum. They may not have the funds to cover the shortfall due to the lower appraisal and complete the transaction. This is one of the significant factors causing significantly higher than average percentages of transactions to not close and the property to come back on the market. In some states, this percentage is as high as 50.
Where are we headed?
In the meantime, in the real world, millions remain unemployed. December 2020 also saw almost one million new unemployment claims. Close to ten million Americans remain unemployed. Mortgage forbearance agreements will eventually come due. The longer that takes, the more severe will be the pain. This also applies to freezes on eviction due to non-payment of rent. 44,000,000 Americans rent, across the country. A significant percentage have been challenged to make the rent payment. The national eviction moratorium will end on March 31, 2021. We have never faced an event like this before. It is difficult to predict how the real estate markets across the country will be affected by this phenomenon.
All Real Estate is local.
It continues to hold that all real estate is local. If you purchased in a robust neighborhood and acted prudently (my clients know that I work hard to help them do just that) and did not pay too much, the impact you might feel will be minimal. One could not overemphasize the need for having a seasoned and knowledgeable broker represent you if you were to list your home or were in the market to acquire one.
I lived through 1987 as an investment advisor. I saw the 2008 financial collapse as a mortgage banker, and now, I devote most of my time to the residential real estate market. I can say one thing with confidence. When there is a financial collapse, it hurts many people, and it takes time to recover. The financial steps you take around such events have a long-lasting impact. You must become extra cautious, equip yourself with the right information, and enlist the help of those in whose expertise you feel confident.
If you are a buyer, you will benefit from my book, Buy Your Next Home With Confidence. Pick this up at Amazon.
This book has crucial information about:
- buying a home
- essential factors you must consider
- how to find a home that meets your needs and desires
- how to make an attractive offer
- how to negotiate successfully
- how to easily wade your way through a mound of paperwork
- and many other valuable tips.
This book will enable you to buy your next home with confidence.
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