The Seattle area real estate market, like a lot of parts of the country, has been growing lately. A lot. Frankly, it’s pretty nuts. Bidding wars and waived contingencies are the norm these days, and it’s not healthy. (Unless you are downsizing or moving somewhere less expensive. In that case, good for you!)
So now we have a problem: Thousands of people moving into the area each year, many of them for well-paid tech industry jobs. The demand pushes prices up because there’s a lack of supply. Few new homes are being built–land is expensive, and labor to build homes is also in high demand. Many would-be move-up buyers (the folks who are now outgrowing their first home) aren’t able to move.
Us Gen-Xers who bought our first home during the heyday of the last bubble are now able to sell. (Yay!) And maybe actually make some money. (Even better!!) But then…where to go?
The natural balance of things in real estate world are definitely out of whack. What would happen in a more balanced market would go something like this: The older generations would downsize. Families with older kids would be buying those homes, freeing up their first homes for younger families who find they need more space.
What’s actually happening goes like this: Many Baby Boomers are deciding to stay where they are longer, maybe they’ll just remodel. Or they recently refinanced and aren’t wanting to sell yet. An influx of newcomers are competing for the low supply. Would-be move-up buyers aren’t finding anything they want to buy at these rapidly-rising prices, so they stay. They probably remodel, too. (Now competing for the limited pool of labor).
All this is not even considering things like how we feel about the economy in general, the upcoming election, and whatever else happens to be going on in the world and how macroeconomics affect regular people who want to buy a home!
Where Will it End?
I wish I knew! Something will shake loose eventually. It always does. Much like death and taxes, real estate is always a cycle. Sometimes, part of the cycle sticks around longer (like the post-bubble recovery). Sometimes it’s quick. (Like how fast prices have risen in the last 2 years). Do you remember when the market was “healthy” in the last 5 years? Me neither. It was too quick. Seemed like we went from all sellers, no buyers, and rock-bottom prices to all buyers, no inventory, and massive appreciation overnight!
Just Remember This…
Don’t just “wait for prices to go down” if you’re considering a move now. They won’t. The appreciation will slow as the market cools, and we’ll see homes sell for what they are listed at. There might be some “deals” again as overpriced properties sit and end up selling at a discount. But certainly don’t sit around waiting for the bottom to drop out like it did in 2009-2010.
You’ll just find yourself, a few years from now, wishing you had made a move when interest rates were lower and houses were “cheaper”.
Do what you need to do. If you need to move, work with your agent to find a strategy that works for you and where you are in your life, job, etc.
It’s the fear that’s holding people back right now, more than anything else. Don’t give in to the fear. A move might take a little more work and crafty strategy now, but that shouldn’t stop you. And maybe a few more people making a bold move will be just what it takes to get this market moving again.