The number of homes available for purchase in December 2017 was exceptionally low in Issaquah and Sammamish, even by “typical” end-of-year standards.
We have buyers, yet we have limited properties to show them. The limited number of homes available for sale heightens competition among buyers and, as a result, we’re seeing multiple offer situations.
In spite of the low inventory, the median sale price increased in both Issaquah and Sammamish: a 3 percent increase to $699,000 in Issaquah from November to December 2017, and a 9 percent increase to $1,035,000 in Sammamish for the same period.
Investors are a large contingent of the current buyer pool, yet high prices are compelling many of them to look further away from job centers. Over the past month, brokers in my office have sold a number of multiple unit buildings in areas where square footage is more affordable such as Kent and Puyallup. With rents at an all-time high in most of the region, investment properties virtually pay for themselves.
During December, many brokers in my office were intentionally focused on working with sellers who wanted to list properties in the new year. This bodes well for a possible uptick in homes for sale in the firsts few months of 2018. Many of our prospective sellers are downsizing and taking advantage of their substantial equity to pay down or pay off a new, smaller home. Many of these prospective sellers are baby boomers with grown children who feel the extra bedrooms in their home are unnecessary.
With market conditions favoring sellers right now, many homeowners feel incentivized to list their home and hope to receive a premium price.
Regarding last month’s federal tax reform, the impact for most buyers in the more affordable and mid-price ranges is minimal. For specific advice on how it relates to your circumstances and especially if you’re looking to buy or sell in the luxury market, I recommend consulting a tax professional.
The inventory shortage is especially severe in townhomes and condominiums. Due to high rents, many builders and developers are choosing to rent units as opposed to selling them. We are hopeful that some of the recently constructed buildings, which were built to condominium standards, will be converted from apartment to condominiums in the near-term future. These units would be especially appealing to millennial buyers, many of whom would be first-time buyers.
The reduction in available inventory is typical for the winter real estate market. In terms of the outlook for the year ahead, I anticipate interest rates will go up slightly, but not to the point of negatively impacting a buyer’s decision to purchase. Sometimes a slight uptick in rates brings a flurry of individuals with a “buy now” attitude into the market with the hope of locking in a lower interest rate before it goes any higher. Due to continued job growth and the strength of the regional economy, my team and I feel 2018 will be another landmark year for real estate.
Karen Lindsay is a managing broker for John L. Scott.