As 2017 is coming to a close, it is time to look towards 2018. I thought I would discuss what we can expect in 2018, whether it will be a buyer's or seller's market, inventory expectations, how buyer's can prepare, home prices, interest rates, and the Seattle job market.
Buyer's or Seller's Market?
As we have seen for the last three years, the market in Seattle has been a strong seller's market. As of right now in October, the market is still quite competitive. We may not be seeing as many multiple offers when compared to the Spring (typically seasonal), but it is still happening, 56% of properties sold above list price last month in Seattle. I expect this trend to continue as we head into 2018. With inventory at an all time low, it is tough to argue it will not be a sellers market. Based on the numbers, it will continue to be strong seller's market for a few more years. I personally predict the tide will start to change in 2020. *I will touch on why 2020 in another blog post to come*
Inventory
Regarding inventory, as I mentioned above, it is still at an all time low in Seattle. The graph above shows Seattle inventory for the last 5 years. Year-to-date, 2017 has been the only year in the last 5 years to stay at or below one month of inventory for every month.
To better understand the graph let me explain the idea of "months of inventory". For example, "six months of inventory" means that if nothing were to come on the market anymore, all the inventory would be bough up within six months and nothing would be left on the market. Six months of inventory is seen as a balanced market for buyers and sellers. Taking that into account, you can really understand the affects of having such low inventory. In September we had one month of inventory, meaning if nothing new was listed, within 30 days there would be no houses to buy! A classic supply and demand problem. Of course there are other factors too, but this is the foundation for why the Seattle real estate market is the way it is.
In any case, I do not predict that the inventory will be much different in 2018. With that said, I do expect inventory to go up a little next year as we start to see more town home projects being completed as well as high-rise apartments. As more housing gets developed it will help ease the inventory problem.
How you can prepare as a buyer
Considering inventory is low, a seller's market, cash buyers, and multiple offers, buyer's have to make sure they are fully prepared to be successful. I encourage my buyers to meet with me well in advance to start planning, sometimes up to 12 months. It is extremely important to educate yourself about the process and what you are taking on. Considering that this is your most financially impactful transaction of your life, it certainly helps to start the conversation early to plan accordingly. It is already stressful enough to purchase a new home/investment, why not make easier on yourself and plan ahead! The foundation of preparation are your finances. If you are getting a loan, seriously consider being underwritten by a lender. There is almost no downside and you can be confident you qualify for the loan. This also shows the seller that you are as solid as possible and won't have to terminate the purchase because you cannot qualify for a loan, thus making you more competitive.
I will discuss home prices, interest rates, and job market in "Looking To 2018 - Part 2".