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Reflecting on 2020: How has real estate changed?
When COVID-19 first came to Oregon, most of my clients put their real estate activities on hold. It really looked like it was going to be a few weeks or months of wait-and-see. I did not expect to sell much until post-pandemic, whenever that might be. My expectations could not have been more wrong.
Once it became clear that the new normal of quarantining, working from home, and online schooling were here to stay — at least for a while — housing needs changed in big ways. With multiple adults and kids all trying to do their school and work in the same space, houses became too small. With commuting concerns out of the picture, the suburbs got a lot more attractive. And with interest rates at all-time lows, buyers flooded the market.
With little else to do in their spare time, homeowners renovated, remodeled, and beautified their space. I started my home gym, since going to a gym was no longer a safe option. I wasn’t the only one — some of the equipment I ordered was backordered for upwards of six months!
The housing gap increased, though, as many low-wage workers lost their employment, and had to wait months for a response to their unemployment claims. New laws came into effect to allow most people to stay in their homes and get nonpayment of rent or mortgages deferred or forgiven. This has proved to be a finger in a dam, and a problem that will continue to demand government attention moving forward. This particular set of circumstances made investment properties a lot less attractive, but if those buyers left the market, it doesn’t show in purchasing trends.
Homes regularly get multiple offers and sell well above their asking prices all over the Portland metro-area. If you’re looking to sell right now, you’re in luck. That’s not to say buyers are hopeless, though. You just have to be willing to compete. If a new listing hits the market, be prepared to pay above the asking price — sometimes by a lot. Understand that it may take a few tries before you write an offer that gets accepted. But the interest rates are in buyers’ favor, and as specific location matters less and less for professionals who work mostly from home, more buyers are coming to our neighborhood — because a lot of people who have the choice of living anywhere choose the Pacific Northwest. Can you blame them? This incoming migration trend signals that home values will likely continue to climb.
There are perks for buyers and sellers in a market like this, and now more than ever, it’s important to find a home you love — you could be stuck inside your walls for a while.
A Look at Current Market Conditions
As winter comes to a close in the Northwest, the real estate market is gearing up for another busy spring and summer season. Will it be as hot as 2016? What does it mean for buyers and sellers? Let’s take a look at some telling trends.
Washington County Market Conditions
The above graph represents real estate sales in Washington County, Oregon, from December 2015 through February 2017. As you can see, the days on market get shorter in the summer months, meaning sales are moving quicker then — but even in the winter months, 33-40 days on the market is not exactly very long. Things are still moving very quickly.
The top line indicates the average percentage of sale price vs. original list price. This number has been steady, right around 100%. That means for every house that sells below its asking price, others are selling above. This is great news for sellers — if your home is priced correctly, you probably won’t be waiting long to get offers, and the market is so competitive that buyers will likely be paying the full asking price, if not more, when you close the deal.
If it’s good news for sellers, does that mean bad news for buyers? Not necessarily; but buyers must be aware of the current market conditions to avoid frustration and heartbreak.
The market is moving FAST. That means you need to stay on top of the listings as they come out. As your Realtor, I check the listings at least once daily, and alert you as soon as something new pops up matching your preferences. If you see something online that interests you, you need to move quickly. Many homes receive offers within their first few days on the market. If you’re not ready to check out a home as soon as it becomes available for sale, it could go pending before you get a chance to see it. What if you’re just not available right away? No problem — I can preview it for you, and communicate with the sellers to let them know you are interested. They may give us some extra time to tour it and get an offer in, or I can write an offer for you before you see it, with everything contingent on your approval once you do get to view the property in person.
When it comes time to make your offer, keep in mind that sales are averaging 99% of the asking price. Many sellers receive multiple offers — I’ve seen some with over 20! — so you need to be putting your best offer forward. Do not expect to be able to lowball your offers in a market like this. I’ve had lots of clients say “We’ll start low, and see what they counter-offer.” But what happens is that the seller doesn’t counter-offer at all — they pick from one of the other, better offers they’ve received. Unless the property you are considering has already been on the market for several weeks, you need to plan for a competitive offer situation. Make your best offer from the start. What is the home worth to you? If you lose the contract to someone who offered more, are you going to wish you’d offered more, too? Offer what you are willing to pay. If we find issues during the inspection or appraisal, we can always negotiate fixes or price reductions then.
It’s true that buying real estate in the Portland area has become more expensive and more competitive in the last few years. The trends have been steady for the last two years, and there are currently no indications of any major changes ahead. Savvy buyers with savvy agents can negotiate even the toughest market conditions. The key is simply to stay informed. It’s my job to keep you on top of the market conditions and to help you make the best possible real estate deals for you. Contact me today for more information. I look forward to working with you!
