Guidance for The Movement in the Real Estate Market

Competition Among Homebuyers Declined.

Statistics and article provided by Redfin research department – October 22, 2013

 As I stated in previous blogs, market data is showing that competition has slowed, and as competition has slowed, fewer homes have been sold above asking price. September marks the sixth month in a row that home sales have declined when compared to the same month last year. What is really interesting about this article are the statistics given regarding bidding wars on Redfin offers. It states that across 22 markets in September, 58.3 percent of Redfin’s agents faced bidding wars when submitting offers. That is a drop from 60.5 percent in August and from a peak of 76 percent in March. It is very interesting reviewing these statistics because it demonstrates how competitive the market was earlier in the year. There were many buyers that became frustrated with the amount of competition that they abandoned buying a new property and have yet to return to the market.

This article identifies Orange County as being the area with the largest percentage drop over a one month period. It states that 72.2% of all homes faced competition in September which was down from 81.8% in August. Seattle experienced the largest rise in competition with a bump from 49.2% to 57% 

The two markets that continue to have offers averaging above asking price are San Francisco and Seattle. On average, homes in the San Francisco Bay Area are selling at 7.3% above asking price and Seattle is seeing prices at 1.4% above the asking price.

Contingent offers have also seen an increase in popularity. Winning bidders who used this strategy in the San Francisco Bay Area accounted for 7.1% and 5.6% in Seattle. We are constantly seeing the market change from a buyer’s market to a seller’s market, and sometimes it could change multiple times in a year. That’s why it is important that you work with an agent that continues to educate themselves on movement in the market.

As we have also experienced with our clients, this article states that the top winning strategy is to include a cover letter that gives personal information of the buyer to add a personal touch to the offer. Table 2 of the article gives examples of the features included in the winning offers. Notice that all markets have different percentages for all features.

As we have heard in many news reports, they are expecting the government shut down to further soften the real estate market and lower their confidence which could prevent them from entering the market. Areas like Washington DC that has a large number of government employees may be impacted more than those with non-government employees. The shut-down will also affect potential buyers who are non-government employees and do not have a lot of confidence in experiencing continued economic growth. Many are also hesitant to enter the market at this time. Although the government shut-down has ended, the deal only funds the government through December 15 and lifts the debt ceiling through February 7, 2014.

Although it may not be a good time for everyone to invest in a property at this time, there are many of you that may have a financial appetite for new investment property. For those that do, with the market softening, it will become easier to find and purchase new lease investments. If you are someone that is in the market for a new lease investment, I would love the opportunity to work with you in finding a new investment that is right for you.

by Redfin research department – October 22, 2013 | view original article...