If I Had a Crystal Ball

Last week I was standing at one of my kids’ afterschool activities watching my trio doing their thing, Max fooling around blowing off his afterschool steam, my unathletic Magnus trying to avoid doing anything and Mia putting her best foot forward as always. I was making hand signs toward my boys through the glass, hand signs to say, “start working” and “cut it”. Another mom joins me, and we talk about the kids and school and mom stuff until she finds enough courage, or maybe she’s just sure enough about me being whom she thinks I am; “You’re a real estate agent, aren’t you? You sold the big house with a pool around the corner? I bet it went way over listing price!”  The answer to all her questions is yes. Yes, I am a broker. Yes, I sold the big house, and yes, it sold way over list price and we got 10 offers. But that was in May. Now we’re in December and many things have changed.

She goes on, she tells me they had listed their home, but it didn’t sell. They pulled it off the market for the holidays as living in a home that is for sale is exhausting. I nod to agree. We’ll try again in spring she says. I answer her questions, we talk about the market and I tell her my views on what the future will bring. I assure her that I’m sure her broker had done a good job setting the price and that is not about that, it’s about the current reality. Then comes the next question, the one that no one knows how to answer, the one about what will happen come spring.

For the first time I really wish I would have that crystal ball as the honest answer right now is, I do not know. No one knows. Right now, we, “we” meaning the real estate industry, are playing the waiting game and so is everyone else. But wouldn't it be awesome to be able to say, this is how it's going to go.

The market has been adjusting since May. Things have been changing for eight months now. The year over year numbers still show growth but if we look at April to December prices have dropped. More in certain areas than others. The market has slowed down, and we have more inventory than we have had in years. That’s not a question at this point. There is no way of calling it just am seasonal slow down and we have started calling it a market adjustment.

Alan Pope

It’s not just the real estate market though. The financial market has been adjusting too. The mortgage rates are slowly making their climb back up. There are lingering rumors about a slight recession, is there? I don’t think we know yet as most recessions get noticed after we have either been in it for a period of time or sometimes after it has already ended. On the other hand, in the Puget Sound area the commercial real estate market is piping hot, as the growing demand for office space has not gone away, we have a net gain of over 100k new jobs per year and there is no change predicted on that front.

All these new jobs mean more people, and those people will have to live somewhere. Yes, we have plenty of new apartment buildings in the area and the rents have stopped their climb for now, but we will return to the point where there no longer are vacancies, rents start climbing again and buying a home gets more interesting again. When will it happen? Is it this spring? I wish I would have a definite answer. I wish I could say yes or no with certainty. But I can’t, and neither can anyone else. We are all waiting to see what happens.

Alan Pope

Then there is the reality of a new listing popping up mid-December. A listing that has been priced competitively, it’s well staged, well prepped for sale and it’s in a location that everyone seems to want. The business cards of brokers start piling on the side table way before the first open house. There in fact, is a line of brokers bringing their clients to look at the property and we all know that it will most likely escalate and sell above listing price within days of getting listed. So, it’s relative. It’s a tough moment to sell a million-dollar home that has nothing extra special about it, it’s hard to sell a home in a rural location due to commuting times but selling a three or four-million-dollar home hasn’t really changed and selling certain homes in certain locations will still happen in a heartbeat.

I see this as a very interesting time in the business. We are all eager to see what will happen next. We have more and more people in the area and they all need to live somewhere. How will this pan out? If you already own a home, if you have no plans to buy or sell, it really does not matter. It doesn’t matter if you bought your new home in April. After every adjustment the market tends to climb higher than the last peak.