Multiple Offers and Inventory Shortage? What’s Up?

In a recent John L Scott Luxury Portfolio meeting, some new and interesting data is immerging in what has been the most devastating real estate market in decades. After the double dip last spring into fall caused by the tax credits that pushed buyers forward into the first 2 quarters creating a slump and lag in sales May through October, this spring has seen a shortage of inventory (26.1% fewer homes on the market in King County from same time last year), decreased foreclosure filings (last month approximately 15% of sales where bank owned compared to 20% last year at this time), and interest rates still at historical lows.
This has led to some multiple offer situations as buyers pick up the best values with cheap financing. Pending sales were flat year over year last month (due to lack of inventory to sell) and the absorption rate for King County is currently 14.5% (20% is considered a balanced market). Nationally, Consumer Sentiment climbed more than forecasted in May as Americans turned more hopeful that employment gains will be sustained, helping them cope with higher fuel and food costs. The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to 72.4, a three-month high, from a final reading of 69.8 in April. This is another positive for the housing market. As consumers feel more confident about the economy, they are more likely to pull the trigger on that next home.

I was reminded by a colleague recently that I accurately predicted what is transpiring; the firming of prices as homeowners put off selling who do not want to compete with REO’s and short sales leading to a shortage of good, saleable homes. How long this phenomena will last is unknown. The Seattle area was estimated to decline another 5-7% this year, so far we have adjusted 9.3%. From the analysis done (Fiserv, FHFA, Moody’s, Economy.com) prices are not going to recover until 2014-2019 in the Seattle area (2030 in some areas of the inland empire in Southern California and Florida). In fact, Lennox Scott pointed out recently that taking out the bubble years of 2005, 2006, we are exactly where we should be.

If you are considering a move or would like a private, current assessment of your home, please contact me. I have a repertoire of steps to take in order to insure a smooth and successful move. If you would like to see the power point that accompanies this blog, please email me.