Pent-up demand for homes in the Spokane-area is converging with smaller inventories to create one of the most competitive home-buying markets in years.
Sellers are getting multiple bids on attractively priced properties and offers that come with price escalation clauses – things that haven’t been common in the local real estate market since before the Great Recession. The prospect of rising interest rates has buyers eager to purchase now.
“Homes are selling at a very fast rate,” said Jennifer Valerien, owner/broker of Re/Max Inland Empire and president of the Spokane Association of Realtors. “Some people would deem it a sellers’ market.”
A balanced market, where neither buyers nor sellers have an upper hand, requires 120 to 180 days of inventory, Valerien said. In March, the Spokane area had a 70-day supply of homes, which means it would take about 70 days to sell off the current inventory if no new homes came on the market.
The smaller inventory is a game-changer, resetting expectations for Spokane-area buyers and sellers. Here are five things to know about the local market:
You have to act quickly
Prospective buyers can’t afford to wait several days, or until the weekend, to look at a new home listing. If they do, they may find that the sellers have already accepted an offer on the house.
“If you truly have your heart set on something, and the listing fits that criteria, get there,” Valerien said.
“Don’t sleep on it,” said Tom Hormel, a Re/Max Inland Empire broker.
Prospective buyers also must decide quickly whether they like the house enough to make an offer.
Making major financial decisions on a quick time frame can be stressful, he acknowledged. But by planning ahead, buyers can take some of the anxiety out of the decision, Hormel said.
Get pre-approved for a loan
“It’s probably the first thing out of my mouth when people call and say they want to look at a house,” Hormel said “If you haven’t talked to a lender, going out and looking at homes is my definition of insanity.”
Knowing your price range and how that translates into monthly mortgage payments is essential. That knowledge takes some of the pressure out of deciding whether you want to make an offer. It’s also a reality check.
“Someone may have fallen in love with a $300,000 home, but they qualify for a $100,000 home,” Hormel said. “I can’t fix that.”
In a competing bid situation, prospective buyers who can demonstrate solid financing have an edge.
“You want that offer to be as clean as possible,” said Natasha Vargas, a broker with Chapman Real Estate.
Identify your housing needs
Prospective home buyers benefit from having a clear picture of their priorities, whether it’s number of bedrooms, the size of the backyard or space for a home office or entertaining. A thought-through list also prepares people to act quickly.
Valerien tells clients, “There is no perfect house,” but properties that meet about 85 perfect of their needs are probably good choices.
“We’re not choosing the right house, we’re eliminating the wrong ones,” she said.
Expect to compete with multiple offers
In the current market, competitively prices homes in desirable areas will attract multiple offers. Hormel counsels sellers not to accept an offer on the first day the house lists, but to allow at least a couple of days for prospective buyers to view the property.
Sellers will set a deadline for offers. If they receive multiple offers, they will review them and pick the one that fits their needs.
In a competitive market, buyers have to be prepared for rejection, said Matt Chapman, managing broker of Chapman Real Estate. They may make offers on several homes before an is accepeted.
“It may take longer than what their expectation was,” Chapman said.
Hormel encourages prospective buyers to make their best offer upfront, rather than trying to top someone else’s offer. While price is important, it isn’t always the deciding factor.
Sometimes, sellers favor offers that let them stay in the home longer. An all-cash offer, which doesn’t require an inspection for financing, could be attractive to the seller, too.
Sellers also like compelling personal stories, Chapman said.
“They like to know they’re selling to a young couple just starting out, or to people who’ve been married for 50 years,” he said.
Homes must be priced realistically
Though the current market is competitive, it’s not a return to the pre-recession housing market. That market was driven by speculative buyers who bought up homes for investment.
The attitude was, “I don’t care which house I get, I’ll just take one,” Hormel said.
Now the market is made up of buyers who are looking for homes they plan to live in. They’re looking beyond new paint and carpet to kitchen countertops and bathroom finishes.
They’re savvier buyers, and they want their money’s worth.
The real estate saying of “location, location, location” doesn’t tell the whole story, Hormel said. He tells sellers that “price, price, price” is a better description.
“If it isn’t priced right, a home in the nicest neighborhood can sit on the market,” he said.