While 2002 posted record gains for
the tri-country region (King, Pierce and Snohomish counties),
an increase of some 4.5% over the previous year, much of those
gains were to absorb the inventory built up from the sluggish
market that occurred over the two plus years following the
stock market correction. Although the market produced record
sales volume, the supply of homes and condos available for
sale outweighed buyer demand. Too many listings create too
many choices. Because of the over-supplied market, prospective
purchasers were able to take a conservative approach to their
buying decisions, creating a buyerís market environment.
Continued low Interest rates below 6% helped to facilitate
active markets in 2003. Low cost housing in most all
neighborhoods was beginning to see the modest price increases.
However, the mid-range and upper-end markets continued to
experience an over-supply of inventory holding values stable.
While inventory in King and Snohomish counties increased from
some 14,000 units in January 2003 to a record high of just
over 17,000 units in July, the housing market was setting
records for the number of negotiated offers during the same
period. Pending offers in the two-county area exceeded 4,500
units per month for eight straight months between March and
October, hitting a high of 5,585 units in July, some 25% above
any previous monthly statistic.
By December both listing inventory and pending offers had
slowed, a typical seasonal trend. Listing volume had reached a
three year low with 11,717 units available for sale. However,
the reduction in pending offers was not nearly as significant.
Not since the fourth quarter of 1999 had the housing market
been as strong. During the fourth quarter 2003, agents began
to comment on the limited availability of quality, well-priced
Many real estate companies and their agents have indicated
that they have had the best year ever and rightfully so. The
Northwest Multiple Listing Service reported 83,867 closed
sales of single family and condo units in the tri-county area,
a 21% increase over 2002.
At the end of the year, most communities under $500,000 had
less than two months inventory. Low interest rates, limited
supply and the typical demand during the spring are indicators
that could create a sellerís market.
Only in the $1,000,000+ price range is there a continued
over-supply of inventory. Although there appears to be an
over-supply, this price range had seven straight months of
record setting sales of 66 to 79 units per month between May
and November. The previous highs were recorded at 61 units per
month in March and September in 2002.
The housing industry was in transition in 2003 moving from a
buyers market to stability in most neighborhoods. With the
changing market during 2003 and record setting statistics over
the year, did the market experience marked appreciation in
home values? In some areas yes, in others, no.
The median price for King County increased to $275,250, up
8.9% over 2002. That statistic alone should lead to a positive
conclusion. But, the median price of housing may not be
relevant to a specific neighborhood or home within a
community. What motivates a buyer in a low-end neighborhood in
Maple Valley or Marysville may not motivate a buyer in west
Bellevue or downtown Seattle. Resale homes selling under
$300,000 have little effect on housing in the $750,000+ range.
The market is stronger today than it has been over the past
three years, inventory is low in most markets and the mood of
those in the market is looking upbeat.
In 2003, most buyers continued to take a conservative approach
to their buying decision unwilling to overpay. They had taken
a wait-and-see approach anticipating that at some point a
seller would offer the perfect home to meet their needs
marketing at a price that they had grown accustomed to. In
general, the educated seller would list at a price slightly
above market, make one price reduction and negotiate a
purchase within 45 days removing any contingencies within 60
days of the initial list date.
Buyers may need to change their approach if they plan to make
a buying decision in 2004. A cautious approach will find many
on the outside looking in.
In a market of limited demand, low offers may not be
acceptable and it may require the prospective buyer to move on
to the next home, a property that may not be as well priced or
fit their needs. They will need to educate themselves on where
the market is going, making a prudent offer that will place
them in their dream home without the agony of several offers
and eventually paying more than they could have if they would
have stepped up to the plate at the first opportunity.
On the other hand, a prospective seller may price themselves
out of the market if they ask in excess of the trend. Many do
not heed the advice of the professional they ask to help them
through the process of selling their real estate adding 10% to
their realtorís opinion in hopes that they will find the
perfect buyer. However, this approach could create an extended
marketing period, taking their marketing time into a period of
If priced too high, the seller will find that their home will
sell the competition.
In my 15 years of keeping statistics, listing inventory
increases over the first seven to eight months of the year. We
should anticipate that 2004 will continue this trend.
Economists predict that interest rates will rise as well. As
the year moves from spring to summer, competition will grow
and competition will reduce the sellerís ability to achieve a
pinnacle sale price.
For those with homes that meet a prerequisite for a broad
number of purchasers (location, design, function and
condition), pricing toward the upper end of the range may be
fruitful. For homes with physical, functional or locational
problems that deter buyers, competitive pricing will allow the
seller to move forward with their life without the headache of
a long marketing period.