By Living Room Realty, July 13, 2021
Where do we stand? And where are we going?
Those area couple of big questions. I’m thinking of this mostly from the perspective of Real Estate, but as I’ve found in this business: the lines often blur between how/where we live and just about every other aspect of our lives. As we transition back towards a new normal, there are a number of items that are in short supply. Have you tried to buy any camping equipment? Or a car in the last few months? The shelves are empty, and things feel scarce. It is kind of the same way in Portland Real Estate. If you look at just active listings…there are not many. If you add on pending sales, there are actually quite a few total listings; the problem is most of them are already taken and just waiting to close. I was looking through a page of listing on Monday and most of them were under contract within 3 days. Because things are selling so quickly, there is no room for any significant inventory to build.
I’ve been working about equally with buyers and sellers this year and there are some interesting dynamics that I’ve picked up on. This one is the most interesting in my opinion: it is a sellers’ market until the seller accepts an offer…then the transaction transitions to the buyer’s favor. To get their offer accepted, the buyer had to really put it all out there. They are usually excited for the first few days then kinda freaked by the end of the inspection period. “We are $70,000 over the asking price. I don’t care what commitments I made in the offer, I want them to put a new roof on the house.” Or replace the sewer line, etc. Now we are two weeks into the transaction and the seller is faced with offering a credit back to the buyer, begrudgingly doing some repairs OR face going back on the market because the backup offer has already moved on. My coaching on both sides of the equation is to work towards a win/win solution and to be prepared for flexibility.
I’ve worked through a couple of these cycles in my career and they each have their own nuance. In the past 12 months, prices have really spiked due to demand + competition. We are starting to see indications that the comps are finally catching up with the market hunger. For example: a house listed for $500,000 in January of 2021 sells for $600,000. When it went live, it was actually in-line with the neighborhood comparables for the previous 12 months. Now that home is a comp for an August listing; when this home goes live at $600k it is not likely to sell for $100k over because the comps have caught up with reality. It is a process that is slow to develop, but this is what usually happens to normalize the market.
It has been various versions of a seller’s market for the past 7 or 8 years. The market will likely remain in the seller’s favor for the foreseeable future, but it will transition with different nuance going forward. Buyers with the right attitude and coaching will continue to get their offers accepted…it will just take some effort.
