To Buy or Not to Buy? Fixer-Uppers for First-Time Homebuyer

Image courtesy of Pixabay

This week I am sharing a blog post from do-it-yourself guys Ray Flynn and Bret Engle. They are committed to DIY home projects and repairs with a real heart for the environment. If you’d like to know more about them, please check out their website at And while I don’t necessarily agree with all they have to say (Don’t wait to connect with a great lender, and don’t try and figure out loan products yourself. And when evaluating neighborhoods, properties, and home values, seek the advice of a great Realtor. Working with trusted professionals from the beginning will help ensure success from the start!), they have some good advice. Enjoy!

“Is a fixer-upper a good deal for first-time homebuyers? Well, the answer is that it depends. Here is everything you need to know to make a smart choice.

Finances of Homebuying

Before you can go any further, you should understand the homebuying process. As Architectural Digest explains, you need to begin with a hard look at your finances. Check your credit rating and clean up your history as needed. Then, look carefully at your budget. You should total your monthly income, reduce it by your monthly expenses, and calculate what you have left for your new home. This amount should include all the usual homeowner’s expenses, such as your mortgage, utilities, insurance, and taxes. You should also budget for your down payment, which normally is 20 percent. You can use a home financing calculator to help with your numbers. For a fixer-upper, remember you will need to allot funds for repairs as well.

Once you are comfortable with your numbers, it’s time to apply with a lender for pre-approval on a loan. Before you meet with a lender, however, you’ll need to think about the type of loan you wish to pursue, which begins by researching which one works best for your situation. For instance, if your fixer-upper doesn’t need a lot of work, a conventional loan might be in your best interest. Not only will you have a choice between fixed-rate and adjustable-rate loans, but borrowers who put down more than 20 percent can avoid additional mortgage insurance payments. What’s more, conventional loans are also lower in cost than some loans provided through government programs.

Budgeting for Repairs

As mentioned, if you jump into a fixer-upper, you will need to plan for your repairs. Sometimes, fixer-uppers can mean major renovations, and you may need to pay for some big-ticket items before you can even move in, such as electrical, foundation, plumbing, or roof repairs. Not only can these issues need immediate attention, they typically require the expertise of a professional contractor. If your home merely requires cosmetics, such as new flooring, appliances, cabinets, and countertops, you can hit the jackpot. In that situation, chances are you can move in and do repairs when you have the time, money and energy.

You may need to invest in some quality tools for your toolbox. Assemble the right power tools, such as drills, sanders, jigsaws, and the like. Don’t skimp on your basics! You may be surprised at what a difference even a well-made hammer will make in efficiency and workload. And since being able to do it yourself can save you money over hiring the work, you will come out ahead in the long run. Either way, when you’re searching for homes you should have a good idea what you can afford to bring the property up to speed.

As you budget for your renovations and upgrades, you’ll need to remember that larger items like ripped up carpet, older appliances and even big chunks of drywall can’t just be thrown into the trash. You’ll either need to find a way to dispose of these items or pay for removal services to have all your junk taken away.

Finding the Right Place

Once your finances are fully in order and you know what you can afford for repairs, you can begin house-hunting. Evaluate the market carefully, searching for fixer-upper properties in your area. So, it’s important to consider the specific location carefully. Just because a home is priced low doesn’t mean it’s a good deal. You want a place that will be valuable when you finish, so a desirable location is a must. Being educated on the market will help you make an informed decision. Learn what neighborhoods hold value and what locations are riskier investments. You need to learn about what is available and for how much.

Keep or Sell?

As Freshome explains, if you’re buying a home to get into a neighborhood you couldn’t otherwise afford, or it’s the only way you can get into a bigger house for your growing family, buying and staying may be your wise choice. However, many people dream of buying a fixer-upper, overhauling it, and reselling it for a tidy sum. After all, we see it on television and hear about substantial profits, and occasionally someone seems to become wealthy from a single sale. That said, it isn’t for everyone, and if your renovations are extensive, costly, and time-consuming, it may not be a profitable venture. If you are a skilled handyman, have someone who can help you with repairs. Or, if you have a roomy budget for upgrades and find a house at a steal, it can work out nicely.

Your First Home

Whether to purchase a fixer-upper for your first home can be a complex decision. Carefully evaluate your financial situation and the skills, time, and money you can dedicate to the project. A fixer-upper can be a great choice when it fits your circumstances!”

I hope you enjoyed this guest blog. As always, if you have any questions, please don’t hesitate to ask. I’m here and happy to help!

Posted on July 12, 2019 at 8:54 am
Liz Bailey | Posted in Uncategorized |

What is a Buyer Love Letter?

buyer love letter


Have you been competing to purchase a home but not been successful? Are you a Broker trying to give your Buyer a competitive edge? If so, then you may have been encouraged to include a “Buyer Love Letter” with your offer on a property. While this strategy may ultimately give you an advantage with a Seller, that advantage may cost you in the long run. I am sharing information the below from the Washington Realtors association.

“A ‘Buyer Love Letter’ could include letters, videos, photos, or any communication accompanied by an offer from a potential buyer to appeal to the seller. Love letters place sellers in the position of indicating a preference for a buyer based on a “feeling” or something that the seller “just likes” about a potential buyer. This “feeling” frequently arises from shared interests, history, family preferences, etc. of the buyer and seller and may trigger decisions by seller based on the seller’s unconscious bias.

Love Letters & Fair Housing

The inclusion of personal information and characteristics about potential buyers in love letters could cause sellers to unknowingly violate fair housing law. An offer that is accepted on the basis of anything other than the price and terms might violate fair housing law. What transactions are subject to Local, State and Federal Fair Housing Laws?

These fair housing laws govern a variety of “transactions” including, but not limited to, the sale or lease of houses, apartments, condominiums and advertising related to residential real estate transactions. The law protects against negative housing actions taken on the basis of a buyer’s or tenant’s protected class status which includes race, color, national origin, religion, sex, disability, or family status. The Washington State Law against Discrimination and other local anti-discrimination laws include additional protected classes such as marital status, age, sexual orientation, gender identity, Section 8, political ideology, and veteran status.

Who is required to Observe Fair Housing?

All parties, other than buyer or tenant, associated with a residential real estate transaction are required to observe fair housing laws and are equally named in complaints alleging fair housing violations. This includes, but is not limited to, sellers, real estate brokers, real estate companies, property management companies, homeowners’ associations, etc.

What Happens if you Violate Fair Housing?

If fair housing laws are violated, the responsible parties may be required to pay monetary damages and attorney fees to the prevailing party as well as civil penalties. Additionally, a real estate professional who has violated applicable fair housing laws could lose their professional license.

How to Avoid Violating Fair Housing?

Consider the following course of action: 1) become aware of the fair housing law in your area; 2) advise your client that fair housing law applies to them; 3) implement good business practices to ensure that offers are accepted based on objective criteria (price and terms) rather than subjective criteria (feelings or emotions); and 4) document your transaction file with evidence of seller’s objectively based decision to accept the chosen offer.

Fair housing is not only the law, it is good business.
Fair housing builds and strengthens communities while ensuring a competitive, open housing market.”

Do you have questions? Feel free to ask. I’m here and happy to help!

Posted on May 31, 2019 at 11:04 am
Liz Bailey | Posted in Uncategorized |

What’s Going On With Bidding Wars? And Are They Ongoing?

What’s Going On with Bidding Wars? | MyKCM

In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense! A seller’s market is defined as a market in which the inventory of homes for sale cannot satisfy the number of buyers who want to purchase a home.

According to the Cambridge English Dictionarybidding wars occur when two or more parties repeatedly outbid each other as they compete to purchase something – in this case, a home.

In some areas of the country, first-time buyers have been met with fierce competition throughout their experience. Some have been out-bid multiple times before finally winning a bid on a home to call their own. This has been true in Kitsap County as well.

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7-month supply of homes for sale nationally. Here in Kitsap County, as of the end of February, there is a little over a 1-month’s supply, an indication of an unusually strong seller’s market in our area.

With the current number of houses listed for sale and the level of demand from buyers, this means it would take just over one month for all the homes here in Kitsap listed to sell if no additional listings came to market. Traditionally, any supply number under 4 months is considered a seller’s market. A market equally balanced between buyers and sellers is one where there is a 4 to 6-month supply of homes for sale. Anything over a 6-month supply is considered a buyer’s market. According to NAR, the national housing market hasn’t had a 6-month supply of homes for sale since August 2012!

Good News for Buyers

A recent report shows that the national percentage of houses sold including a bidding war before settling on a final price decreased from 53% in January of 2018 to 13% this year. We have seen a similar reduction in multiple-offer situations here in Kitsap. Buyers have been less willing to engage in a competitive offer situation where they may be waiving contingencies or paying more than they feel is reasonable for the home in question.

Another reason for the decline nationally is an influx of homes being listed for sale. Even though the month’s supply number is not increasing, the number of homes for sale is. The chart below shows the year-over-year change in inventory over the last 12 months. Kitsap County is lagging behind the nation in this area, with inventory still at very low levels. However, we are beginning to see an uptick in the number of new listings coming on the market as we head into Spring.

What’s Going On with Bidding Wars? | MyKCM

As you can see, the number of homes for sale nationwide has started to build over the last eight months. Prior to this reversal, inventory levels had fallen for 36 consecutive months when compared to the year before.

Danielle Hale,’s Chief Economist, gave some insight into why bidding wars are less common on a local level this year,

“[Last year] you might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price. That tide is turning this year.

It’s going to depend on what neighborhood you’re in, but we expect it to be more common this year that you won’t be the only listing.”

Inventory in the luxury and premium markets (the top 25% of listings in an area by price), is increasing at a greater rate than the starter home market. As the choices buyers have continued to increase, the likelihood of a bidding war will decrease.

Bottom Line

If you are a buyer, don’t despair! More choices may be coming your way. If you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise. If you have questions, please feel free to ask. As always, I am here and happy to help!

Posted on March 22, 2019 at 12:57 pm
Liz Bailey | Posted in Uncategorized |

Next Recession in 2020? What Will Be the Impact?

Next Recession in 2020? What Will Be the Impact? | MyKCM


Economists and analysts know that the country has experienced economic growth for almost a decade. They also know that a recession can’t be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession:

Experts largely expect the next recession to begin in 2020.”

That timing concurs with a recent survey of economists by the Wall Street Journal:

“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”

Here is a graph comparing the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:

Next Recession in 2020? What Will Be the Impact? | MyKCM

Recession DOES NOT Equal Housing Crisis

According to the Merriam-Webster Dictionary, a recession is defined as follows:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Obviously, the housing crash of 2008 caused the last recession. However, during the previous five recessions home values appreciated.

Next Recession in 2020? What Will Be the Impact? | MyKCM

According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:

  • Monetary policy
  • Trade policy
  • A stock market correction

A housing market correction was ranked ninth in probability. Those same experts also projected that home values would continue to appreciate in 2019, 2020, 2021 and 2022.  

Others agree that housing will not be impacted like it was a decade ago.

Mark Fleming, First American’s Chief Economistexplained:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

And U.S. News and World Report agreed:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

Bottom Line

A recession is probably less than two years away. That does not mean a housing crisis is. Questions? Please feel free to ask. I’m here and happy to help!

Posted on July 14, 2018 at 9:27 am
Liz Bailey | Posted in Uncategorized |

Are Lending Standards Too Loose, Too Tight, or Just Right?

Are Lending Standards Too Loose…or Too Tight? | MyKCM



With home values appreciating at record rates, some are concerned that we may be heading for another housing bubble like the one we experienced a decade ago. One of the major culprits of that housing boom and bust was the loosening of standards for mortgage credit.

In a study done at the University of North Carolina immediately after the crisis, it was revealed that:

“Lenders began originating large numbers of high risk mortgages from around 2004 to 2007, and loans from those vintage years exhibited higher default rates than loans made either before or after.”

A study by John V Duca, John Muellbauer, and Anthony Murphy concluded that those risky mortgages caused the housing crisis:

“Our findings indicate that swings in credit standards played a major, if not the major, role in driving the recent boom and bust in US house prices.”

How do today’s mortgage standards compare to those from 2004 to 2007?

The Mortgage Bankers’ Association tracks mortgage standards in their Mortgage Credit Availability Index (MCAI). A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. While the chart below shows the index going back to that period between 2004 and 2007 when loose standards caused the housing bubble, we can see that, though the index has risen slightly over the last several years, we are nowhere near the standards that precipitated the housing crisis. Indeed, according to their standards, there are qualified buyers whose mortgage needs are not yet being met.

Are Lending Standards Too Loose…or Too Tight? | MyKCM

Bottom Line

While standards today remain fairly tight and credit is not as easily obtained as it was prior to the housing crisis, we need to be careful that we don’t drift too far once again. While we don’t want to prevent qualified buyers from obtaining the mortgage credit they deserve, the percentage of Americans able to obtain mortgage credit is currently at a stable level and should be held to a firm standard. Mortgage availability is a challenge to some buyers. Low inventory and increasing home values coupled with rising interest rates in our area are the real challenge in today’s market. Questions? Please feel free to ask. As always, I’m  here and happy to help!

Posted on June 15, 2018 at 5:32 pm
Liz Bailey | Posted in Uncategorized |

Will Home Prices Fall as Mortgage Rates Rise?

Will Home Prices Fall as Mortgage Rates Rise? | MyKCM


Mortgage interest rates have increased by more than half of a point since the beginning of the year, and they are projected to increase by an additional half of a point by year’s end. Because of this increase in rates, some are guessing that home prices will depreciate. And I have clients holding off on making a purchase with that idea in mind. But – is that a good idea?

Some prominent experts in the housing industry doubt that home values will be negatively impacted by the rise in rates. Read on…

Mark FlemingFirst American’s Chief Economist:

“Understanding the resiliency of the housing market in a rising mortgage rate environment puts the likely rise in mortgage rates into perspective – they are unlikely to materially impact the housing market…

The driving force behind the increase are healthy economic conditions…The healthy economy encourages more homeownership demand and spurs household income growth, which increases consumer house-buying power. Mortgage rates are on the rise because of a stronger economy and our housing market is well positioned to adapt.”

Terry LoebsFounder of Pulsenomics:

“Constrained home supply, persistent demand, very low unemployment, and steady economic growth have given a jolt to the near-term outlook for U.S. home prices. These conditions are overshadowing concerns that mortgage rate increases expected this year might quash the appetite of prospective home buyers.”

Laurie GoodmanCodirector of the Housing Finance Policy Center at the Urban Institute:

“Higher interest rates are generally positive for home prices, despite decreasing affordability…There were only three periods of prolonged higher rates in 1994, 2000, and the ‘taper tantrum’ in 2013. In each period, home price appreciation was robust.”

Industry reports are also calling for substantial home price appreciation this year. Here are three examples:

Bottom Line

As Freddie Mac reported earlier this year in their Insights Report“Nowhere to go but up? How increasing mortgage rates could affect housing,”

“As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

Is betting on home values reversing themselves in the near future a good idea? I don’t believe it is, and I believe I’m in good company. Would you like to know more? Please feel free to ask. I’m here and happy to help!

Posted on June 1, 2018 at 10:33 am
Liz Bailey | Posted in Uncategorized |

5 Ways Tax Reform Has Impacted the 2018 Housing Market

5 Ways Tax Reform Has Impacted the 2018 Housing Market | MyKCM


Starting late last year, some predicted that the 2018 tax changes would cripple the housing market. Headlines warned of the potential for double-digit price depreciation and suggested that buyer demand could drop like a rock. There was even sentiment that homeownership could lose its coveted status as a major component of the American Dream.

Now that the first quarter numbers are in, we can begin to decipher the actual impact that tax reform has had on the real estate market.

1. Has tax reform killed off home buyer demand? The answer is “NO.”

According to the Showing Time Index which “tracks the average number of buyer showings on active residential properties on a monthly basis” and is a “highly reliable leading indicator of current and future demand trends,” buyer demand has increased each month over the last three months and is HIGHER than it was for the same months last year. Buyer demand is not down. It is up.

2. Have the tax changes affected America’s belief in real estate as a long-term investment? The answer is “NO.”

Two weeks ago, Gallup released its annual survey which asks Americans which asset they believed to be the best long-term investment. The survey revealed:

“More Americans name real estate over several other vehicles for growing wealth as the best long-term investment for the fifth year in a row. Just over a third cite real estate for this, while roughly a quarter name stocks or mutual funds.” 

The survey also showed that the percentage of Americans who believe real estate is the best long-term investment was unchanged from a year ago.

3. Has the homeownership rate been negatively impacted by the tax changes? The answer is “NO.”

Not only did the homeownership rate not crash, it increased when compared to the first quarter of last year according to data released by the Census Bureau.

In her latest Z Report,” Ivy Zelman explains that tax reform didn’t hurt the homeownership rate, but instead, enhanced it:

“We have been of the opinion that homeownership is most highly correlated with income and the net effect of tax reform would be a positive, rather than negative catalyst for the homeownership rate. While still in the early innings of tax changes, this has proven to be the case.”

4. Has the upper-end market been crushed by new State and Local Taxes (SALT) limitations? The answer is “NO.”

In the National Association of Realtors latest Existing Home Sales Report it was revealed that:

  • Sales between $500,000 and $750,000 were up 4.5% year-over-year
  • Sales between $750,000 and $1M were up 15.1% year-over-year
  • Sales over $1M were up 17.3% year-over-year

5. Will the reforms in the tax code cause home prices to tumble over the next twelve months? The answer is “NO.”

According to CoreLogic’s latest Home Price Insights Report, home prices will appreciate in each of the 50 states over the next twelve months. Appreciation is projected to be anywhere from 1.9% to 10.3% with the national average being 4.7%.

Bottom Line

The doomsday scenarios that some predicted based on tax reform fears seem to have already blown over based on the early housing industry numbers being reported. Questions? Please feel free to ask. I’m here and happy to help!

Posted on May 18, 2018 at 6:27 pm
Liz Bailey | Posted in Uncategorized |

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | MyKCM

With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. In spite of the concerns, today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that illustrate why:

  1. Home Prices
  2. Mortgage Standards
  3. Mortgage Debt
  4. Housing Affordability


There is no doubt that home prices have reached 2006 levels in many markets across the country, and this is certainly true in our region. However, after more than a decade, home prices nationwide should be higher based on inflation alone. In our region, rapidly rising prices have only brought us to a level approximately equal with inflation for that time span.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” (emphasis added)


Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are notas lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI). According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | MyKCM


Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.

At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!


With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | MyKCM

Bottom Line

After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market. Do you have questions? Please feel free to ask. I’m here and happy to help!

Posted on May 4, 2018 at 3:44 pm
Liz Bailey | Posted in Uncategorized |

Getting Pre-Approved Should Always Be Your First Step

Getting Pre-Approved Should Always Be Your First Step | MyKCM


In many markets across the country, the number of buyers searching for their dream home greatly outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-approved for a mortgage before starting your search. In fact, in our competitive marketplace, no seller will give serious consideration to a buyer who does not have a strong pre-approval letter to accompany their offer. Even if you are currently in a market that is not as competitive, understanding your budget will give you the confidence of knowing your dream home is within your reach. It will also help your real estate professional locate the home that is just right for you.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Did you know the lender you choose matters? It does! Sellers will give more consideration to well-known, local lenders with a reputation for getting the job done on time and with minimal stress on all concerned. Your choice of mortgage company and specific loan officer may make the difference between winning or losing the home of your dreams. One of the many advantages of working with a local real estate professional is that they will have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so. If you would like a referral to a local lender to initiate the process, please let me know. And if you have any other questions, please don’t hesitate to ask. I’m here and happy to help!

Posted on April 20, 2018 at 6:01 pm
Liz Bailey | Posted in Uncategorized |

House Prices: A Simple Matter of Supply & Demand

House Prices: Simply a Matter of Supply & Demand | MyKCM


Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:

“…the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”

When demand exceeds supply, prices go up. This is currently happening in the residential real estate market, and dramatically so here in Western Washington.

Here are the numbers for supply and demand as compared to last year for the last three months nationwide (March numbers are not yet available):

House Prices: Simply a Matter of Supply & Demand | MyKCM

In each of the last three months, demand (buyer traffic) has increased compared to last year while supply (number of available listings) has decreased. As long as this situation persists, home values will continue to increase. The lack of inventory, increasing competition, and the rise in home prices coupled with increasing interest rates makes this a challenging market for buyers!

Bottom Line

The reason home prices are still rising is because there are many purchasers looking to buy but very few homeowners ready to sell. This current imbalance is the reason prices will remain on the uptick for at least the short term.

Although challenging, this market is not an impossible one for buyers. Working with an experienced, professional Realtor is one way to win the day! Questions? Please feel free to ask. I’m here to help!

Posted on April 7, 2018 at 10:01 am
Liz Bailey | Posted in Uncategorized |