Some research into the statistics reveals an interesting answer to that question. When looking at a comparison of the year-over-year statistics for 2017 verses 2018, the buyers are still out in force.
I focused my report on the “Eastside” real estate market, but my research shows that the trend is generally applicable across the Puget Sound region.
For a visual picture of what has happened, the first chart here shows a comparison of the number of homes pending in the Eastside market for 2018 year to date, and for the same period in 2017.
The overall number of homes to enter into contract for purchase in 2018 was only slightly less than 2017. In total, there were 8,350 homes that entered into contract for purchase between January 1, 2017 and October 31, 2017 on the Eastside. For the same time period in 2018, that number dropped to 7,392, or approximately 11.5% lower than the previous year.
If we look just at the buyer activity, it would appear that our market has cooled only slightly, but the next chart reveals a significant increase in the available inventory for purchase in these last few months of 2018 compared to the same time frame in 2017. The economic principle of supply and demand has now tilted toward the advantage of the buyer for the first time in nearly 5 years. The question to follow is: “What will happen with the market in the spring months of 2019?” There could be a couple of different scenarios that play out.
- Available inventory is starting to decrease which means that sellers are beginning to hold off on putting their homes on the market – potentially with the thought of waiting until springtime to list. This could result in an even larger number of homes entering the market next spring. More supply than demand. Prices would not likely rise given this situation and could even reduce further.
- Or, buyers will remain steady – with normal seasonal adjustments – over the next couple of months and will continue to draw down the remaining inventory. Pent-up demand on the part of many buyers who have waited out the market shift, elections, final months of the year, and the holidays, will put another surge of buying pressure on the inventory in the spring months and the market advantage will swing back to the sellers, although not nearly as strong as experienced in the past several years.
Those of us in the profession tend towards this latter scenario. It will be interesting – as always – to see how the market actually plays out as it happens.
– Bill Badgley