Sequim is approaching a tipping point in the real estate market, and we may be there now. There is actually more than one tipping point, but they are both connected. This has so much relevance for buyers today. Over a year ago I wrote that Sequim real estate prices had stabilized over the previous year, and that we we very likely seeing real estate prices at or near a bottom. The data has proven this to be true. Supply and demand, buyer activity, and the shrinking inventory all point to a real estate market that is stable and which has been steadily improving over the past two years.
A Tipping Point for New Construction
The first tipping point can be thought of as a seesaw with existing homes on one end and new construction on the other end. Home builders have not been building in the Sequim area for the past seven years. Buyers have not been buying lots and hiring builders to build during this recession. Because home prices dropped so much over the past seven years, buyers have been able to purchase an existing home for 20% to 30% less than the cost of buying a lot and building a new home. But the existing inventory of homes has been slowly and steadily decreasing, and now many buyers are not able to find their ideal home. Home prices are also increasing slowly. All this means people will start building again. In fact, at least one Sequim home builder is anticipating the need for new homes, and he is building spec homes once again. This is one tipping point, and we are there.
A Tipping Point for Prices
We are also at a tipping point for home prices. The Sequim real estate market spent a lot of time stabilizing before prices actually started to increase. It’s been a slow process, but prices reached a bottom and stabilized over the past two years. Now with real estate markets getting hot in California and elsewhere, buyer activity in Sequim increased dramatically, and with a shrinking inventory, prices have reached a tipping point and are about to tip upward significantly.
I’m seeing this in several ways. Buyers are having trouble finding a home, and many of the homes we line up to view are being sold right out from under us. Another indicator is the time a home is on the market before it sells, and the “days on market” have been shrinking. And one more indicator is how the selling price relates to the original listing price and the last adjusted listing price. Many homes are now selling at full listed price. All of this indicates we are at a tipping point for real estate prices, too.
Last Updated on September 23, 2019 by Chuck Marunde