Timing the Market

Speaker 1: [0:09] Hello, hello, and welcome to another episode of the Awesome in Seattle podcast. This is your host, Christian Nossum, with the Awesome Nossum Group at Wilson Realty, and I'm here with my co-hosts. First off, we got the one and only Les Cutting

Speaker 2: [0:23] Hola. ¿Cómo estás?

Speaker 1: [0:26] And the wonderful Jason Saldarriaga

Speaker 2: [0:29] As always.

Speaker 1: [0:31] Yes, he is. We are, if you don't already know, we are a group of Seattle real estate agents. Um, and we love to talk about Seattle, we love to talk about the real estate market, and we love to keep people up to date on what's going on. And today's episode is really answering one of the questions that we get asked all the time, and that is, how do I time the market? When is the best time to buy? When is the best time to sell? Um, really, people just wanna know how do they get a deal, that's really what they're asking. But how do they, how do they time the market? So, today we are going to tackle all of this and really educate you on what matters and what doesn't when it comes to timing the real estate market here in Seattle. All right, so Jason, why don't you, why don't you clue us in to, to what's going on. Tell us about some of the stats, since you are the stats guru.

Speaker 3: [1:22] Yeah, I like my data, don't I? Mm-hmm. Um, yeah. So we, like you said, a lot of people come to us, and one of the first things they really bring up when we sit down and start talking real estate is the dynamics of the market, especially in relation to, like, timing certain things. So just a, an overall generalization here, just a overview of the dynamics of real estate in Seattle. Um, if you look at a lot of different metrics, like new listings, and even in some ways, sales price, depending on stuff of that sort or, or months of inventory, you'll see a lot of times an annual bell curve. And this makes sense. In the winter, the weather here is pretty bad, or at least it's not as conducive to buying a house as it is in the summer when there's a lot more sunlight, and there's also the dynamics of job market and, uh, and education, where people are in school. Jobs, a lot of people start new jobs at, at the beginning of the summer. There's less change in that regard in the winter. And so if you look at these different metrics and you graph them out for real estate in Seattle, you'll see things kinda slow down in the winter, and they heat back up in the … The height of the market generally is each summer. You know, May, May, June, July period. In fact, if you look at, like, new listings, you might get three times fewer listings in December as compared to in the height of the summer market. And so, there's dynamics at play here, and if you understand that dynamic, it helps you as a buyer or a seller because you know what to expect. Um, in the winter there's fewer listings. There's also fewer buyers, though, generally speaking. I'm making generalizations here.

Speaker 1: [3:10] Mm-hmm.

Speaker 3: [3:10] Um, but … And so, you know, it's not necessarily there's a bad time to buy or a bad time to sell, it's more about understanding the dynamic and playing the game accordingly. Another thing to keep in mind is the list price to sale price ratio is something that I bring up a lot. It's a metric basically that means if, for example, that ratio is one hundred and four percent for a certain month, that means that that month houses sold for on average four percent over list price. And if you graph this out and you average out each month for the past few years or even extend it, it's pretty i- consistent here, what you see is a, a s- slight but statistically significant change month over month, where prices don't appreciate as much in the winter as they do during the summer on average. Now, you look at this data and you instantly say to yourself if you're a buyer, "Oh, I should definitely buy then in the winter," because if you think of it, it very simply, like prices are better in the winter as a result of it not… houses not selling for s- as much over list price on average as compared to in the, in the summer months. If you're a seller, you'd think the opposite. "I should sell in the summer and, and, uh, hold off if I'm wanting to sell in the winter because I can get more money over list price in the summer if I do that." But that's not necessarily true. There's a lot more nuance to this. Um, and I'm getting a little deep in the weeds here, but I do think it's important to understand. When you go and list a house You talk to a real estate agent and they advise you on what you should list your house at, what you should price it at. And this is a number that they, that a good real estate agent comes to based off of a lot of different things. First off, the biggest thing being comps, so comparable sales. So they, the agent's gonna look at your neighborhood and say, "All right. In the last two months," or whatever timeframe makes sense for the area, "if you look over the last 60 days, on average, houses like yours are selling for X amount. And as a result, we should pr- I think you can reasonably expect your house to sell for X amount." And then there's obviously strategy on do you price it at that amount? Do you price it a little lower than that to dr- get interest? There, we're not gonna talk about that today, but there's a lot of strategy behind exactly where you price it. But because of that, because of how an agent and a seller prices their house based off of recent sales, there's a lagging factor here. So if prices appreciate a lot in the summer, and then come September, October, you're then sitting ready to sell your house, you're gonna base your price off of prices over the hot summer months. Mm-hmm. If that makes sense, right?

Speaker 1: [6:05] Yep. No, totally.

Speaker 3: [6:06] Um, and so the, y- I'm saying this because, again, if you look at, like, the list price to sale price ratio over time, you get this potentially incorrect assumption that, oh, I should definitely buy in the s- uh, in the winter, sell in the summer. And no, there's more nuance to it. Mm-hmm. And so if this piques your interest at all, reach out to me, because what- … I can spend hours. I have graphs and graphs and more graphs. Beautiful. And we can really dig in really deep here. I don't wanna go too deep in the weeds, because I've already been talking for way too long, but- but there's a lot of nuance to this. The moral of the story is there is annual cycles, there's seasonal cycles, and then there's also just nuance. So even if you see a headline or something like, "Prices did X amount this month," which is off the charts, it's really easy to make assumptions off that. But there's a lot of times more to the story than just the headline. So.

Speaker 1: [7:05] Yep. I thought you explained that really well. Mm-hmm. I mean, essentially what you said is there's not really a, a great time necessarily to buy, uh, because- Well, in this market when, in Seattle, Seattle area I should say, it hasn't really been changing much. Like, our market has been continuing… I, me- I should say that again. It's not that it's not changing. It's continuing to increase in price. Mm-hmm. Prices have continued to be, to, to increase. They, we've had clients that said, "You know, I'm just gonna hold off. Uh, I know that the, the prices are gonna drop, and I'm gonna buy when that happens." And they've been waiting for five, six, seven, eight years at this point. Yep. And, uh, yeah, they still haven't bought. Meanwhile, house prices have doubled. Um, some areas they've almost tripled. Um, and it's, uh, it's sad when people do that because they're not paying attention to the actual, you know, cycles that you just explained and how this is working and, uh- Yeah. It's, um, it's an interesting, i- interesting cycle and, yeah, definitely it's almost better… I mean, some people are obviously od- audio learners. How do you… Yeah, I think that's the right way to say that. Everybody knows what I'm trying to say. Um- Auditory … others are visual. Auditory learners, there you go. Yeah, and other people are visual. So if you are one of those visual learners and you wanna see the graphs, just reach out to Jason. His email is jason@awesomenossum.com. Very easy. He'd love to, you know, show you what's going on and, and, and

Speaker 3: [8:39] really

Speaker 1: [8:39] help you understand. One thing to pay attention to as well when timing the market in general, so if you were to sell, you really need to pay attention to holidays. So you're not gonna really want to put your house on the market on, like, a popular three-day weekend or a holiday weekend, or even on some of those holidays that, that land in the middle of the week. Um, like, you know, 4th of July sometimes is in the middle of the week. It's not always on a weekend. There's government holidays that often are, you know, celebrated on the Friday or Monday. Um, but then there's holidays like Thanksgiving, and that's on a Thursday. You don't really want to put your house on the market on one of those holiday weekends or holiday weeks because there's a lot of buyers that are going out of town, and you don't wanna lose the opportunity to, you know, or miss an opportunity where people are not in town to see your house on the market. And in this market right now, the average days on market is six or seven days, and if those six to seven days people are out of town for three or four or five of those, they might completely miss your house and you might lose one or two or three or more potential offers on your home, which can lead to a lot of money that you just lost. So it's really important to pay attention to that. Also, pay attention to when you're choosing your closing date. Make sure you're not closing, one, you can't close on a weekend because the county is not open, uh, and that's where you actually record your documents, and you can't close on a bank holiday either because generally the bank needs to wire those funds to the, the escrow company. So, um, just make sure that when you are choosing a closing date, and generally your agent is going to help you a lot with this, but just make sure you're not, you know, landing on one of those random holidays that are in the middle of the week or on a three-day weekend and, and you were planning to move in on this great three-day weekend. You'd have all weekend to do it, and then, oh crap, you can't. So you don't wanna do that. Les, uh, let's talk about, I, I love this topic that you came up with, micro-timing. Let's talk about this. What does that mean?

Speaker 2: [10:54] Well, the days of the week are crucial to, I guess, timing the market. It's more important than a lot of people realize. So let me do a little pop quiz with you two. What are the best days of the week to generally list a house, or when do houses typically pop up?

Speaker 3: [11:11] Sunday. Okay. Uh,

Speaker 2: [11:13] okay. You failed the test.

Speaker 1: [11:16] No, they're usually, you know, Wednesday, Thursday, maybe Friday. But generally, you know, that middle of the week.

Speaker 2: [11:22] Winner, winner, turkey dinner. So the average days on the market in Seattle is about six to seven days, and it's been like that for a while now. And that's because most properties have offer review date on that Monday, Tuesday, or Wednesday. So you definitely wanna get all your ducks in a row from that Wednesday and Thursday. Go see the house. If you're really serious about it, prepare. Look at the inspection. Look at all the Form 17, the seller's disclosure, all that stuff to gather all your information, and that way you're informed and you're ready to pull the trigger. Um, now, keep in mind, some houses have offer review dates, but there's a note that says they may accept an offer sooner, and that's rare. It's just a rare occasion. In this market, in my experience, most people honor their offer review dates. However, there has been time for people just blowing the seller out of the, blowing everybody out of the water and blowing the seller away, where the offer is just too good to pass up and they don't honor the offer review date. So that's important to, um, to understand as well, so.

Speaker 3: [12:19] Yeah. And I actually experienced this this week. You know, I almost feel like we're seeing this more as the market gets even more competitive, because people are coming in and just blowing sellers out of the water. There was a house that my clients were interested in seeing. It was in North Seattle. And I don't wanna tell the whole story, because it's not that interesting, but basically, you know, it w- they had an offer review date of the following week And before my clients could even see it, they got an offer that waived the inspection full out. The sellers had paid to, for an inspection to be done, and before it was even finished, they got an offer waiving inspection way above list price, and they were like, "Well, I guess we don't need to even see the inspection- so please don't show us." Yep, 'cause- This is the seller speaking … yeah,

Speaker 1: [13:08] and then the seller would have to disclose what they saw in the inspection.

Speaker 3: [13:11] Yeah. So they

Speaker 1: [13:11] really don't wanna know that.

Speaker 3: [13:13] And, uh, I mean, it sold in, like, 13 hours. And then, you know, that, that's, I heard of another s- uh, house where it got, like, 50 offers on offer review date. So- Mm-hmm … you know, there's benefits to accepting early, and there's benefits to waiting. So there's also, if you're a seller, there, like, kind of continu- continuing on with what Les was kinda saying, if you're a seller, um, there's a strategy behind timing the market in terms of understanding your competition. So, you know, usually you don't reach out to a listing agent and say, "All right, in a week I wanna sell my house." Usually it's, you know, there's a, a lead time here. You start the conversation with your listing ag- with the listing agent, and you, you know, there might be some work you need to do on your property, maybe some landscaping. Uh, you might have to get staging and photos done. So, you know, usually there's a few weeks there that you're kind of planning the listing. And then kind of at the last minute, you really hone in on the specifics as of, in terms of what day are we actually gonna list this house, and what are we gonna list it for. Um, and even if you'll do a offer review date, sometimes that you, you kinda wait until the last minute, although usually you have an idea on that one in, in advance. And the reason you wait until the last minute is because you really need to see your very small micro competition in your, in your s- tiny neighborhood. If, for example, there's a, an identical unit to your house two blocks away, that's def- that's gonna impact your listing as opposed to if you were the only, you know, three bedroom in the neighborhood. And so sometimes it's very important at the last minute, really when all the ducks are in a row, to sit down and say, "All right, what has come on the market in the last few days? How can we position ourselves as sellers to stand out?" Sometimes that means pricing your property a little below that other property that's identical to yours. Sometimes you price it higher because there's some obvious advantages to what yours brings. Maybe it's remodeled versus the other one that's identical, but just not, not updated. And so I, I just think it's important to acknowledge that a lot of this real estate stuff is long-term, but then at the end of the day, a lot of it is really short-term. Like the specifics on our strategy, a lot of that is last minute, really understanding the dynamics of, uh, in your neighborhood.

Speaker 1: [15:40] Yeah. I actually have a prime example of that from Wednesday. So on Wednesday, we put a house on the market. Uh, we had done all our research, done all our prep. We came on with a very good price, and then Thursday morning, the identical house literally across the street and around the corner came on the market, built the same era, same builder, exact same floor plan, which is pretty unique actually. There's not usually the same exact house that's built like numerous times. Uh, but then in this little neighborhood, they were like that. And, uh, unfortunately for the other buyer or the other seller, I should say Their, their house had not been touched since 1961 when it was built.

Speaker 2: [16:25] Oh.

Speaker 1: [16:25] And, uh, my client's house, uh, had been recently updated. So although our price was $30,000 higher than the other house, ours was updated and theirs was not. So- Hmm … for the amount of updates that ours had, it was easily worth 30,000, if not more. So I think it's actually going to help us that they're on the market for less than us, but are, you know, just, uh, three houses away essentially, and priced lower. It, it might actually bring more buyers in to see our house because, you know, you got two identical houses priced differently, but they're also, you know, one's remodeled, one's not. So we'll see how that all plays out, but that literally just happened Wednesday and Thursday of this week, so. Hmm. Um, one game that I think you should pay attention to when you're timing the market is mortgage rates, interest rates. That's, that's something that we haven't really touched on at all, and that can actually play sometimes a bigger difference and give you more purchasing power than the actual purchase price of the home. If you're waiting for prices to go down, like we talked about earlier, you're, you've been sitting there waiting for years and years and years. Meanwhile, if you pay attention to mortgage rates, interest rates, they are actually… They've been dropping, and right now they're at, uh, once again, I know you've heard us repeat this over and over, but they're once again at historic lows. They are insanely low. Yeah. Uh, over the last week, I've seen mortgage planning reports come over from lenders to our clients as they're talking. They're kind of CC'ing us on these emails, and we see the rates that they're kind of throwing out there as, you know, today's rate, and they're anywhere from 2.5 to 2.75 to 3%, depending on the loan program. And that's huge. That is so inexpensive. And the, the change in a interest rate can drastically alter what your monthly payment is and drastically alter how much purchase power you have, way faster than prices increasing or decreasing. So if you are trying to play the market- Pay attention to mortgage rates, interest rates. Um, right now they're stupid low. Literally just insanely stupid how low they are. If you've been on the fence about buying and you were thinking about waiting for prices to, to, you know, bottom out or something crazy like that, it might be worth reassessing what, uh, what interest rate you were basing your assumptions off of, because right now they're, they're crazy low, and that's a, that's a better market to be playing right now. So-

Speaker 2: [19:04] And just to play off- Uh- … of what you said. Yeah. If you've been waiting for prices to drop and you're still waiting and waiting and waiting, I think it's time to change up your strategy. That's all.

Speaker 1: [19:16] I think you have a good point there, Wes. Yeah. Um, all right, so let's wrap this thing up. If, if you guys have any questions about timing, again, feel free to get more data from Jason if you want. Again, his email is jason@awesomenossum.com. If you are a seller thinking about selling and trying to figure out what timing makes sense for you, feel free to schedule a strategy session or an appointment with us right on our website. It's awesomenossum.com/schedule. It's super easy. There is no cost. There's no commitment. We don't pressure you to do anything. That's not our style at all. We're super laid back. We just wanna educate you and give you the information so that you can make an informed decision. So that's it for this week's episode of the Awesome in Seattle podcast. Hope you guys stay safe, and we'll see you soon.

Speaker 2: [20:07] Talk to you guys later. Adios.