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What’s Causing Today’s Competitive Real Estate Market?

Published:
November 3, 2021
Last updated:
November 24, 2021
In This Article

We’re in the middle of a hot seller’s market, and we have been for a long time now.

Today’s strong seller’s market is the direct result of high demand and low supply. It’s Economics 101. Low supply coupled with high demand always causes significant competition among buyers in the real estate market and ultimately drives home prices.

Let’s go into more detail about what’s causing today’s competitive real estate market.

Competitive Real Estate Market

What’s Causing Today’s Competitive Real Estate Market?

Both high demand and low supply create a competitive housing market.

Demand is high. Here’s why:

  • Historically low mortgage rates. Right now, the going rate for a 30-year fixed-rate mortgage is currently 3.05%, according to Freddie Mac. That’s very low and makes homebuying much more affordable for buyers. This is a major reason why buyers are looking to get into the local real estate market, despite rising home prices.
  • The pandemic and working remotely changed what many people need in a home. Right now, the going rate for a 30-year fixed-rate mortgage is 3.05%, according to Freddie Mac. That’s very low and makes homebuying much more affordable for buyers. This is a major reason why buyers are looking to get into the local real estate market, despite rising home prices.
  • The largest generation, Millennials, are aging into peak homebuying age. As the largest real estate group continues to get in the real estate market, we’ll be seeing increasing demand for housing.

Right now, buyer traffic is strong in almost every state across the country, including in the Pacific Northwest.

At the same time, seller traffic is not as strong in comparison.

Supply is low. Here’s why:

  • Insufficient new housing construction for more than a decade. With fewer housing starts, there are fewer homes available on the market to keep up with the growing demand among buyers.
  • People were hesitant to sell during the pandemic. The health crisis created a great deal of uncertainty among homeowners we were thinking of selling. As a result, many held off on putting their homes on the market during that time. But they’re all coming out of the woodworks now.
  • Less turnover as Americans chooses to stay in their homes longer. While many homeowners may be looking to make changes to their home to suit changing lifestyles and needs, many others are looking to stay put. As such, there aren’t as many homes available in the market for buyers to take advantage of.

What Does a Balanced Market Look Like?

A real estate market is considered equally balanced among both buyers and sellers when there is 6-months’ worth of housing inventory available for buyers. When that number drops below 6 months, that means inventory is tight and the market favors sellers.

Buyers will have more competition amongst each other because there are more buyers looking for homes than there are homes available for sale. This is what drives home prices up.

In the Pacific Northwest, there is far less than 6-months’ of housing inventory available, which is why it’s a seller’s market across all real estate markets in the area.

Housing Inventory Throughout the Pacific Northwest

Let’s take a look at some of the major housing markets throughout the region to see what their housing inventory situation is like.

Seattle, Washington

Seattle has long been a hot housing market, not just in Washington State but in the entire US as a whole. Right now, Seattle has very low inventory and high competition among buyers.

Low interest rates have been key to the boom in the market, as well as the scarcity of available homes. This will only intensify as more Millennials get into the market.

Right now, Seattle has less than 1-month of available housing supply to meet the high demand of buyers. This is contributing to the hot seller’s market that the city continues to see.

Redfin characterizes the Seattle real estate market as “very competitive”. Many homes get several offers, and the average home sells for about 3% above the listing price and goes pending in about 7 days. Hot properties can sell for as much as 7% above the listing price and go pending in as little as 5 days.

Here are a few other stats from Redfin regarding Seattle’s housing market:

  • Sale-to-List Price: 102%
  • Homes Sold Above List Price: 40.5%

According to real estate research firm Zillow, Seattle’s average home price is at $875,450, marking a 12.3% increase from 1 year ago. In Washington State as a whole, home prices are currently sitting at $548,280, which is 22.8% higher than where they were the same time last year.

Denver, Colorado

The Denver Metropolitan Area’s real estate market continues to see low inventory for homebuyers to choose from. The number of available homes and condos for sale fell between August and September 2021, and supply remains very tight. As of the fall of 2021, Denver is seeing a mere 1-month supply of homes available for sale.

Having said that, there may be signs that the market may be trending towards balancing out. Sales and closings were down over the latter half of the second quarter of 2021, while available housing inventory remained tight.

According to Redfin, Denver’s housing market is considered “very competitive”. Many homes get multiple offers, and some are sold without any contingencies.

The average property is currently selling for about 2% above the listing price and goes pending in about 6 days. In some cases, homes can sell for as much as 5% above the listing price and go pending in approximately 4 days.

Here are some other stats about the Denver housing market according to Redfin:

  • Sale-to-List Price: 101.4%
  • Homes Sold Above List Price: 47.9%

Home prices in Denver are now averaging $568,178 according to Zillow, marking an 18% increase from the same time last year. In Colorado as a whole, home prices are averaging $516,875, which is 21.1% higher than 12 months earlier.

Boise, Idaho

For the past couple of years, Boise has been one of the hottest real estate markets in the entire nation. And that fact has not changed yet.

This area continues to be a hot seller’s market with very low inventory sitting at a low 1.2-months’ supply. That’s about a 50% decrease from the same time last year.

Like Seattle and Denver, Boise’s housing market is classified as “very competitive” according to Redfin. Homes sell quickly and often get multiple offers. Other pertinent stats about home sales in Boise include the following:

  • Average Number of Days on the Market: 9
  • Over List Price: 0.4%

In Boise, the current average home price is $525,825, marking a whopping 45.1% year-over-year change since the same time in 2020. This stat alone supports the fact that Boise is certainly one of the hottest markets in the country right now, if not the hottest.

In all of Idaho, the average home price is $436,922. That’s 37.2% higher than where prices were the same time last year.

Portland, Oregon

Housing available is very tight in Portland, OR. Right now, there is only a 1-month supply of homes available for sale, which is far below what is considered to be a balanced market.

Portland’s housing market is also considered competitive as per Redfin. Some homes get multiple offers, and the average home sells for approximately 2% over the listing price. And hot properties can sell for 6% over the listing price and go pending in about 5 days.

Other Redfin Stats regarding the Portland housing market are as follows:

  • Average Number of Days on the Market: 9
  • Sale-to-List Price: 102%

In Portland, the average home price is currently $558,685, as per Zillow. That’s a 16.2% increase from the same time in 2020. In the entire state of Oregon, the average home price is $474,505, marking a healthy 20.9% increase from 12 months earlier.

If you’re wondering “What’s Causing Today’s Competitive Real Estate Market?”, wonder no more. With tight inventory and lots of demand, the competition will remain fierce. And that’s good news for sellers.

If you’re thinking of selling, let’s connect to talk about our local area and how you can take advantage of today’s unprecedented housing market.

Today’s Mortgage Rates

Looking to Buy a Home?

If you have questions about mortgages and selling, Sammamish Mortgage can help. We are a local mortgage company based out of Bellevue, Washington that has been serving the entire state, as well as Oregon, Idaho, and Colorado since 1992. Our mortgage financing professionals can work with you to help you determine which one of our mortgage programs is right for you. Contact us today with any questions you have about mortgages.

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