Over the past few months, there have been numerous reports and statistics that point to a cooling trend within the Seattle-area real estate market. More inventory has come onto the market. Price reductions have become more common. And home prices are rising more slowly than during the last couple of years.
There’s another trend that might make a comeback in the near future. If things keep going the way they are, home sellers in Seattle might once again resort to paying buyer closing costs.
Will ‘Sellers Concessions’ Make a Comeback?
Closing cost contributions and other seller concessions are rare in a red-hot real estate market. That’s because sellers have plenty of competing offers to choose from. That has been the case in Seattle for several years now.
In a seller’s market, homeowners are often reluctant to pay buyer closing costs for the simple fact that they don’t have to. In a multiple-offer scenario, a seller can choose the best offer from several. And that’s usually the one with the strongest financing and the fewest “strings” attached.
But the market has slowed a bit. While there is still an inventory shortage relative to demand, homes are staying on the market longer today than in the past (on average). Price cuts have also become more common in the Seattle real estate market.
Reducing the asking price is one of several strategies sellers use to expedite the sale of their homes. Offering to contribute money toward the buyer’s closing costs is another such strategy.
Most of the mortgage programs available today allow sellers to contribute a certain amount of money toward the buyer’s closing costs. Homeowners sometimes use this strategy as a way of attracting more offers, in order to sell faster.
Related: Who pays which costs in Washington?
Changes in the Seattle Housing Market
Such concessions have been rare over the past few years, because the market largely favored sellers over buyers. But there appears to be a slow-and-steady shift taking place in the Seattle housing market. It’s reasonable to believe that more and more sellers will start to use closing cost contributions to attract buyers, particularly if the market continues to cool.
A November 2018 press release from the Northwest Multiple Listing Service stated:
“Many sellers are feeling the change, [MLS director] Deely noted. ‘Longer market times upset their expectations of a quick sale,’ he explained. Also, he said, brokers are reporting some sellers’ pricing remains flexible ‘even after a price reduction as buyers take advantage of a seller’s desire to beat the competition.'”
Home-price appreciation is another sign that the Seattle-area real estate market is finally starting to cool. There was a time when the median home value in the area was rising by double digits, year over year. But price growth has slowed down a bit.
In fact, one recent industry forecast predicted that house values in the Seattle area would rise somewhere between 1% and 2% during 2019. That’s a big change from the double-digit growth we saw during 2016 and 2017. The slowdown in appreciation is likely the result of several different factors, including affordability issues among some would-be buyers.
The bottom line is that the Seattle real estate market of today is very different from two or three years ago. And sellers are starting to notice the change.