Pending sales in Sequim and Port Angeles are at an all time high, at least as far back as I have tracked this data during this past 10 year recession. We have 125 pending sales, which explains why buyers are having trouble finding their ideal home. In one way of saying it, “There’s no inventory left,” although that would be an exaggeration. There is still inventory, but the inventory for the 3 bedroom, 2 bath single level modern home on a nice piece of property is almost non-existent. If it does appear on the market, it’s gone very quickly.
Pending Sales and Price Increases
Here’s what this means. Prices are finally starting to go up significantly. This past 12 months we have seen increased sales and upward pressure on prices as homes were selling at full list prices, and some were selling for slightly above. But now we are seeing homes selling for more than previously established Fair Market Value (FMV). In other words, supply and demand is now dramatically effecting the sales price and sales numbers, so we now have more pending sales than ever before.
Many buyers are feeling desperate, because they can’t find what they want. If and when they find something that they decide would be a workable compromise, the list price is often higher than they feel it’s true FMV is. Here’s a real life example.
I showed a couple a home that had been on the market for over 700 days. In other words, it is a home that no one has wanted in two years on the market. It has been vacant the entire time, and it appears the seller has been doing virtually no maintenance. It’s an older home, and the floor plan is not all that attractive. There are some other features of the property that are attractive, but this is definitely a home that retirees moving to Sequim did not find appealing. The seller kept the price way too high, and it was clearly overpriced the entire time. This is the classic example of a very stubborn seller who refuses to acknowledge the laws of supply and demand by setting the price artificially high and just sitting on it despite the fact that so many buyers had walked away from it over such a long time period.
Pending Sales Push Offers
In my opinion, and the opinion of my buyer clients, this property had a FMV of $275,000 to $285,000. I show and sell a lot of homes, and the comps indicated a value in that range. But the seller had it listed for much more, $345,000. There was just no way that the home was worth that much. There were no comps supporting that, and far too much work was needed on the home. The entire kitchen needed a major upgrade. Some of the basement rooms were rather odd.
My clients decided to make an offer of $285,000, and after some counteroffers back and forth, they came up substantially more than they felt was justified to $315,000. They couldn’t find another suitable home in the inventory, and so they were willing to pay $15,000 to $20,000 more than it was worth. But the seller would not come below $335,000, which was way more than this old house was worth.
While my clients were considering whether they should walk away forever or pay even more, the home went under contract and became one of our statistical pending transactions. We don’t know the sales price yet, because that doesn’t become public information until it has closed, but it would appear this home sold for $335,000 or something close to that. This means this home sold for about $50,000 more than it’s historical FMV. Of course, once pending sales actually close, they become the new standard and establish FMV.
That is positive proof that prices are suddenly going up when you add that to the 125 pending sales we have right now. I have buyers who cannot even find a suitable home in the inventory. It is my opinion that supply and demand is finally catching up with Sequim, and now we have proof with all the pending sales.