It’s going to be a tough house hunting season for buyers, but it’s particularly brutal for those in Seattle.
While competition and prices have been rapidly rising in real estate markets across the country, Seattle buyers are facing major obstacles to landing their dream home.
Open houses are jammed packed, bidding wars are the new normal and homes are selling for well above asking prices.
Home prices in the city have seen double-digit growth for more than a year, according to the S&P CoreLogic Case-Shiller Home Price Index.
“This is the craziest market I’ve seen,” said Kyle Moss, a real estate agent with Redfin who was born and raised in Washington. “We have a sea of very, very well qualified buyers coupled with the lowest amount of homes for sale. It’s a serious problem.”
One reason is that the city has been flooded with new residents, thanks to its strong economy. The Seattle area is home to tech giants like Amazon and Microsoft, as well as other big employers like Starbucks that tend to pay well.
“If someone is making enough to qualify for a $700,000, $800,000 or million dollar mortgage, that is always going to drive housing prices up,” said Moss.
Many of the buyers in the market are first-timers, according to local agents, but there’s also been an increase in foreign buyers paying all cash.
The city has had an inventory problem for about four years, according to Sam DeBord, managing broker for Seattle Homes Group. Regulations and geographical barriers make it hard for builders to put up new homes.
“We are falling behind tens of thousands of units a year and have been for several years,” he said. “The basic law of supply and demand can’t be ignored. That is what is at the heart of this housing crisis.”
It’s certainly not impossible to become a homeowner in Seattle. It just takes a lot of time, a thick skin to deal with rejected offers, and a little creativity.
Brian Harris and his partner recently became the winning bidders on a three-bedroom home in Seattle.
But it wasn’t easy reaching that point.
Harris said they were originally searching for a home within 10 miles of the downtown area, but competition was so intense they pushed it even farther to 20 miles out.
Open houses took over their weekends and eventually spilled into their weeknights as well.
“It is all encompassing,” Harris said. “We found we couldn’t wait for the weekend. If a house came on the market on Monday or Tuesday, it was pending by Thursday or Friday.”
Homes are selling fast in Seattle, spending about 25 days on the market, down from 65 in March 2012. It can be hard to find parking at open houses and some are so crowded that it’s hard to move around to see the home.
Sellers are seeing some of the biggest price gains in almost a decade, and they know they’re in the driver’s seat.
“You put a house on the market you will have 100 people through the open house on the weekend and maybe 15-20 offers,” said Patti Hill, a real estate agent who has worked in the Seattle market for more than 17 years.
And despite the high demand, the housing stock isn’t always impressive.
Harris said that while some owners still take the time to clean and present their homes in the best way, others aren’t even bothering. “It was surprising how little effort some sellers are making.”
To win a home, buyers are putting in aggressive offers.
“Some of them are kind of scary because they’re waiving contingencies that puts earnest money in jeopardy if something happens,” said Hill. It’s common for Seattle buyers to waive inspections and appraisals and go above list price.
When Harris and his partner found their soon-to-be new home, they did everything they could to come up with the winning bid. They waived all contingencies, went above the asking price and had an escalation clause.
“Buyers are totally at the mercy of whatever the sellers wants,” he said. “If you want the house, you do whatever it takes.”
The pair also talked to the listing agent to find out about any special circumstances about the owner and incorporated that into a personalized letter and also offered a 30-day rent-back-to-owner for free.
Their winning bid was $425,000 — $60,000 over the asking price and above their original budget.
They are set to close this month, with a move in date in June.
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