Staying Ahead in the Real Estate Game

By Leslie Williams and Mike Miller, Partners, Matrix Real Estate

Results from the Matrix Real Estate Survey 2010 (click here for the related PDF presentation)

We are all influenced by media, blogs, social networking and various other forms of communication. The national and international news is full of contradictions – the recession is over…unemployment is up…housing prices are creeping up...housing prices are stable…housing prices are still falling. Getting a good local snapshot is not easy so we at Matrix Real Estate decided to survey real estate agents, prospects and buyers to see what they think about housing in our region and how our current economy is affecting them.

This is our third year surveying Seattleites viewpoint as to what is happening in the real estate world. We had some surprising and informative results. We are facing arguably the fourth year of our downturn and it seemed like a good time to do a follow up.

We wanted to know – How do YOU stay ahead in the Real Estate Game?

Who responded to the survey?

Just under 1500 people in the Puget Sound area gave us their opinion on a variety of real estate topics. Over 25% are in their 50’s, and 70% are between 30 and 59 years old. This year over 60% live in a single family residence, far different than last year where the majority lived in multi-family housing. Over 80% of the respondents currently own their home. Last year when asked if they are in the market to buy a new home in the next 12 to 24 months, over 62% said yes or maybe; this year just under 50% responded affirmatively. Many of our respondents had recently bought, so many believed 2010 was a good time to buy.  So what about 2011?

Where is the first place you turn to when searching for housing?

As in years past nearly 70% say they start their home search on the Internet . Clearly the Internet continues to be a powerful tool for home shoppers. We asked what websites they used for their search. The top four websites include Windermere.com (39%); followed by Zillow.com (36%), and Redfin.com and Craigslist.org (30% each). These are each down slightly from last year so we conclude that buyers are using more unique websites when they shop for housing.

How many people think now is a good time to buy and what are they looking for?

Over 82% of our respondents think 2011 is a good time to buy, 10% higher than 2010 and 28% higher than 2009. For those in the market today, nearly 55% were interested in buying a single family home, while last year 55% said they were shopping for some form of multi-family housing. And in 2008, 64% were interested in multi-family living. This decrease may be because there is less inventory in new construction condominiums today. The majority – over 60% will shop both new and resale, in huge contrast to last year where 3 to 1 preferred new construction, this year 2 to 1 prefer resale. Again, this may be due to lack of inventory in new construction.

Last year those looking to buy a second home or an investment property preferred a condominium nearly 3 to 1. This year they preferred single family 2 to 1.

And now we want to know WHY our respondents think now is a good time to buy.

Nearly 60% cite lower housing prices, less than last years 70%. Low interest rates continue to be cited by 50% of our respondents as a good reason to buy now. For 2010, 43% cite surplus inventory as a reason to buy now compared to 55% last year. This supports our theory that the market is noticing the diminishing housing inventory. The most surprising result is in 2010, 10% of our respondents said they thought now is a good time to buy because they were tired of paying rent. In 2011 this number went up to 30% - a huge jump. Does this mean Seattleites think rents are going up? Or just that housing prices are at the bottom? Let’s see what our respondents think…

So, where are prices headed?

Since 60% cited lower housing prices as a good reason to buy now, we thought we would explore this further. In 2009 nearly 50% thought prices were decreasing; in 2010 only 27% thought prices were decreasing while 50% believed prices were stable and 20% thought they were increasing. When looking ahead to 2011, 33% believe prices are stable - a huge decrease from the former years of this survey. And in further contrast to last year, over 50% of our respondents felt prices were bouncing along the bottom.

Consumer confidence is clearly on the rise. One of our most surprising results is that in 2009, 58% of our respondents were delaying their purchase due to the economy, in 2010 that number was a steady 54%. For 2011 only 38% cited the economy as a reason to delay their purchase decision.  And in contrast to former years, 72% of our current respondents said they were not delaying their purchase decision due to concerns about job stability, while last year this number was 64%. As one respondent said “The Real Estate market will improve when the economy improves”.

What price range is most popular today?

For 2011 the majority selected the $300K to $400K range. For 2009, price points were a bit higher with most in the $400K to $500K range. But in 2010 and looking into 2011, lower pricing seems to be the sweet spot. This may be due to the fact that home buyers believe they can get what they need in a new home for a lower price than in the past.

Buyer priorities changed dramatically in the past 12 months.

When asked their top three priorities when choosing their next home, for 2009 their answers were parking and view (33% each), privacy (32%) and sound proofing (32%). For 2010 a far different picture emerged. The vast majority – an astounding 49% said price and  floorplan/style of residence and 38% said the ability to walk to restaurants and services. For 2011, the same three top priorities, price (35%), floorplan/style of residence (41%) and walk to services (28%) emerged as the winners. Views were noted by 24% in both 2010 and 2011. And in 2011, outdoor space and closer commute emerged as new priorities at just over 20% each.

What is your opinion on real estate auctions and bank owned properties?

Auctions have become more commonplace in Puget Sound so we added this question for our 2010 forecast and this section then as now had the most comments. In 2010, the majority (38%) said they didn’t like the auction format as you were not guaranteed that you would leave with a property purchase. And 31% said that auctions are a stressful way to buy a property. This year, many auctions later, the top concern is that auctions are a stressful way to buy a property (40%), while the fact that auctions are not a sure thing in guaranteeing that you bought a property dropped to 30%.

For the past two years, over 50% of our respondents believe that auctions lower community and neighborhood value. “I hope that we do not see many more of these. Buyers don’t always get the best deal and it hurts the rest of the community and property values.” This sentiment was repeated frequently in the comment section. Another frequent comment is that they didn’t know much about auctions but they just don’t like them. But others had a different take on auctions such as “I believe auctions are a great way to buy if you do thorough research and set a cap and leave emotions out of it.”

On the other side of the coin, over 50% of our respondents are interested in a bank owned property. For 2011 nearly 50% believe bank owned properties are a good buy while last year that number was under 40%.

As one respondent put it

“Now is a good time to buy, prices are low, rates are low.”

2010 has continued to be a challenge, however most of our respondents had made adjustments to accommodate “the new world”. As one respondent put it “Real estate is a great investment, but like any investment there are risks. You should hold a property for a while to invest. And real estate is the only investment with the side benefit of giving you a place to live.”

We couldn’t have said it better. .

As another respondent put it: “Crazy market; crazy times.”  That just about sums it up for all of us.

Once again we want to thank all of you who responded to our survey. We know that your perception is reality, and it is your opinion that really counts.

Leslie Williams and Mike Miller are Partners of Matrix Real Estate, a Seattle-based real estate brokerage formed in January 2010 as a partnership of MCM Group and Williams Marketing, Inc. Matrix Real Estate specializes in the sales and marketing of new developments and offers complete real estate brokerage services to corporate and individual buyers and sellers of Puget Sound-area real estate.