Video Transcript below:
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Well it's April and I have the latest
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figures and news to share with you to
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keep you up to date with what's
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happening in the market, both
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nationally and here in Spokane. My name
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is Phil Wells i'm a real estate agent
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who takes the time to keep up to date
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with the market and I want you to be as
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informed as possible too.
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In this video we're going to take a look
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at the pending home sales from February
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as well as mortgage rates and loan
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applications. We'll also take a look at
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some
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real estate articles that stood out to
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me recently. We'll then try piece it all
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together at the end figure out what it
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all means and see we can predict where
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the market's heading. So let's get into
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it.
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Looking first at pending sales for
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existing homes in February. So why do we
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look at pending sales rather than closed
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sales?
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Well it takes about 30 to 45 days to
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close a transaction
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so if we were looking February's
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closed transactions
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we'd be looking at market activity from
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December or January
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whereas pending home sales in February
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give us the most up-to-date impression
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of where the market's heading.
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A pending home sale is exactly what it
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sounds like, it's a home that's had an
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offer accepted or in some other way has
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ended
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up in escrow waiting to transfer
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ownership. Nationwide contract signings
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fell
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10.6% compared to January and when
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compared to last February
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contract signings fell 0.5%. Where
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i am in the Western Region,
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contract signings fell at 7.4%
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compared to January this year
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but were up overall 1.9% compared to
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February last year. The National
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Association of Realtors chief economist
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summed it up like this,
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"the demand for home purchases is
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widespread, multiple offers are prevalent
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and days on market are swift, but
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contracts are not clicking due to record
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low
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inventory." What this man is saying
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reflects almost exactly what i'm seeing
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here in Spokane.
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New listings are attracting outsized
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attention even on homes that 18 months
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ago wouldn't have been that desirable.
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But there just aren't that many
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transactions happening because there
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aren't that many homes out there to buy.
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If there were more homes available for
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sale in my opinion home prices would
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stop rising so rapidly
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and there would be more transactions
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taking place each month. Looking now
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at mortgage rates. So everyone has been
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hit by radio and tv ads saying that
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interest rates are "near record lows".
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Notice that change in verbiage, "near
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record lows". It used to be "at record lows".
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So what's actually been happening with
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interest rates?
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Sticking with February for a second we
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started February with mortgage rates for
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the 30-year fixed mortgage
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being 2.79% and at the end of February
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they were 3.27%.
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That's nearly a 0.5% gain over a
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one-month period -
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in the mortgage world 0.5%
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gain is huge. I am
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able to give you up-to-date figures for
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mortgages - as of April 7th (today when i'm
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recording this)
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interest rates are 3.34%. So it's plain to
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see that sub 3%
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mortgages are on their way out and will
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this have an impact on the market? We'll
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have to wait and see.
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Sticking with mortgages let's look at
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loan application rates. This is a huge
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leading indicator when it comes to the
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housing market
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because it doesn't matter what rates are
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if nobody's applying for a loan.
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Let's head over to the Mortgage Bankers
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Association the MBA
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to see what the experts are saying right
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now. Joel Kan is an associate vice
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president at the MBA
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and he said, "after seven consecutive
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weeks of increasing mortgage rates
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the 30-year fixed rate declined
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three basis points to 3.33%,
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which is still almost 0.5%
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higher than at the start of the year
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(which we highlighted before) mortgage
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applications for refinancing and home
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purchases
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both declined but purchase activity was
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still convincingly higher than the
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pre-pandemic induced drop
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seen a year ago as well as up six
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percent from the same week in March 2019.
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He continued by saying "many prospective
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home buyers this spring are feeling the
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effects of higher rates
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and rapidly accelerating home prices.
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Record low inventory
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is pushing home price growth at double
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the rate from a year ago
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and even above the 10% growth rates seen
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in 2005.
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The housing market is in desperate need
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of more inventory to cool
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price growth and preserve affordability".
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Now throughout this article here's the
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point that really stood out to me,
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"higher mortgage rates continue to shut
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down refinance activity,
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as the pool of borrowers who can benefit
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from a refinance
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further shrinks." In my opinion the
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ability to refinance at a really low
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sub 3% rate has been one of the key
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factors for people not listing their
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homes for sale.
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There are other factors of course out
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there like the low inventory to choose
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from when you do sell.
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But with it becoming less desirable to
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refinance and there's still a huge pool
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of potential buyers out there
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are we gonna see more people choosing to
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sell in summer 2021?
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Who knows. Now i wanted to take a brief
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look at some news articles that stood
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out to me recently.
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So just looking here at Redfin we can
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see
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homes sell at the fastest pace on record,
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more homes ever selling above their
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asking price,
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a record of 39% homes sold above list
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price
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bidding wars surpassed 60 in February as
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the housing shortage fuels fierce
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competition.
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Yep let's take a look at one of these
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articles. Straight away the things that
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jump out to me
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on this article, new listings of homes
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for sale were down two percent from the
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same period in 2020
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and down 5 from the same period in 2019
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active listings fell 42 from the same
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period in 2020 to an all-time low
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59% of homes that went under contract had
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an offer accepted within the first two
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weeks on market
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47% of homes had offer accepted
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within the first
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week. 41% of homes sold for more than
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their list price.
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So we can see this really supports the
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data that we've highlighted so far.
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Buyer demand is strong prices are up and
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inventory is down.
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Looking now at my local market, Spokane.
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Fortunately we get data here really
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quickly in Spokane, so looking at the
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closed transaction data is actually
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really valuable here. So let's take a
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quick look and see how what's happening
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locally compares to what's happening
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nationally.
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Here in Spokane sales are actually up
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2.3%
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average prices are up 20.7%
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medium prices are up 17.9%
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inventory is down and distressed home
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sales are down as well.
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Other than sales actually being up
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reflects exactly what's happening
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nationally.
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We've got a low inventory, prices are up,
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things are selling quickly - you can see
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we've only got 11 day supply here of
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properties in Spokane.
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As soon as things do hit the market here
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they're getting under contract pretty
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quickly.
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Now let's try piece all this together,
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make sense of it and try to figure out
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where we're going.
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We have a reduced number of pending home
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sales nationally, we have a majority of
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listings going under contract above
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asking price within the first two weeks,
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fewer active listings and fewer new
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listings as well.
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All this points to one key factor
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causing an imbalance in the overall
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housing market.
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As the economist from the National
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Association of Realtors said we clearly
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have a supply issue here.
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More homes for sale are needed to
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balance out this market and to satisfy
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built up buyer demand. Like I mentioned
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earlier it is possible that
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rising interest rates will take away the
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incentive for home buyers simply to
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refinance
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and just sit on a sub 3% loan for many
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years. Alternatively those that could
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have benefited from the low rates
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already have and
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are prepared to just sit on that rate
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for many years. I'll be watching this
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very closely for the next few months to
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see what does happen. That's it for this
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video. I hope you gained from this video
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if you did
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please give me a like and subscribe as
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well, that really helps me out. If you are
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in the Spokane area and looking at
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listing your home for sale
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please get in contact with me and i'd be
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honored to work with you. Until the next
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one thanks for watching.
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