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  • Phil Wells

April Market Update - Latest Housing Market Update


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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