How Do You Know If Your Home Is A "Unicorn"?
Table of contents:
Have you ever wondered how you can know if the value of your home is a true value? What if your home value has gone up substantially, but your home isn’t like any other homes in your neighborhood? These are important questions, and I want to address them in three parts: home appreciation, values of other homes around you, and “unicorn status.”
Home Appreciation
First off: there is no doubt that your home value has risen dramatically in the last few years, with much of the appreciation having taken place in the last two years due to dramatically low interest rates and a dramatically low supply of homes to purchase. This has affected all home values, bringing them WAY up—22% just in 2021. As it stands today, the market is currently undergoing a “shift”: home prices are correcting as interest rates increase. In early 2021 and throughout the rest of last year, rates were in the 2% range, making buying power incredible. With $1M as the new $800K, buyers could afford WAY more for their money and they weren't afraid to use that buying power. Coupled with an average of ONLY 47 homes on the market throughout the ENTIRE year, it produced one of the most incredible markets ever for sellers. Fast forward to today, with interest rates now hovering around 5%. This is a dramatic increase for purchase power and changes the value of what buyers can purchase; they are back to $800K homes and adjusting their expectations. In addition we now have about 160 homes on the market week over week. This supply increase gives more options to buyers each week and puts downward pressure on appreciation, and although year over year the prices are still up, we are seeing a slight downward pressure on home prices. The change occurred most notably in May of this year, when rates rose by 2% virtually overnight and supply tripled in a week. Take Canterwood, for example: a few months ago when I listed a home on April 27 there was ONE home in the neighborhood; on May 4, only a week later, there were TEN homes to choose from.
Home Values Around You
This brings us to part two: What about the values of the comparable sales in your neighborhood? The online algorithms (Zillow and Redfin) are more misleading than ever as they are a computer looking at old data, all outdated at this point as the market conditions (interest rates and supply of homes) are dramatically different.
Also, agents who are NOT working full time and local to your area may have their values inflated, as the old sales numbers are now in the “rear view.” The last 30 days is all you should be looking at as the new market takes hold. You should be working with a full-time, active agent who is currently selling homes; they will have the skills and understanding of the current-day market, since it has changed dramatically. Prices are still incredible, but seller expectations must be met. Your home will likely sit on the market longer and unless you have a “unicorn,” we are not seeing multiple offers—we are back to negotiating and a more neutral market where buyers and sellers both have to give a little. If you are doing research, it's best to look at the pending and active homes on the market right now and compare their values to what yours might obtain. We run our numbers every Monday and Wednesday to track how many homes are on the market and the number of pending vs. active homes to see the strength of the market. We look at prices and days on market so we can try to triangulate the “sweet spot” for pricing your home, which in turn means we need to be able to see inside it, something Zillow can’t do. Our office also tours the Gig Harbor market every week, getting eyes on the inside of the currently listed homes so we know how it compares to yours when we see what they sold for vs. your product. Finally, we work with buyers in the market so we know what they are capable of and what the market temperature and mindset of the buyers are when they are house hunting. At the time of writing this article, many buyers are looking for 1-3% in closing costs to help with bringing their rates down to make their monthly payments more affordable. But if your house has “unicorn status,” the rules will be different.
Unicorn Status
Now, part three: What if your house is different from anything out there? How do you know its value? Again, hiring a local and full-time agent is the best in triangulating the price—they will know the comps, market temperature, and true “uniqueness” of the property for the location. As full-time, hyperlocal Gig Harbor real estate agents, we can spot a unicorn. After we do a site visit to get a read on upgrades, lot, smell of the home (it’s a thing), size, and layout, we work with you on finding comparable properties to help us come up with a price, an exercise that is also important when the appraiser comes around. It can be harder to pinpoint the price, but the best approach is to always price close to market value and let the buyers set the price with interest and offers. If you price too high you’ll be ignored, but if you price too low you may not get the multiple offers to bring it up high enough. This is pretty hard to do, though, as buyers even in the current market can spot a unicorn. I would say about 20% of homes listed now with a view or land are still obtaining multiple offers above ask, but that initial list price is paramount in attracting all the buyers to your home.
Here are some examples of homes that were on the market recently, where the agents and sellers adjusted the price for the CURRENT market:
11020 54th Street NW: It received three offers in 48 hours and is currently pending at $100K+ over asking price. The home has been remodeled, is not too big, is in an epic location with incredible views, has room to store an RV, and a bedroom on the main floor. It was a unicorn for Gig Harbor and priced to attract the masses. With careful negotiation, the sellers now have an incredible sales price.
1708 154th Street Court NW: Currently pending, it received 5+ offers. An updated rambler with 2,800 square feet (a sweet spot on square footage), acreage, a beautiful remodeled studio outbuilding, RV parking, trails for walking or biking, and in a gated neighborhood but NOT part of an HOA. It escalated an estimated $100K over asking in only 4 days, in a market where offer review periods are a thing of the past.
Both of these homes were listed by hyperlocal, experienced full-time agents. These types of realtors are going to have the skills in the current market to identify your home’s true value, especially if it is in a category of its own. And even then, it’s always the buyers that set the market. An expert realtor will help you decipher the buyer's feedback after showings to adjust your strategy as your home is on the market.
I hope this helps! Identifying home value is a skill which requires boots on the ground inside the competition as well as regular data analysis in order to know the strength of the market and how aggressive you can price your home. You want an experienced, smart, and local agent to help with that.
Your neighborhood expert, Paige Schulte, has all you need to know about our wonderful community here in Gig Harbor. Visit Paige’s Gig to learn more.
Interested in selling your current home or starting the search for your dream home? Call us today at (253) 313-4093 or book a call at your convenience.