Local Market Update – February 2018

With competition for homes growing and inventory shrinking, the real estate market in January was as hot as ever. Home prices were up by double digits as buyers chased severely limited inventory. The number of homes for sale hit a record low for the month of January, which should strongly favor sellers as we move into the prime spring selling season. The average home seller in our area now makes a 64 percent profit, the fourth-highest rate of any region in the country, according to ATTOM Data Solutions.

Eastside

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Home prices on the Eastside continue to climb. The median price of a single-family home was up 18 percent over last January to $938,000 —­ virtually unchanged from the record high set a month ago. West Bellevue, King County’s most expensive area, saw the median home price surge to a record high of $2.72 million. With less than a month of available inventory, prices aren’t expected to cool any time soon.

King County

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Single-family home prices in King County soared 20 percent over a year ago to $628,388, with double-digit increases recorded in every area of the county. Lack of inventory continues to fuel the market. There were 21 percent fewer homes for sale here as compared to a year ago, with inventory hitting a record low for the month of January. The region has now been the hottest housing market in the country for 15 months in a row.

Seattle

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An ongoing shortage of inventory combined with an economy that continues to add jobs has kept the Seattle housing market very competitive and increasingly expensive. Seattle’s median price hit a new record in January jumping 19 percent to $757,000. Despite the increase in prices, brokers are reporting open house traffic that can number in the hundreds of interested buyers.

Snohomish County

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Home price increases in Snohomish County were more moderate than those in King County. The median price of a single-family home grew 10 percent over a year ago to $450,000. That number is down from the high of last year, and reflects a more common seasonal slowdown.


Posted on February 10, 2018 at 12:32 am
Keith Childress | Posted in Local Market Update |

The Gardner Report | Western Washington Q4 2017

Economic Overview

The Washington State economy added 104,600 new jobs over the past 12 months. This impressive growth rate of 3.1% is well above the national rate of 1.4%. Interestingly, the slowdown we saw through most of the second half of the year reversed in the fall, and we actually saw more robust employment growth.

Growth continues to be broad-based, with expansion in all major job sectors other than aerospace due to a slowdown at Boeing.

With job creation, the state unemployment rate stands at 4.5%, essentially indicating that the state is close to full employment. Additionally, all counties contained within this report show unemployment rates below where they were a year ago.

I expect continued economic expansion in Washington State in 2018; however, we are likely to see a modest slowdown, which is to be expected at this stage in the business cycle.

Home Sales Activity

  • There were 22,325 home sales during the final quarter of 2017. This is an increase of 3.7% over the same period in 2016.
  • Jefferson County saw sales rise the fastest relative to fourth quarter of 2016, with an impressive increase of 22.8%. Six other counties saw double-digit gains in sales. A lack of listings impacted King and Skagit Counties, where sales fell.
  • Housing inventory was down by 16.2% when compared to the fourth quarter of 2016, and down by 17.3% from last quarter. This isn’t terribly surprising since we typically see a slowdown as we enter the winter months. Pending home sales rose by 4.1% over the third quarter of 2017, suggesting that closings in the first quarter of 2018 should be robust.
  • The takeaway from this data is that listings remain at very low levels and, unfortunately, I don’t expect to see substantial increases in 2018. The region is likely to remain somewhat starved for inventory for the foreseeable future.

Annual change in home sales

Home Prices

  • Because of low inventory in the fall of 2017, price growth was well above long-term averages across Western Washington. Year-over-year, average prices rose 12% to $466,726.
  • Economic vitality in the region is leading to a demand for housing that far exceeds supply. Given the relative lack of newly constructed homes—something that is unlikely to change any time soon—there will continue to be pressure on the resale market. This means home prices will rise at above-average rates in 2018.
  • Compared to the same period a year ago, price growth was most pronounced in Lewis County, where home prices were 18.8% higher than a year ago. Eleven additional counties experienced double-digit price growth as well.
  • Mortgage rates in the fourth quarter rose very modestly, but remained below the four percent barrier. Although I anticipate rates will rise in 2018, the pace will be modest. My current forecast predicts an average 30-year rate of 4.4% in 2018—still remarkably low when compared to historic averages.

Days on Market

  • The average number of days it took to sell a home in the fourth quarter dropped by eight days, compared to the same quarter of 2016.
  • King County continues to be the tightest market in Western Washington, with homes taking an average of 21 days to sell. Every county in the region saw the length of time it took to sell a home either drop or remain static relative to the same period a year ago.
  • Last quarter, it took an average of 50 days to sell a home. This is down from 58 days in the fourth quarter of 2016, but up by 7 days from the third quarter of 2017.
  • As mentioned earlier in this report, I expect inventory levels to rise modestly, which should lead to an increase in the average time it takes to sell a house. That said, with homes selling in less than two months on average, the market is nowhere near balanced.

Average Days On Market

Conclusions

Market SpeedometerThis speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the fourth quarter of 2017, I have left the needle at the same point as third quarter. Price growth remains robust even as sales activity slowed. 2018 is setting itself up to be another very good year for housing.

 

 

 

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

 

 

 

 

 

This article originally appeared on the Windermere.com blog.


Posted on January 29, 2018 at 8:27 pm
Keith Childress | Posted in The Gardner Report |

2018 Housing Forecast


Posted on January 12, 2018 at 8:06 pm
Keith Childress | Posted in Home Buying, Home Selling, Housing Market Statistics |

Seattle’s Approach to Winning HQ2

In September Amazon announced a plan to open a second multi-billion dollar headquarters (HQ2) in North America, and as of late October nearly 240 cities had joined the competition to become the company’s second home. Some hopeful contenders have made outrageous gestures to win the favor of the e-commerce giant. Tuscon delivered Jeff Bezos a 21-foot saguaro cactus, Birmingham placed giant Amazon delivery packages all over the city, and Stonecrest, Georgia offered to give the company its own 345-acre city.

Of course Amazon has its own strict criteria for HQ2’s home including an area with low cost of living, an educated and tech-savvy workforce, at least one million people, close access to an international airport, and more. Despite Seattle fulfilling several of these criteria, it was originally believed that Amazon had firmly set its sights elsewhere. However, Seattle is in the running and local leaders are actively trying to convince Amazon that they can work together to make Seattle the best option for HQ2.

Seattle’s Approach to Winning HQ2

While other cities are vying to gain Amazon’s attention and a spot on its radar, Seattle is focused on reconciling and rebuilding its relationship with the company. According to The Seattle Times Seattle-area politicians sent Amazon an apologetic letter asking that the city and its largest private employer hit the “refresh button” in their relationship. It suggested the company and local leaders create a “joint task force” on issues related to transportation, freight mobility, public safety, the gig economy, and public education.

A representative responded a month later saying, “We propose a roundtable discussion in January at our offices to discuss the challenges and opportunities ahead for the city and how we can best work together on them.”

Read the full article from The Seattle Times.


Posted on December 29, 2017 at 5:27 pm
Keith Childress | Posted in Tech Industry |

Local Market Update – December 2017

It looks like we’re skipping the normal holiday slowdown this season with brokers reporting crowded open houses and competitive bidding in many areas. However, since sellers who list their homes at this time of the year are usually motivated to move soon, the holidays are still a good time to buy. Some of the best pricing is historically found between December and February.

Eastside

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The rate of appreciation for homes on the Eastside continues to be as robust – or more so – as in Seattle. Both local and international buyers attribute the appeal of the area to larger lot sizes, newer construction, and highly-rated school districts. Inventory here is extremely low, and homes are selling quickly. The median price for a single-family home on the Eastside reached $851,000 in November, a 12 percent increase over the same time last year.

King County

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The number of new listings in King County is down 19 percent as compared to a year ago. With demand still strong, the median home price in King County rose 15 percent over last year to $630,750. Condo inventory, long an option for more affordable housing, is at a record low as developers opt for building apartments to avoid the legal and financial risks that come with building condos.

Seattle

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Seattle is one of the fastest growing American cities, and demand doesn’t look to be slowing any time soon. Combine that with a very limited supply and it’s no surprise that for over a year home prices here have been rising faster than anywhere in the country. Last month, the median price for a single-family home in Seattle was $741,000, soaring 21 percent from the previous year.

Snohomish County

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Buyers priced out of the King County market are taking this advice: drive until you qualify. Many are ending up buying in Snohomish County. The number of homes for sale was down more than 24 percent here in November and there is currently less than one month of inventory available. The median price of a single-family home was $445,000, up 11 percent year-over-year.


Posted on December 16, 2017 at 12:37 am
Keith Childress | Posted in Local Market Update |

Empty Nesters: Remodel or Sell?


Your kids have moved out and now you’re living in a big house with way more space than you need. You have two choices – remodel your existing home or move. Here are some things to consider about each option.

Choice No. 1: Remodel your existing home to better fit your current needs.

  • Remodeling gives you lots of options, but some choices can reduce the value of your home. You can combine two bedrooms into a master suite or change another bedroom into a spa area. But reducing the number of bedrooms can dramatically decrease the value of your house when you go to sell, making it much less desirable to a typical buyer with a family.
  • The ROI on remodeling is generally poor. You should remodel because it’s something that makes your home more appealing for you, not because you want to increase the value of your home. According to a recent study, on average you’ll recoup just 64 percent of a remodeling project’s investment when you go to sell.
  • Remodeling is stressful. Living in a construction zone is no fun, and an extensive remodel may mean that you have to move out of your home for a while. Staying on budget is also challenging. Remodels often end up taking much more time and much more money than homeowners expect.

Choice No. 2: Sell your existing home and buy your empty nest dream home.

  • You can downsize to a single-level residence and upsize your lifestyle. Many people planning for their later years prefer a home that is all on one level and has less square footage. But downsizing doesn’t mean scrimping. You may be able to funnel the proceeds of the sale of your existing home into a great view or high-end amenities.
  • A “lock-and-leave” home offers more freedom. As your time becomes more flexible, you may want to travel more. Or maybe you’d like to spend winters in a sunnier climate. You may want to trade your existing home for the security and low maintenance of condominium living.
  • There has never been a better time to sell. Our area is one of the top in the country for sellers to get the greatest return on investment. Real estate is cyclical, so the current boom is bound to moderate at some point. If you’re thinking about selling, take advantage of this strong seller’s market and do it now.

Bottom Line

If your current home no longer works for you, consider looking at homes that would meet your lifestyle needs before taking on the cost and hassle of remodeling. Get in touch with a Windermere Real Estate broker to discuss the best option for you.

This post originally appeared on the Windermere Eastside blog.


Posted on December 4, 2017 at 6:22 pm
Keith Childress | Posted in Home Selling |

Local Market Update – November 2017

Prices in our area have now been rising faster than anywhere in the country for twelve months. Sellers seem to be getting the message that now is a good time to put their home on the market. There was an increase in new inventory in October, but with homes selling rapidly, there still aren’t enough properties to meet demand. As a result, counties throughout the Puget Sound area saw year-over-year price increases in the double digits.

Eastside

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The median price for a single-family home on the Eastside rose 10 percent from a year ago to $845,000. Homes in West Bellevue hit a new record median price of $2.6 million. Despite soaring prices, demand has remained strong in this desirable area. And the continued robust economy makes it unlikely that home prices here will cool any time soon.

King County

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The number of new listings in King County increased at the highest rate in more than a year. But, they were grabbed up quickly, with most homes selling in well under 30 days. The shortage of homes for sale propelled prices up, with the median home price in King County jumping 15 percent over the same time last year to $630,000.

Seattle

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Seattle remains the hottest real estate market in the country, with prices rising here at more than double the national rate. Rents in Seattle are also rising faster than almost anywhere else in the country, pushing more people into the home buying market. High demand and slim supply helped boost the median price of a single-family home nearly 18 percent to $735,000.

Snohomish County

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The median price of a single-family home in Snohomish County in October was $440,000, an increase of 14 percent over the prior year. The market here may be moderating slightly. Brokers note that while multiple offers are continuing, listings are experiencing longer market times and fewer above-list price offers.


Posted on November 17, 2017 at 11:51 pm
Keith Childress | Posted in Local Market Update |

The Gardner Report – Third Quarter 2017

Economic Overview

The Washington State economy added 79,600 new jobs over the past 12 months—an impressive growth rate of 2.4%, and well above the national growth rate of 1.2%. However, as we anticipated in last quarter’s report, we continue to see a modest slowdown in the growth rate as the state grows closer to full employment. Growth has been broad-based, with expansion in all major job sectors other than Aerospace (a function of a slowdown at Boeing). Given the current rate of expansion, I am raising my employment forecast and now predict that Washington will add 81,000 new jobs in 2017.

Given the robust job market, it is unsurprising that the state unemployment rate continues to fall. The current unemployment rate in Washington State is 4.6% and we are essentially at full employment. Additionally, all counties contained within this report reported either a drop or stability in their unemployment rate from a year ago. I maintain my belief that the Washington State economy will continue to outperform the U.S. as a whole. Given such a strong expansion, we should also expect solid income growth across Western Washington.

Home Sales Activity

  • There were 25,312 home sales during the third quarter of 2017. This is an increase of 3.6% over the same period in 2016.
  • Clallam County maintains its number one position for sales growth over the past 12 months. Only four other counties saw double-digit gains in sales. This demonstrates continuing issues with the low supply of listings. There were modest declines in sales activity in six counties.
  • The market remains remarkably tight with listing inventory down by 14.2% when compared to the third quarter of 2016. But inventory is up a significant 32% compared to the second quarter of this year. Pending sales rose by 5.2% over the same quarter a year ago, which suggests that closings in Q4 will still be robust.
  • The key takeaway from this data is that inventory is still very low, and the situation is unlikely to improve through the balance of the year.

Home Prices

  • Given tight supply levels, it is unsurprising to see very solid price growth across the Western Washington counties. Year-over-year, average prices rose 12.3% to $474,184. This is 0.9% higher than seen in the second quarter of this year.
  • With demand far exceeding supply, price growth in Western Washington continues to trend well above the longterm average. As I do not expect to see the new home market expand at any significant pace, there will be continued pressure on the resale market, which will cause home prices to continue to rise at above-average rates.
  • When compared to the same period a year ago, price growth was most pronounced in Grays Harbor County where sale prices were 20.1% higher than the third quarter of 2016. Nine additional counties experienced double-digit price growth.
  • Mortgage rates in the quarter continue to test the lows of 2017, and this is unlikely to change in the near-term. This will allow home prices to escalate further but I expect we will see rates start to rise fairly modestly in 2018, which could slow price growth.

Days on Market

  • The average number of days it took to sell a home in the quarter dropped by eight days when compared to the same quarter of 2016.
  • King County continues to be the tightest market, with homes taking an average of 17 days to sell. Every county except San Juan saw the days on market drop from the same period a year ago.
  • This quarter, it took an average of 43 days to sell a home. This is down from the 51 days it took in the second quarter of 2016 and down by 8 days from the second quarter of this year.
  • At some point, inventory will start to grow and this will lead to an increase in the average time it takes to sell a house. However, I do not expect that to happen at any time soon. So we remain in a seller’s market.

Conclusions

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. For the third quarter of 2017, I have left the needle at the same point as the second quarter. Though price growth remains robust, sales activity has slowed very slightly and listings jumped relative to the second quarter. That said, the market is very strong and buyers will continue to find significant competition for accurately priced and well-located homes.

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

 

This article originally appeared on the Windermere.com blog.


Posted on November 3, 2017 at 8:51 pm
Keith Childress | Posted in The Gardner Report |

Local Market Update – October 2017

The typical seasonal slowdown of new listings in September added to frustration for buyers who are competing for a very limited number of homes. Strong job growth continues to fuel demand. The state added 83,000 new jobs in the month of August, and September looked to be just as robust. The result? King, Pierce and Snohomish counties all reported double-digit price increases from a year earlier.

Eastside

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The median price of a single-family home on the Eastside jumped 14 percent from the same time last year to a $855,000. As the median on the Eastside approaches the $1 million mark, the price tag for a luxury home is increasing. Of all the single-family homes that sold on the Eastside in September nearly 40 percent sold for more than $1 million. In the city of Bellevue, two-thirds of the homes sold for more than $1 million.

King County

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The median price of a single-family home sold in King County in September increased 16 percent from a year ago to $625,000. While down from the record high of $658,000 in July, it represents the highest value for any September since records began in 2000. Among the largest metro areas in the U.S., our region has now led the nation in price increases for the last 11 months.

Seattle

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Seattle’s inventory remains as tight as ever, with homes being snapped up in days. A big hiring push by local employers just keeps adding to the pressure. With supply dwindling and demand soaring, prices had only one place to go – up. In September, the median single-family home price in Seattle soared 15 percent over a year ago to $725,000.

Snohomish County

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The median price of a single-family home in Snohomish County sold in September was $450,000, a 14 percent increase over the same time last year. With just slightly over one month’s inventory of homes available, it’s unlikely price growth here will slow any time soon.


Posted on October 19, 2017 at 10:16 pm
Keith Childress | Posted in Local Market Update |

Renting vs. Buying in Today’s Market

The debate about whether it makes more financial sense to rent or buy has been raging for decades. Advocates of buying say: When you rent, you’re essentially paying someone else’s mortgage. Buying, on the other hand, is an investment—one that can significantly increase in value every year you continue living in the home.

Fans of renting say: The extra costs associated with owning a home (interest payments on the loan, property taxes, homeowner dues, improvement/repair costs, etc.) add up. And there’s no guarantee that those expenses will be recouped when the house is sold. Instead of investing in a home, you may be better off investing your savings in stocks, bonds, and other financial securities.

Who’s right?

According to Jed Kolko, one of the country’s most respected real estate economists, “Mortgage rates are still near long-term lows. Because prices fell so much after the housing bubble burst, and remain low relative to rents even after recent price increases, buying is still much cheaper than renting.“

But that’s a blanket statement. The right option for you depends on your personal circumstances, and your answers to the following questions:

 

What’s the real estate situation in your city?

Industry groups put out reports every quarter stating the average national sales price for a home, and the average monthly payment for a U.S. rental. But what really matters is what the numbers show when you dig into them on a local level.

The reports are almost always based on average for all the cities in the country. Delve into the details, and you’ll see there are some cities that fall well below that average, and some that rise far above it. The learning: When comparing housing costs, be sure to base your evaluation on what’s happening in your city and neighborhood, not the nationwide averages.

 

How long do you expect to live there?

If five years is the longest you can envision yourself living in one place right now, renting is probably your best bet financially. But if you think you’re ready to put down roots for as long as 10 years, chances are very good that any home you purchase will appreciate during that time even if the economy runs into some bumps along the way.

 

What’s the mortgage rate?

One of the other key factors to consider is the cost of your loan (the interest you’ll pay the lender). Fortunately, you now have access to some of the lowest mortgage interest rates in history, even if they increase a bit over the coming year, as many expect. According to a recent article in Forbes, “Compared to decades past, today’s rates are unprecedentedly—and artificially—low. They’re the direct result of a Federal Reserve-funded fiscal stimulus plan, better known as the third round of quantitative easing of QE3, aimed at hastening the recovery in housing and the economy as a whole.”

 

Can you pay a bit more?

If you can afford to pay a little extra towards your mortgage bill each month, it makes even more sense to buy. Paying $300 more per month (on a 30-year, $300,000 loan) will knock eight years off the life of the loan and reduce your final bill by more than $63,000 (that’s savings you would never see if you rented).

 

Will you need to make repairs or improvements?

Buying a fixer-upper may seem like a great way to get a deal on a house, but if the money you spend on the repairs is too great, your profit could be slashed when it comes time to sell. The same is true for remodeling and improvement projects. If you can only afford a home that demands major improvements, and you don’t have the skills to do much of the work yourself, it’s probably better to rent.

Do you have other ways to invest?

Many see a home purchase as an easy way to invest—a place where they can generate savings through home equity. But others say you can make more money renting an apartment and investing your savings in stocks, bonds, and other financial securities.

According to two professors studying the issue, it is possible to make more money investing in securities, however, you need to invest ALL the money you would have put towards the house (something most people can’t/won’t/don’t do). Plus, do you have the knowledge, resources and liquid cash necessary?

“We find that if people don’t invest the money, actually about 90% of the time, you’re better off buying,” says professor Eli Beracha, a co-author of the study.

Can you rent part of the house?

Here’s a twist: If you buy a house that includes a rental (space bedroom, mother-in-law unit, etc.), you could BE the landlord instead of paying the landlord. With that rental income, you could pay off the mortgage faster and contribute more to your savings. But, of course, you need to be willing to share your home with a tenant and take on the responsibilities of being a landlord.

Making your decision

To make your decision about whether to rent or buy easier, input the key financial facts regarding your situation into this Realtor.com Rent vs. Buy Calculator: https://www.realtor.com/mortgage/tools/rent-or-buy-calculator/. For help making sense of the results and analyzing other factors, contact me.

This post originally appeared on the Windermere.com blog.


Posted on October 6, 2017 at 10:04 pm
Keith Childress | Posted in Home Buying |