Newsletter, November 2020 – Inventory, Equity & Experts: Laying Fact Over Fact to Find the Truth in the Housing Market.
It is important that we pay attention to the data when measuring the health of the housing market. There are a lot of feelings and media influences that can play into one’s opinion of the housing market. I choose to focus on three things: inventory, equity levels, and the experts. This has been and will continue to be my guide in order to be a valuable aid to my clients. To quote Peter Kann, former publisher of the WSJ, “truth is attainable by laying fact upon fact”.
Inventory levels nationally and in our region continue to be historically low. In fact, national inventory levels are at 2.7 months of inventory, and are the lowest they have been since the National Association of Realtors (NAR) started to report them in 1982. There are only approximately 1.2 million single-family homes for sale across the nation. In King County, inventory levels sat at 0.8 months in September and only 0.4 months in Snohomish County. A seller’s market is defined by 0-3 months of inventory, and finding our region with less than one month has us operating in an extreme seller’s market!
The combination of scarce inventory and the lowest interest rates in history has led to above-average price growth year-over-year. Nationally, the single-family median home price is up 15% this September compared to the previous September. In King County, it is up 13%, and in Snohomish County up 14%. It is also important to measure complete year-over-year data. Taking just one month of data and comparing it to the same month a year ago definitely tells a story, but by taking the average of the last 12 months and comparing it to the previous 12 months, you get a more accurate picture of overall growth. It is important to look at both in order to analyze long-term and real-time trends. We must also consider the sustainability of such extreme price growth.
The complete year-over-year price growth percentages temper compared to just looking at the month of September. In King County, the single-family median price is up 5% complete year-over-year and up 8% in Snohomish County. This takes into consideration the stall we saw in the market when the pandemic hit, along with the less extreme inventory environment we started 2020 with. Looking at the data one way gives us the big picture and looking at the most recent data tells the story of what is happening now in comparison to a snapshot one year ago. Pricing is still an art in a seller’s market and even though we are seeing historically low inventory levels, it is certainly possible to over-price and miss the mark for a great outcome.
The multi-family market which includes condominiums is also seeing price growth, but not as strong as single-family. There seems to be a trend with more people working from home and retiring who want to obtain larger interior spaces and room for outdoor enjoyment. The suburbs and smalls towns are gaining a ton of traction with commute-times being lower on the list of considerations. However, the surge of first-time buyers coming into the market due to Millennials coming of age and the historically low interest rates has the multi-family market in growth mode as well.
Nationally, multi-family (which includes condo) inventory sits at four months of inventory, which is a balanced market. In King County, there are two months of available inventory and in Snohomish County 0.7 months. King County’s condo market has seen a larger flood of available inventory, with folks transferring equity to single-family homes in the suburbs and exiting the city. Both counties’ condo markets are still experiencing year-over-year price growth, but due to density in certain areas, price analysis should be studied by the specific building and location. The ability to eliminate commutes by working from home has taken the shine off of condo price affordability as some buyers are opting to purchase a single-family home further out, resulting in a similar monthly payment.
Equity levels across our nation are formidable. 42% of homeowners own their home free-and-clear and 58% of homeowners have 60% equity or more! Unlike the Great Recession of 2008 that was centered on housing, we are experiencing quite the opposite. With unemployment still an important issue, some homeowners will utilize their positive equity position to help relieve financial pressure as they pivot to an alternative career path and/or geographic location. Housing will be a tool for some to navigate the economic uncertainty the pandemic has caused.
The experts I continue to follow are Matthew Gardner, Windermere’s Chief Economist, and David Childers and Steve Harney from Keeping Current Matters. Along with following their well-researched and thoughtful insights I am committed to studying the local monthly, weekly, and daily statistics that represent our local real estate market.
Trends can vary from one neighborhood to the next or from one type of product to another. It is my mission to position myself as an expert in order to serve my clients, by digging deep into the local data, discerning, and reporting back the truth. The strategy of layering fact upon fact is my guide to help develop the most successful outcome possible for my clients.
As always, it is my goal to help keep my clients informed in order to empower strong decisions, especially during these unique times. Please reach out if you need some help, want to satisfy a curiosity, or have a friend in need of some solid real estate guidance. In the meantime, please check out the video below featuring Matthew’s latest update including three recent data points that tell a story about the housing market. Be well!
As the Official Real Estate company of the Seattle Seahawks, Windermere donates $100 to Mary’s Place for every home game Hawks tackle. During last Sunday’s game we raised another $4,200, bringing our total to $140,500.
Newsletter – October 2020: The Windermere Bridge Loan. Inventory levels got you down, but your equity is high.
Homeowners across our region are enjoying very healthy equity levels due to an amazing upswing in the real estate market over the last five years. In fact, the median price in King County is up 49% over the last five years and up 51% in Snohomish County. This growth in equity has given homeowners the exciting option to sell their homes for a price that will bear a sizable down payment or the ability to “buy all-cash” on their next home. This has many people exploring their next chapters, such as moving up to a larger home or downsizing for retirement. The strong price appreciation is great news and provides many opportunities; however, we have also faced some challenges in how to make these transitions work without moving twice.
Our biggest challenge for homebuyers in the marketplace right now is inventory levels. It is also the reason so many home sellers are doing so well. Currently, King County sits at 0.9 months of inventory based on pending sales and 0.6 months in Snohomish County. Historically, buyers that are also sellers would commonly secure a new home with a home sale contingency on the sale of their current home. Meaning the seller of the new home they are buying would give them a month or so to get their current house sold in order to be able to buy theirs.
Well in this market, utilizing a home sale contingency is only rarely an option, especially on desirable homes. So, the million-dollar question is this: how does one who has gained so much equity, now itching to get that bigger house, different location, or perfect rambler for settling into retirement, make this transition without having to move twice? We need to get creative and have a strategy. The Windermere Bridge Loan program has been a powerful tool to help homebuyers transition their equity without having to sell their house first.
This is an amazing tool for homeowners that own their homes free-and-clear or have gained a large amount of equity over time. This is also a low-cost and faster alternative to a cash-out re-fi or securing a HELOC which enables one to pull the equity out of their current house prior to selling it in order to make a non-contingent offer.
The way it works is we take the market value of the house the homeowner current lives in, established by a comparative market analysis (CMA) that I complete and is approved by my Broker. We then take 75% of the CMA value and subtract any debt owed, and that is the maximum amount the homeowner can borrow for their next down payment. For example, if the market value is $700,000: 75% of $700,000 is $525,000. Say the homeowner owes a remaining $225,000 on their mortgage; the max amount they could borrow would be $525,000 – $225,000 = $300,000. If that same homeowner didn’t have a mortgage then they could borrow up to $525,000 as that is 75% of the CMA value.
This tool enables people to make transitions without having to sell their home first, attempt a home-sale-contingent offer, or go through the lengthy and expensive process of a cash-out re-fi or securing a HELOC. What makes this tool so efficient, is that it doesn’t require an appraisal (like a re-fi or HELOC does), and these can easily be turned around in 5-7 business days. This tool provides the opportunity to quickly and inexpensively pull your equity out, be competitive, and eliminates the double move.
The fees associated with this program are a 1% loan fee on the loan amount (minimum fee of $1,000), a title report, credit report, recording fees for the deed, and interest that is incurred between the loan funding and being paid off once the subject home is sold. That interest is conveniently wrapped up in the closing costs when the client closes the sale of the collateral home, eliminating the need to make monthly interest payments. Clients who use this program are also required to list the home 30 days after the loan has funded. This allows time for the client to prepare their home for sale after they have moved out. Lastly, only homes in Washington state are eligible to be the collateral property, but note this can be a tool for relocating out-of-state which we are seeing a lot of.
In a strategy that is somewhat mind-blowing, we can sometimes use these bridge loans and never have to actually fund them. For example, if we secure a property non-contingent with the bridge loan and immediately get the subject home on the market, we can often secure a sale with a simultaneous closing, and never have to fund the loan. This eliminates the loan fee, interest, and the need to carry two mortgages. All this requires is getting pre-approved for the bridge loan and preparing the home for sale prior to shopping, so one is prepared to act quickly and line up both closings.
If you are excited about equity levels and today’s low interest rates and have thought about making that move you’ve been waiting for, but have been fearful of how to do it all – I can help. The Windermere Bridge Loan, along with great attention to detail, hand-holding, and careful planning have helped many people make these exciting transitions. It is my goal to help keep my clients informed and empower strong decisions. Please contact me if you would like further information on how this might work for you or someone you know.
As the Official Real Estate company of the Seattle Seahawks, Windermere donates $100 to Mary’s Place for every home game Hawks tackle. During the last home game against the Cowboys we raised $5,300, bringing our total to $131,000.
This weekend we take on the Vikings at Century Link and together, we’ll continue to #TackleHomelessness.
We’ve said it so many times, but it is so true: these are unprecedented times! In relation to the real estate market, there are many factors that are contributing to this environment. First and foremost, we are living through a global pandemic. Our daily lives have changed and they will probably never be quite like they were before. Besides this major upheaval in life as we know it, we have the lowest interest rates ever in history (this won’t last forever), formidable equity levels, and we are at the corner of a generational shift. These factors are fueling demand in the real estate market despite the challenges the pandemic has brought to light. In fact, the pandemic has influenced some very big lifestyle moves due to having time to reflect on goals and the new normal of working remotely.
Low interest rates, Baby Boomers retiring, Millennials stepping up to the home-ownership plate, Gen X settling into their forever homes, and commute times becoming less important are the ingredients in the proverbial pot that is being stirred in the 2020 real estate market. The demand is high! Couple that with a reduction in new listings over the last year and it is competitive. Sellers are in such a favorable position and buyers are devising solid plans to win a home with the lowest debt service in history.
Before I share some tips on how to win a home in today’s market, let’s look at the numbers. 2020 started off with abnormally low inventory levels following 2019 when we were headed toward more balance in the marketplace. Then COVID hit and the market briefly stalled. There were 8 weeks in King County and 4 weeks in Snohomish County from the onset of COVID where the market performed under 80% of the pending sales rate in 2019. We adjusted rather quickly as the influence of the demand mentioned above found its way with masks on and hand sanitizer at the ready.
Now that we have established that the demand is strong, debt service is low, and that lifestyle moves are leading the way, how do you make it happen if you want to participate?
Partner with a Broker Who Will Get the Job Done
A broker that has a process is key! It starts with an initial buyer consultation. I liken the buyer consultation to the seat belt you would wear on a roller coaster. The buyer consultation aims to unearth a buyer’s goals, research the areas they are interested in, address financing, and illustrate the challenges of the environment, so one can be successful. Time is money, and this consultation brings clarity, efficiency, and trust. This upfront education coupled with a high level of communication and availability is paramount. The depth of the relationship will lead to success and is the ingredient that enables a buyer to throw up their hands and take the thrilling plunge on the roller coaster. It is hard to do that without a seat belt!
Get Your Finances in Order
Aligning with a trusted real estate professional is key, but so is aligning with a reputable and responsive mortgage lender. Getting pre-approved is the minimum, but getting pre-underwritten is a game-changer. Finding a lender that is willing to put in the work up-front to vet credit, income, savings, debt, and all other financial indicators will lead to being pre-underwritten, which listing agents and sellers appreciate! Also, be aware that you do not always need to have a huge down payment to make a purchase work. Employment, assets, credit, and what you have saved all work into your ability to acquire a loan. I have seen plenty of people secure a home with 3-5% down. Education and awareness create clarity, and investing into understanding your financial footing equals empowered and more efficient decisions. Note that I mentioned “responsive”. This is a 24/7 market, and lenders who don’t work evenings and weekends can get in the way of a buyer securing a home. If you need a shortlist of lenders that fit this description, please contact me.
Be Willing to Take Calculated Risks
Buyer due diligence is key to making a sound investment. Even though timelines are tight and buyers must act swiftly, it is not time to just throw caution to the wind. Having some funds set aside to perform a pre-inspection will help a buyer make a purchase with both eyes open and be competitive. Also, going back to getting pre-underwritten, this could empower a buyer to waive financing and beat out all-cash buyers.
Strategizing Down Payment Funds
Many buyers are moving big chunks of equity from their previous home to the one they are buying. Equity levels are deep and prevailing buyers are commonly reserving some of their equity to offset appraisal risk for a seller. The market is appreciating so rapidly that a buyer holding back down payment funds and shifting them to an appraisal safety net has been one of the most successful strategies to help a buyer win a home. The best part is the safety net only seldomly has to be used. This plays into the calculated risk category and also highlights the importance of a good lender and broker to help navigate such decisions.
The Triangle of Buyer Clarity
Buyers must be realistic with their expectations. The triangle of buyer clarity rests on the three corners of Location, Price, and Condition. If a buyer continues to run into walls when making offers it typically has to do with the need to adjust one of the corners of the triangle. Buying a home take compromise, especially with such low inventory. By staying connected to the big picture of building wealth with low debt service, gaining a home that will work with your goals may require an adjustment of location, price, or level of condition. Focusing on the triangle of buyer clarity and talking it through during the buying process leads to clarity and success. A rule of thumb to bear in mind is that when a home starts to check 75% of your boxes, it should be considered.
The 2020 real estate market has provided a ton of opportunity during a very challenging time. It’s been a bright light in the economy. If you are curious about how the current market relates to your housing and financial goals, please reach out. It is always my goal to help keep my clients informed so they are empowered to make strong decisions. Be well!
We are proud to be the official real estate company of the Seattle Seahawks! The best part of this partnership is our #TackleHomelessness campaign. For every home-game tackle the Hawks make, the Windermere Foundation donates $100 to Mary’s Place which provides safe, inclusive shelter and services supporting women, children and families on their journey out of homelessness.
When Equity Meets Lifestyle: Sellers Moving Out, the Push to the Burbs, & Who’s Coming into the City
Over the last 5 years, housing has had abundant price appreciation, providing substantial equity for homeowners to utilize to make meaningful lifestyle moves or invest back into where they are. In King County, the median price has appreciated from $463,000 to $689,000 since July 2015, which is a 49% increase equaling $226,000! In Snohomish County, the median price has appreciated from $340,000 to $515,000 since July 2015, which is a 51% increase equaling $175,000. Bring on a global pandemic that has turned the world as we know it on its heels and the needs and desires for housing are starting to change! Solid equity positions and the changes brought on by the pandemic are creating The Big American Move.
In a July survey by Realtor.com the results show that consumers are looking for larger interior spaces, more spacious outdoor areas, and a desire to move to suburban areas from urban locations. This has been fueled by the ability to work remotely, providing many homeowners the opportunity to pivot to locations not driven by commute times, but by the overall enjoyment of the spaces that the home and yard provide. In fact in that same survey, 2 out of 3 consumers noted the ability to work remotely was fueling their decision to move. Some are fleeing from urban density to more wide-open spaces to provide more room to roam for children as on-line school looked to be the plan for 2020-21.
The pandemic has also spurred retirement for many, as well as adding the big retirement or second-home move to the east of the mountains or out of state. These markets are much more affordable, and folks that spent many years in their homes in King and Snohomish Counties are selling and turning their big chunks of equity into their dream oasis in the mountains, by the beach, or in the desert. Many of these purchases are able to be made all-cash due to the affordability of these areas in relation to liquidated equity. This simplifies life with no mortgage payments to maintain. An agent in my office just shared that of the last ten listings she had, eight either went east or out of state.
The established equity, increased demand, low inventory, and the lowest interest rates we have ever seen have created one of the most vital housing markets ever. According to Housing Wire, the rebound in the housing market since the National Emergency was announced has been shockingly strong. Meyers Research calls it nothing short of remarkable. Home purchase mortgage applications are up year-over-year for 11 straight weeks since mid-May.
Seven out of nine economists predict national price growth in 2020. Locally, Windermere’s Chief Economist Matthew Gardner predicts 5% year-over-year appreciation. In July, King County’s median price for Single Family Residential Homes (SFR) is up 3% complete year-over-year and Snohomish County (SFR) 6%. The higher price growth in Snohomish County is a reflection of the push to the suburbs and affordability.
John Burns Consulting is calling this The Great American Move. The phenomenon is being fueled by safety reasons, financial prospects, life-change improvements, personal comfort, and employment. They expect a surge in household and business relocations over the next few months that will provide new, strategic opportunities for the real estate market.
The Greater Seattle job market is still strong in many sectors and commutes will come back. While folks are cashing out their equity and going for larger spaces because they can, the Millennial generation is still very much attracted to the in-city neighborhoods. We have not seen this wealth transfer hurt these markets, as it is perfect timing for the maturing Millennials to put roots down in urban locations as they flourish in their careers, migrate to our area for work, marry, or start families.
2020 has been downright astonishing in regards to the housing market. In fact, it has felt like two different worlds managing the pace of such a brisk real estate market during a time where we have slowed down and simplified our daily lives. Maintaining the safety of everyone around me by observing all the proper safety protocols has been a top priority. I’ve felt a great responsibility to help my clients navigate some very big lifestyle decisions through the purchase and sale of their real estate. It has been an honor and something I take very seriously. It is always my goal to help keep my clients informed and to empower strong decisions, especially during this unprecedented time. Please reach out if you’d like me to answer any questions or shed light on the trends in your area. Be safe, be well!
For many of us, all the extra time at home this year has sparked bouts of decluttering and purging. Whether you have already cleaned out your linen closet, or you’re still planning to tackle the garage, an important key in this process is what to do with all the stuff.
Most thrift stores in King and Snohomish counties are open under Phase 2 right now, but many of the more well-known spots have restrictions on what they will take, and when they are accepting donations. If you’ve made your way through a donation line at Goodwill, you probably know that they are not currently accepting any furniture. But did you know that many of the smaller, independent shops are taking large pieces?
Do a Google search for “thrift stores near me”, and call the smaller ones to see what their donation acceptance policies are during COVID. Or use this great national directory where you can put in your zip code and find lots of nearby shops.
Below are a few Puget Sound organizations where your gently used household donations support important causes like homelessness and youth mentoring. Make sure to check their website or call for their current COVID policies.
As we head into the second half of 2020, we are starting to see the makings of a housing market recovery. There was a steep dive down in closed sales in April and May, but a quick snap back in June. This trajectory illustrates a “V” shaped change from the beginning of the COVID-19 health crisis until now.
Nationally, sales are down year-to-date but they were up 21% from May to June, the largest month-over-month increase ever recorded by the National Association of Realtors. According to Matthew Gardner, Windermere’s Chief Economist and sought after expert across the nation, he sees our position as a “glass half full” reality. He just released his updated 2020 housing market forecast and believes that sales will be down year-over-year, but that prices will be up!
He believes that the strongest influence on the reduction in sales is the lack of inventory, not lack of demand. In fact, inventory levels are the lowest they have been in two decades. Currently, national prices are up 3.5% year-over-year and he anticipates that prices will end the year up 4.3%. Currently in King County, prices are up 2% year-over-year and in Snohomish County 4% year-over-year.
Eight out of the last nine weeks of pending sales in King and Snohomish counties have outperformed the pending sales for the same weeks in 2019. Historically low interest rates are driving demand, as well as many people making big lifestyle moves due to remote working, the Millennials expanding their families, and Baby Boomers retiring.
He does not anticipate a huge flood of foreclosures despite some of the noise out there. He believes the mortgage forbearance programs are providing great relief for those out of work and that this will enable those in need to hold on to their homes until their jobs return. The sizable equity position many homeowners are in across the country is also ensuring that fewer homes will be foreclosed upon.
Housing is performing very well despite the health crisis and it will be a key leading factor for the recovery of the economy overall. Unlike the 2008 Great Recession, housing is the cornerstone of economic fortitude right now. If you would like additional information or if you’re curious how the market relates to your lifestyle and bottom line, please reach out. It is my goal to help keep my clients informed and empower strong decisions.
On July 18th our office managed to pull off our annual paper shredding event. We were able to follow the proper protocols and made it a no-contact event. Guests stayed in their cars and we unloaded their trunks and sent them safely on their way. It was a relief to be able to provide this service, as it has been a long-time tradition that provides a meaningful service.
Even better is we equally billed the event this year as a food drive. The results were heartwarming, outstanding, and successful. The generosity of our guests was overwhelming and impressive! Mike from Concern For Neighbors Food Bank was thrilled when he walked in and saw all the food piled up. He mentioned that actual food donations are very low this year due to the pandemic and that this would help greatly over the coming weeks. In addition to the 2,123 lbs of food we also collected $4,122 dollars! Mike and his team will use those funds to purchase food to provide to the community in need over the next several weeks.
If you’d like to donate, please visit their website (above) to see their COVID-19 schedule and how you can help.
Since the onset of the COVID-19 pandemic reaching our region, I quickly shifted to updating you more frequently with information to help you stay informed on the real estate market. Since mid-March, I have been committed to gathering high-frequency data (micro-data) to help illustrate “Where We Are Now” and have provided this newsletter bi-monthly vs. monthly. I felt this was important as real estate is typically our biggest investment and the pandemic has certainly had its economic impact.
I have also closely followed Windermere’s Chief Economist Matthew Gardner, and Economist Steve Harney of Keeping Current Matters. They have both been knowledgeable guides and source their micro-data from various credible sources to help determine their conclusions. Check out Matthew’s latest video update below about the real estate market in relation to COVID-19.
The graphs below are a new data set I’ve been studying on a weekly basis. They compare the number of pending sales reported each week to the same week in 2019, which was another stellar year for our local real estate market. 2020 was outpacing 2019 when the National Emergency was declared and then dropped significantly once the Stay Home Orders were put in place in late March.
April stalled, and rightfully so: pending sales were down as people retreated into their homes and started new routines, such as working from home. As we ventured into May however, things changed. From mid-May until now, pending sales activity in both counties has started to reach or outpace 2019 numbers.
Spring is typically our peak season for real estate sales, and what is being made clear is that the historically-active spring market has now shifted to summer. As we come off the Summer Solstice and head into the warmer months, we are seeing tons of buyers out in the marketplace and a limited supply of available inventory. This combination has helped prices maintain, and in some areas appreciate.
One set of micro-data that is illustrating increased buyer demand is the uptick in mortgage applications. Last week, mortgage applications were up 20% over the same week last year. Note this is for purchase loans, not refinances. With the lowest rates we have ever seen in history it is no surprise that buyers are motivated to go secure a home with the lowest debt service ever!
Last week, the micro-data set of the recorded home-showing appointments displayed a 51% increase in showings over 2019! This is measured by comparing key box access compared to the same week last year. Demand certainly paused in the spring, but was not eliminated; it was being deferred to the summer. As we have reported from the beginning, this is a health crisis, not a housing crisis.
Our biggest challenge as we head into the peak summer months is the available inventory. We entered into 2020 with tight inventory to begin with, and COVID-19 has had a profound impact on the number of homes coming to market. We are expecting some homes to wait until the health crisis has passed, and others will be delayed by 45-60 days. Homes take time to prepare for market, and contractors and handy-persons were all at home in April, pushing prep time out to later spring/early summer for those ready to come to market.
We expect to see an increase in new listings as we head into July and August, which will be welcomed after a 40% deficit compared to 2019. Mortgage applications, historical interest rates, industries in our region that are thriving, and entering into Phase 2 are all micro-data sets that indicate strong buyer demand for the second half of 2020.
Unemployment numbers are also an important micro-data point to keep an eye on. Since the Stay Home Orders, initial unemployment claims have dropped significantly, but continued claims are maintaining. We anticipate the continued claims to reduce as more and more people return to work after being furloughed. Not all of those jobs will be recovered, indicating our greatest need for recovery.
The last three months have been an incredible journey helping people safely navigate the real estate market. Some folks just want to know that their nest egg is safe, and some are making actual moves. When COVID-19 hit there was a ton of uncertainty, we weren’t sure how this would play out in regards to housing. Since we went into this with a very formidable economy and housing values, we have sustained, and in some areas we are thriving. It has been remarkable to watch and be a part of. I am grateful every day that this is not the housing crash of 2008 all over again.
If you are curious about the value of your home in today’s market or are considering a move, please reach out. The interest rates are unbelievable and will greatly benefit those who take advantage of them. I am committed to safe business practices and follow all of the protocols put in place, which include mask-wearing, proper social distancing, and sanitizing. It is my goal to help keep my clients informed and empower strong, safe decisions, especially during unprecedented times. Thank you for your trust; I am honored to be your trusted advisor.
NEW DATE! We are partnering with Confidential Data Disposal for our 9th year; providing you with a safe, eco-friendly way to reduce your paper trail and help prevent identity theft.
⯈ Saturday, July 18th, 10AM to 2PM
4211 Alderwood Mall Blvd, Lynnwood
Bring your sensitive documents to be professionally destroyed on-site. Limit 20 file boxes per visitor.
⯈ We will also be collecting non-perishable food and cash donations to benefit Concern for Neighbors food bank. Donations are not required, but are appreciated. Hope to see you there!
⯈ This is a no-contact, drive-through event. We ask that you stay in your vehicle and unlock your trunk or car door so that we can unload your boxes. We will be taking all proper precautions to keep everyone safe, including wearing PPE, maintaining distance, and using CDC-recommended disinfectants.
**This is a Paper-Only event. No x-rays, electronics, recyclables, or any other materials.
What is Happening with Home Prices?
It is without question we are living in one of the most unique times in all of our lives. Who would have thought we’d experience living life during a global pandemic? Beyond staying safe, adjusting daily habits, and navigating a changing economy, I’ve kept a very close eye on the housing market. With Windermere’s Chief Economist, Matthew Gardner as one of my guides, I am happy to report that housing has been a bright light in the economy during a very challenging time.
May unemployment numbers settled around 13%, an improvement over April, but still far from the 5% we started out with at the beginning of 2020. We are also embarking on our second quarter of retraction in GDP which is the textbook definition of a recession. Many experts are predicting a V-shaped recovery and I’d venture to say that we are currently at the bottom of the V.
With stay-at-home orders being lifted or eased depending on what part of the country you live in, we are starting to see jobs come back. Conversely, we are also seeing some industries thrive, but we will also witness some businesses be required to pivot to remain relevant or go away altogether. For example, tech is thriving and aerospace is not. The reorganization and re-prioritizing that is occurring will be impactful to many, some positive and some challenging.
In our region of the country, we entered into this pandemic with a thriving economy and a strong housing market. In January it was predicted that we would see a year-over-year price appreciation of around 5%. This health crisis will slow that level of appreciation, but we are not expecting losses.
Spring is typically our busiest time in the market with many sellers coming to market and buyers shopping in order to land in their new home by summer and the start of the fall school season. COVID-19 and the associated limitations in our daily activities along with employment disruption created a slowdown in our typical spring market. The largest impact has been the amount of available inventory to choose from. Amazingly, the housing market has continued to hum along with many buyers still eager to purchase. Inventory is down 40% year-over-year and buyer demand is strong, creating a frenzy in some price ranges and neighborhoods.
According to Joel Kan, Economist for the Mortgage Bankers Association mortgage applications are on the rise and up 5% from the same time last year. Summer is looking to be the re-invented spring market as our country starts to re-open. Interest rates are the lowest they have ever been, which is encouraging buyers to act and creating a good-sized audience for sellers.
Below is a video where Matthew speaks to his predicted trajectory for home prices as we travel through the second half of 2020 and beyond. Also, note below the latest statistic for both King and Snohomish Counties for the month of May.
It is always my goal to report real-time numbers from the front lines and do my best to explain what is happening. I choose to look at the numbers in tight snippets week-by-week and also dig deep on year-over-year numbers. Right now, we are reporting growth from March and starting to return to the same amount of activity that we saw at the same time last year. We must keep a close eye on unemployment figures and mortgage forbearance reporting, both of which are improving but still have a ways to go.
It is my goal to help keep my clients informed and empower strong decisions by studying the stats and reporting my day-to-day observations. Please reach out if you or someone you know has questions or concerns. These are unprecedented times and knowledge is one of your most powerful tools. I am honored to be your trusted advisor.
Congrats Class of 2020!
The class of 2020 deserves a huge congratulations! The milestone of finishing elementary school, junior high, high school or college is always worth noting, but this class is extra-special!! They have navigated distance learning and missed out on the proper celebrations, but they’ve shown resilience and finished strong. The world is proud of you and so am I!
A heartfelt thank you to all the teachers, administrators and staff that helped guide all the students this school year! Distance learning is not for the faint of heart and the teachers are amongst the heroes during this challenging time!
Will COVID-19 Impact Where People Want to Live?
Recently, Matthew Gardner, Windermere’s Chief Economist released a video about the effects COVID-19 is having and/or could have on consumer tendencies in real estate. There seems to be quite the paradigm shift happening due to health reasons, appreciating simpler schedules, and the new phenomenon of many people working from home. Along with Matthew, Leading Real Estate Companies of the World and Keeping Current Matters are reporting similar indicators due to COVID 19.
The Flight to the Suburbs: Many buyers are listing more open space and less density as one of their top features when looking for a new home. The larger yards and separation from neighbors found in the suburbs versus urban areas are appealing for health reasons, due to the need to socially distance. Higher density buildings and townhouses found in-city were more appealing due to shorter commute times, but the newfound option to work from home has encouraged some buyers to venture out and consider commute times as less of a factor when choosing where they want to live.
Many high-tech employers such as Amazon, Google, and Facebook have extended the work-from-home option until the end of 2020 despite the phasing to get businesses re-opened. Companies like Twitter told some employees they could work from home indefinitely. This will have some buyers in these types of jobs capitalizing on suburban living, which is typically less expensive than in-city living and includes larger homes and yards. Look at the weekly stats for both King and Snohomish counties below. This compares the number of pending sales per week this year versus the same week last year, and the more suburban and affordable area of Snohomish County is thriving!
Return of the McMansion: Millennials had already begun looking at the suburbs as they embarked on crossing the threshold of big life events such as getting married and starting a family. Now, with more people working from home and desiring more space, the larger square footage homes are becoming more appealing.
This affords more flex spaces for at-home offices, especially if more than one adult is working from home. Space to enjoy hobbies and passions such as an in-home yoga or craft studio or in-home gym are predicted to be popular. Further, private outdoor spaces are a hit, such as fire pits, play areas for children, and outdoor entertaining space which encourages recreation and distancing.
Second-Home Market Boom: With air travel severely reduced, the desire to have a second home within driving distance has increased. Many people’s commitments have simplified and their dreams have shifted to accommodate more down-time closer to home. The change of scenery a lake, beach, or mountain property provides along with space to distance is quickly becoming in-demand. The use of homes like this versus large travel budgets could make a comeback, especially if future rental income is considered. Overall, we have seen an increased value put on local access to nature to decompress and down-shift.
Single-Family Residential Rentals vs. Apartment Rentals: Again this comes back to density versus open space. Renters also desire more room, and some are also working from home, so they may opt for a single-family home over an apartment building with shared space. There could also be a push for college students to prefer renting a single-family home instead of living in a dorm, increasing the rental value of such investment properties in college towns.
Check out the video below to hear Matthew’s entire take on all of these possible changes in how and where we want to live based on COVID 19 and the life lessons were are learning as we navigate this new way of life. What I can tell you is that the real estate market is moving! Activity has seen a large uptick since the first of May, and in many areas and price points we are lacking available inventory to meet the buyer demand.
If you are curious how these new trends and the state of current real estate market relates to your personal needs and dreams, please reach out. It is my goal to help keep my clients informed and empower storing decisions, especially during these unique times. Be well!
I am excited to share some updates from the Martha Perry Veggie Garden in Snohomish, WA! We have already purchased the vegetable starts to help support the Snohomish Garden Club, and have begun planting for the harvest. My office is working in socially distant groups, broken up by nine groups working over three weeks to get this acre of produce in the ground. By using starts instead of seeds we will be able to provide the harvest sooner and for longer throughout the season.
This is all possible thanks to your generosity! Our office raised $8,000 in under two weeks to benefit local food banks through our Neighbors in Need Program powered by the Windermere Foundation. A portion of that money was earmarked for this garden project and replaced our annual Community Service Day project that was done for the last four years in a large group of 50 people. This will provide local food banks with thousands of pounds of fresh produce throughout the summer and early fall and will be especially meaningful during this challenging time. Check out some of our first groups getting to work, making it possible for those in need to enjoy fresh produce instead of only non-perishable foods via the local food banks.
There have been a lot of questions that I have encountered about the stability of the housing market due to the global health crisis of COVID-19. I have kept close track of the statistics and daily activity in our market in order to help keep my clients well informed. Inventory levels remain very tight and buyer demand has started to return since the Stay Home Orders were put in place.
Interest rates are at the lowest point they have ever been, providing amazing opportunities for both buyers and sellers. Interest rates continue to fuel buyer demand and create an audience for home sellers. Recently, rates were as low as 3.33%, which is historic.
Below is a chart that shows the amount of weekly pending sales in 2020 in relation to the weekly pending sales during the same week in 2019.
In King County, you can see that we started the year off with activity similar to the robust year of 2019. In February 2020, there were more sales, but that was due to “Snowmageddon” in February 2019. March 2020 started off in concurrence with 2019, but once the Stay Home Orders were put in place there was a dramatic and expected drop in pending sales activity.
When the Stay at Home Orders were first put in place, showings were not allowed, causing a legitimate pause in transactions. The following week, the orders were adjusted to allow for showings and since then the amount of pending sales has increased each week. Protocols for showings include only two people in the home at one time, by appointment only, while practicing 6-foot social distancing.
These protocols, along with virtual showings and many different digital tools using video, have helped buyers and sellers safely come together in transactions. Agents are getting creative in order to best serve their buyers and sellers during this unique time. This has helped quell demand brought on by interest rates and the many industries still thriving despite recent unemployment numbers. See this video from Matthew Gardner regarding the latest unemployment report and his forecast.
Snohomish County followed the same initial pattern as King County, but has seen a quicker return to 2019 sales levels. This is due in part to the more affordable price points in Snohomish County compared to King. In fact, the days on market for closed sales in April 2020 were quicker by 34% at 21 days, and the list-to-sale price ratio was up 1% to 101% over April 2019. Additionally, the median price is up 3% complete year-over-year. In King County, the median price was up 1% complete year-over-year and days on market quicker by 41% at 17 days, and a flat list-to-sale price ratio of 101%.
Tight inventory started in January and continued due to sellers holding off coming to market amid COVID-19. Available inventory is currently not meeting the buyer demand in the market, especially in the lower to middle price ranges. The higher price points have been affected by the increased cost to obtain a jumbo loan, but are still seeing movement. We anticipate more homes coming to the market as we enter into the different phases Washington State has planned to reopen the economy and remain as safe as possible.
For some, now is the right time to sell, and for some it will be later down the road. The timing, safety, and comfort all need to be assessed along with the market data. What I’m pleased to report is that our market is not crashing. In fact, it is adapting! We will most likely find a balance as we head into the remainder of Q2 and start Q3. Many jobs are set to return as the phases unfold. Unlike the 2008 Great Recession, this is a health crisis, not a housing crisis; see this video from Matthew Gardner on this topic. The numbers are telling that story and so is the recent activity.
I strive for excellence when it comes to educating my clients, especially during these historic times that have created uncertainty. I am committed to providing accurate data and real-time information. Please reach out if you’d like to discuss this information and how it relates to your investment and lifestyle. It is simply my goal to help keep you informed and empower strong decisions. Be well!
We couldn’t have done it without you! Thanks to your generosity, we have surpassed our fundraising goal to benefit local food banks. The Windermere Foundation is matching every dollar up to $3,500, so we will be able to give a total of $7,500 to help feed our neighbors in need.
A portion of this money will go towards buying vegetable starts for the Martha Perry Veggie Garden, which will provide thousands of pounds of fresh produce to local food banks through the summer. Our office will soon get to work helping plant those starts along with the Snohomish Garden Club. We will be in small groups practicing proper social distancing over the course of several days in order to efficiently and safely get this acre of land planted. The rest of the funds will go to the Volunteers of America, who will stretch every dollar to its fullest extent throughout many food banks and food pantries across the county.
This is a portion of a larger fundraiser throughout the Windermere network. The funds are still being counted, but the total amount being given to local food banks is currently over $600,000!
Are we Headed Towards a Repeat of the 2008 Housing Meltdown?
The pressure the COVID-19 global pandemic is putting on the economy is a reality. As a real estate broker, I take great pride in having the honor of being your trusted advisor when it comes to your investment in the housing market and protecting the value of your home. I have been asked several times, “Is this the Great Recession all over again?”
At Windermere, we have continued to rely on the expertise of Matthew Gardner, Windermere’s Chief Economist. Above is a chart he shared from Black Knight Financial comparing the housing market as we headed into this global health crisis versus the start of the Great Recession in 2007. Below is an 11-minute video going over the chart line by line. I urge you to watch the video and key in to his expertise versus what you might hear in the media. Matthew predicted the Great Recession and does not shy away from heeding the truth, even if it is not great news. I trust him and I hope you do too.
Bottom line, we are heading into this economic challenge with a much more formidable foundation based on more stringent lending practices, higher equity levels, and we are anticipating a shorter 1-2 year V-shaped recovery, compared to the long U-shaped recovery of the 5-year Great Recession. In fact, we have seen pending sales rise over the last three consecutive weeks, some even with multiple offers. Every neighborhood and every price-point has its own story. Please reach out with any questions or concerns. It is my goal to help keep you informed and empower strong decisions.
We’re on a mission to help our local food banks keep their shelves stocked during this uncertain time. For every dollar our office raises, the Windermere Foundation is matching up to $3,500 through May 5th! This is a part of a total of $250,000 in matching funds from the Windermere Foundation, with the goal to give $500,000 to food banks across the areas that Windermere serves.
The need has never been greater, so we’re partnering with the trusted Volunteers of America (VOA) of Snohomish County, who know how to stretch every dollar to its fullest extent and successfully manage many of the food banks and food pantries across the county. In addition, a portion of the total raised will go towards buying vegetable starts for the Martha Perry Veggie Garden (MPVG) managed by the Snohomish Garden Club (SGC) – which will supply local food banks with thousands of pounds of fresh produce throughout the summer and early fall.
Our team of agents at Windermere North will be planting close to an acre of starts on behalf of the VOA at the MPVG with the SGC the end of May into early June in small groups practicing proper social distancing. We have done this project for three years as a larger group and we are thrilled to creatively get it done this year. Food Banks have always coveted fresh produce and this effort will be more meaningful than ever this year.
If you are able to give, any amount will help make an impact and directly benefit our Neighbors in Need: gf.me/u/xy7ikd