Quarterly Reports: Q3 South Snohomish

Q3: July 1 – September 30, 2018

SOUTH SNOHOMISH COUNTY: In September, the average days on market landed at 27 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in April, the average days on market was 14 days and the original list-to-sale price ratio 104%; but months of inventory based on pending sales was 0.8 months, compared to 2.5 months currently. Year-over-year, prices are up 11%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 11% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends in south Snohomish County; please contact us if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:11 pm
Kristine Stevens | Category: Market Update, Quarterly Market Updates, South Snohomish County

Quarterly Reports: Q3 North King

Q3: July 1 – September 30, 2018

NORTH KING COUNTY: In September, the average days on market landed at 23 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in April, the average days on market was 12 days and the original list-to-sale price ratio 106%; but months of inventory based on pending sales was 0.8 months, compared to 2.2 months currently. Year-over-year, prices are up 10%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 10% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends in north King County; please contact us if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:10 pm
Kristine Stevens | Category: Market Update, North King County, Quarterly Market Updates

Quarterly Reports: Q3 Seattle Metro

Q3: July 1 – September 30, 2018

SEATTLE METRO: In September, the average days on market landed at 23 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in April, the average days on market was 11 days and the original list-to-sale price ratio 105%; but months of inventory based on pending sales was 0.8 months, compared to 2.4 months currently. Year-over-year, prices are up 11%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 10% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends in the Seattle Metro area; please contact us if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:10 pm
Kristine Stevens | Category: Market Update, Quarterly Market Updates, Seattle Metro

Quarterly Reports: Q3 Eastside

Q3: July 1 – September 30, 2018

 

THE EASTSIDE: In September, the average days on market landed at 32 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in April, the average days on market was 13 days and the original list-to-sale price ratio 103%; but months of inventory based on pending sales was 0.8 months, compared to 2.9 months currently. Year-over-year, prices are up 10%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 10% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends on the Eastside; please contact us if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:09 pm
Kristine Stevens | Category: Eastside, Market Update, Quarterly Market Updates

Quarterly Reports: Q3 North Snohomish

Q3: July 1 – September 30, 2018

NORTH SNOHOMISH COUNTY: In September, the average days on market landed at 29 days and the original list-to-sale price ratio at 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in May, the average days on market was 22 days and the original list-to-sale price ratio 101%; but months of inventory based on pending sales was 1 month compared to 2.3 months currently. Year-over-year, prices are up 11%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 11% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends in north Snohomish County; please contact me if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:08 pm
Kristine Stevens | Category: Market Update, North Snohomish County, Quarterly Market Updates

Quarterly Reports: Q3 South King County

Q3: July 1 – September 30, 2018

SOUTH KING COUNTY: In September, the average days on market landed at 26 days and the original list-to-sale price ratio 98%. Since May, inventory growth has been noticeable, and has given buyers more options. This has led to more negotiations and fewer bidding wars, which is tempering month-over-month price growth to a more sustainable level.

Back in April, the average days on market was 21 days and the original list-to-sale price ratio 103%; but months of inventory based on pending sales was 0.9 months, compared to 2.6 months currently. Year-over-year, prices are up 10%, still well above the historical norm of 3%-5% year-over-year gains—but note that the majority of this growth happened during the spring, due to constricted inventory levels.

Supply has increased, creating more options for buyers and helping to buffer affordability issues. Many sellers are deciding to make moves and cash in on the equity gained over the last six years. An average original list-to-sale price ratio of 98% is a positive return, yet illustrates a softening in the market after some very extreme times. With 10% price growth over the last 12-months in a seller’s favor, the increase in selection has led to more nimble moves from one house to another. Where sellers need to be careful is anticipating the month-over-month price growth we saw prior to the shift in inventory. Prospective buyers would be smart to take advantage of today’s historically low interest rates and the added inventory selection.

This is only a snapshot of the trends in south King County; please contact us if you would like further explanation of how the latest trends relate to you.

Posted on October 11, 2018 at 8:06 pm
Kristine Stevens | Category: Market Update, Quarterly Market Updates, South King County

Wealth-Building Opportunities Abound for First Time Home Buyers

With the sharpest increase of available homes for sale in years, more opportunities are now available for buyers, including first-timers. Many first-time home buyers have sat on the sidelines and remained renters due to the constriction of inventory, which put major pressure on price affordability. Not only has affordability been an issue, but the terms required to prevail in a multiple-offer situation were often not within reach for someone entering the market for the first time.

For example, over the last 12 months in the Seattle Metro area we have seen a 66% increase in the selection of homes for buyers to choose from. There is currently 1.8 months of available inventory based on pending sales versus 0.8 months that was available the same month last year. This is still a seller’s market (0-3 months), but it is providing more than twice as much selection than a year ago. This loosening up of the market has helped to temper price growth by reducing the amount of price escalations and the need to have super aggressive financing terms in order to secure a home.

You see, over the last 3-4 years we have experienced double-digit price appreciation (10-14%) year-over-year, each year. A normal rate of appreciation is 3-5%. Minimal amounts of available inventory, low interest rates, and rapid job growth lead to this increase in prices. Now that more homes are coming to market and job growth has stabilized a bit (still growing, but not as fast), price growth has slowed. This is good news for sustainability and affordability. Here’s the deal though – we are still experiencing growth in values, making home ownership a sound investment over renting.

According to the most recent survey from rentcafe.com, the average rent for an apartment in Seattle is $1,906 with an average square footage of 736 sq. ft. That is quite a bit of money for not a ton of space. Further, that monthly expenditure does not create any wealth for the renter, only for the landlord. With renting, rates can be increased at any time, and you are paying down someone else’s asset, not your own. Also, owning gives the homeowner control of their overhead, while getting to make their house their home by adding improvements such as painting.

There are several factors to consider that will lead a person to make the best decision for their lifestyle and their financial bottom line. One of the biggest factors is interest rates! Currently, the rate for a 30-year fixed, conventional, conforming loan is hovering around 4.88%. Up from earlier this year and predicted to rise, but still historically low over the course of the last 30 years. These rates need to be considered the greatest opportunity of them all! With prices tempering and rates still under the 30-year average of 6.65%, buyers are able to secure a sound investment with very low debt service.

With interest rates predicted to rise over the next year, a good rule of thumb to remember is that for every one-point increase in rate, a buyer loses 10% of their buying power. For example, if the rate jumps from 4.75% to 5.75% and one wants to keep the same monthly payment, they must adjust their price point down by 10%. So, a $450,000 budget becomes a $405,000 budget, and that isn’t taking appreciation into consideration. If you assume an average appreciation rate of 4% year-over-year, today’s $450,000 house will be $468,000 next year. What side of the equity growth do you want to be on? As an owner now, or a buyer a year from now, when prices are higher and interest rates are most likely higher as well?

Once you secure a mortgage, the payment stays the same over the term of the entire loan. The long-term benefits of owning are abundant, including the stability of not being asked to move. These are important factors to consider for everyone, but especially millennials, who are enjoying the benefits of Seattle’s attractive job market. One myth to address is the common belief that you must have a 20% down payment in order to buy a home. That is simply not true. There are loan programs as low as 3% down, decreasing the need to have a large sum of money saved up before being able to buy.

Where folks are having to compromise the most due to affordability is commute times, and settling in less-urban neighborhoods. Worth pointing out, is the average home price in south Snohomish County is 34% less than Seattle Metro – that is a huge savings! Further, south King County is 74% more affordable than Seattle. Some people, mainly millennials, have not been willing to give up living in the core urban neighborhoods that have high walk scores and shorter commute times. That should be apt to change with more selection available in the purchase market, coupled with low interest rates. The advantages of moving out a little further and securing a home will start people on the track of building long-term wealth. If you or anyone you know is currently renting and is considering a change, please let me know, as I would be happy to get their questions answered and help them make an informed decision.

 

 

Don’t Wait for a Disaster to Build Your Emergency Kit

Two Weeks Ready: Be Prepared. Build Kits. Help Each Other.

The first few days after a disaster are often the most critical. Government and essential services may not be available right away, depending on the circumstances. It is imperative to have a plan in place for such a time, and be ready to act on your own.

Washington’s biggest disaster threat is from earthquakes. Washington State’s Emergency Management Division advises that we take precautions to be on our own for at least 2 weeks. Take a look at their Two Week Ready Brochure (PDF) that outlines the basics necessary for your emergency kit. While it is important to get ready, don’t feel like you have to do it all at once. The list of necessities is long, so take a look at the agency’s year-long prep plan. You will also find information on pet preparedness, as well as the agency’s Drop, Cover, and Hold Earthquake Scenario map.

 

#TackleHomelessness Update

During last weekend’s win against Dallas, the Seattle Seahawks had 46 defensive tackles, raising another $4,600 for Windermere’s #TackleHomelessness campaign. Combined with what we’ve raised over the past two seasons, this brings our to-date grand total to $71,400! All season long we’ll be partnering with the Seahawks to raise money for YouthCare in support of homeless youth.

Posted on October 2, 2018 at 9:44 pm
Kristine Stevens | Category: Market Update, Monthly Newsletter, The More you Know

Monthly Newsletter

Keeping Price Growth in Perspective,
Opportunities Abound for Both Buyers and Sellers

 

“How’s the Market?” is a question I am asked all the time. It is a common segue in casual conversation over the neighbor’s fence, at a cocktail party or family gathering. Now more than ever, the answer to this question is critical, yet fascinating. You see, our market is experiencing a long-awaited correction, a tempering of price appreciation. This is providing great opportunities for both buyers and sellers.

For so long, inventory has been so limited that prices have had nowhere else to go but up, and up fast! In May, we saw the largest jump in new listings in a decade, which created a slowdown in month-over-month price appreciation. This was especially exacerbated due to the scarcity of inventory in the first quarter of the year when many jobs were being filled by big companies in the area, skyrocketing demand. The graphs above illustrate the price growth in both King and Snohomish Counties. If you average out the last 12 months and compare to the previous 12 months, prices are up 14% in King County and 13% in Snohomish County. Due to a large increase in inventory and other factors, we have seen prices start to balance out since May.

Additional factors that play into this healthy adjustment on the run-up of prices are interest rates, affordability, and Seattle summertime. First, interest rates have been dancing. They have climbed over a half a point from a year ago, which has been coupled with double-digit price growth, forcing many buyers to take a step back. Bear in mind that interest rates are still under 5% and well below the 30-year average of 6.61%. This must be taken to heart!

Affordability has been a huge factor that played into the reduction of absorption rate once the increase in new listings hit this Spring. This was especially true in King County. Prices peaked so far this year at $725,000 in April, whereas they peaked in Snohomish County at $510,000 in June. This is simple supply and demand, as buyers have had more selection. Further, many buyers turned their heads north to find a more affordable option while still sustaining a manageable commute.

The bottom line is that it just got too expensive for some to make King County their home, even Snohomish County for that matter. Combine that with an influx of selection, and you find the top of the market so far in 2018. This is not a bad thing! We must keep the double-digit, year-over-year price appreciation in perspective, and trust that the market factors which led to prices balancing out are healthy. A typical appreciation rate is 3-5%. Matthew Gardner, Windermere’s Chief Economist, predicts that we will finish out 2018 with 7-8% appreciation over 2017, which is well above the norm of 3-5%. Sustainable growth is important to the overall health of our economy and culture; this provides opportunity.

Buyers take heed. As we come out of the Seattle summertime seasonal slowdown, we anticipate a little run on new listings in September and October. Note on the graph above that we seasonally see prices peak in the late spring and early summer, due to many folks taking time to enjoy the summer months traveling and relaxing a bit. If you have been a sidelined buyer or have been thinking about making a move, the remainder of 2018 may be your time to enjoy more selection, still-low interest rates, and the chance to secure the best home for your lifestyle.

Interest rates are still attractive (historically attractive) and are predicted to rise. Plus, selection has increased, making negotiations not as intense. Multiple offers are not always the norm these days, which provides some breathing room for luxuries like inspections and relying on the bank’s appraisal to confirm value. Also, if you are a buyer that needs to sell a home first in order to purchase, this environment is much more forgiving. Believe it or not, we have even started to see contingent offers make a comeback.

This was one reason why we saw such a limit on inventory, because folks were not able to make fluid moves, so they just uncomfortably stayed put. It was the many baby boomers who came to market this spring and summer who relocated out of the area that loosened this up, paving the way for the local first-time, move-up, or move-down buyer to have some opportunity to transition.

So what does all this mean for potential sellers? Well, a lot! The word of the day is perspective. You must keep a close connection to the double-digit, year-over-year price appreciation we have seen over the last three years, and come to terms with today’s balancing out. Great equity gains are behind every homeowner who has owned their home since 2012. If that equity has been cared for, there are large profits to turn, even though you might not get multiple offers. All it takes is one good buyer for a successful sale!

It is all about what is motivating you. If a move seems interesting or imminent, chances are you can take that equity and turn it into something that better matches your current lifestyle. This is where a detailed assessment of the features of your home, along with an analysis of market conditions can be developed into a winning strategy. This does not come easy and requires in-depth research, close attention to condition and comparable homes, and outstanding marketing and merchandising.

Where I have seen the most opportunity is when sellers partner up and listen to the professional assessment of all of these factors. It often leads to satisfying results with one buyer, or believe it or not, the occasional multiple offer. Our market is exciting, but it takes skill to set level expectations, which leads to positive results.

If you or someone you know is curious about “How’s the Market?”, please reach out. Education and explanation are key to awareness, which leads to clarity. I love what I do and look forward to the opportunity to serve during this changing time. It is my goal to help keep my clients informed and empower strong decisions.

 

 

We are so fortunate here at Windermere to have Matthew Gardner help keep us informed on our economy and the real estate market. Each quarter Matthew compiles in-depth research on counties from across Western Washington. Click here to download Matthew’s full Q2 report.

 

 

Summer is quickly coming to a close, and it’s time to think about prepping your yard for fall.  Here are a few quick tips to get you started, and a full article here.

Fertilizing

All summer long, plants and grass are using up nutrients in the soil. After months of growing, your soil’s reserves become depleted, which is why a fall fertilizer is great to restore nutrients and give your grass, shrubs, and perennials a boost to help them make it through winter. It is recommended to fertilize once every season.

Stop Pruning and Watering

Late summer and fall might seem like a good time to prune dead flowers and branches, but several experts recommend waiting until spring to prune anything. Pruning stimulates new growth, but with the frost coming, chances are this new growth won’t survive. Pruning also interferes with the plant when it is going dormant.

In late September, you should also stop watering your plants to help them go dormant as well.

Furnace Filter

Okay, this isn’t really a yard tip but it’s still important, and after all this smoke – critical! It’s recommended that you change your furnace filter at least every three months, if not more often. Having a clean furnace filter will make the air circulating through your house cleaner, and will put less stress on your heating and air systems.

Posted on September 4, 2018 at 9:07 pm
Kristine Stevens | Category: Market Update, Monthly Newsletter, North King County, South Snohomish County, The More you Know

What’s in your Toolbx to Navigate the Changing Market?

 

The late spring market brought about some welcomed change to our local real estate markets. In May, we experienced the largest increase in inventory in a decade! North King County and South Snohomish County are two examples of what is happening in all the markets across the Puget Sound as we head into the second half of 2018. Below is a breakdown of the current environment; further is an explanation of what it all means.

North King County (Ship Canal to Snohomish County Line):

  • 38% increase in new listings from April to May 2018
  • 16% more new listings in May 2018 vs. May 2017
  • Overall 5% more new listings over the last 12 months vs. the previous 12 months
  • Average list-to-sale price ratios reduce to 104% from 105% in May 2018
  • Median Price up 15% complete year over year, but down 1% vs. the previous month, landing at $815K.

South Snohomish County (Snohomish County Line to Everett):

  • 27% increase in new listings from April to May 2018
  • 10% more new listings in May 2018 vs. May 2017
  • Overall 2% more new listings over the last 12 months vs. the previous 12 months
  • Average list-to-sale price ratios reduce to 102% from 103% in May 2018
  • Median price up 12% complete year over year, but equal with the previous month, landing at $500K.

This increase in inventory is awesome! It is providing more selection for buyers and is helping temper price growth, which was increasing at an unsustainable level. It is still a Seller’s market by all means, which is defined by having three or less months of available inventory. Both market areas are still just under one month of inventory based on pending sales, but not as low as the two-week mark they were experiencing in March.

The increase in inventory is the result of pent up seller demand. From 1985-2008 the average amount of time a homeowner stayed in their home was 6 years. From 2008-2017 it grew to 9 years. With a resounding amount of equity under their belts, many homeowners are now deciding to make moves. Some are moving up to the next best thing and others are cashing out and leaving the area for a new beginning or retirement. This is providing buyers with the selection they have been waiting for after a very tenuous, inventory-starved start to 2018. The buyers that have stayed on the forefront of the market are now being rewarded with choices. These choices are best accompanied with keen discernment in order to craft the best negotiations – the broker they choose to align with is key.

The price analysis above indicates strong equity positions for sellers, but also a leveling off in price growth. Over the first quarter we saw prices increase month-over-month quite handily; now that more inventory is appearing and demand is being absorbed, price growth is not as extreme. This has highlighted the importance of having a strategic pricing and marketing plan for sellers wanting the highest price and shortest market time. The broker they choose to align with is key.

The importance of both buyers and sellers aligning with a knowledgeable, well-researched and responsive broker is paramount. One might think that it is “easy” to sell a house in this market, but the pricing research, home preparation, market exposure, varied marketing mediums, close management of all the communication, and how negotiations are handled can make or break a seller’s net return on the sale. With market times increasing, having a broker with a tight grasp on the changing environment will help create an efficient market time, resulting in the best price and terms for a successful closing. It is important that sellers do not overshoot this market, and it takes a broker with a keen gut sense rooted in in-depth research to help get them their desired results.

If you’re a buyer, it is overwhelmingly important that you are aligned with a broker that knows how to win in this market. The increase in selection has left some room for contemplation in some cases. Considering possible terms and price based on thorough market research as you head into negotiations are what set a highly capable selling broker apart and are required to prevail. With more selection coming to market, buyers have more to consider, and having a broker alongside them to help craft a strategy of negotiations will ensure they don’t overpay.

If you have any curiosities or questions regarding the value of your current home or purchase opportunities in today’s market, please contact us. It is our goal to help keep you informed and empower strong decisions.

Posted on June 29, 2018 at 4:54 pm
Kristine Stevens | Category: Lynnwood, Market Update, Monthly Newsletter, North King County, Seattle Metro, Shoreline, South Snohomish County, The More you Know

Why We Are Not Headed for Another Housing Bubble

Double-digit price appreciation has taken place for over 3 years now, so prices are up. Way up. In fact, in just the last year we have seen prices rise 14% year-over-year. When talking with people about our real estate market, the conversation often involves the question, “are we headed toward a bubble?” We get asked this question often, and it is understandable. With the Great Recession not too far back in our rear-view mirror, the fear that surrounds the bottom dropping out in our home values is real. The large price gains might seem familiar to the gains of the previous up market of 2004-2007, but the environment is much different, and that is why we are not headed toward a housing collapse.

Lending Requirements & Down Payments
Previous lending practices allowed people to get into homes with high debt-to-income ratios, low credit scores, risky loan programs, and undocumented incomes. They called this sub-prime lending. This led to the housing bubble bursting 10 years ago – because people received mortgages they were not equipped to handle. Borrowers were not properly qualified for their monthly payments, and with minimal down payments they had no skin in the game. There were also a ton of adjustable rate mortgages and interest-only loans, which created negative equity positions. In July 2007, the sub-prime loan products disappeared and literally became history overnight. This eliminated a large part of the buyer pool creating over supply, not to mention the foreclosures that followed due to these ill-equipped homeowners walking away. The combination of these two factors caused prices to plummet.

Conversely, in March of this year, the average credit score for an approved conventional loan according to Ellie Mae was 752. Banks are scrutinizing their borrowers much more thoroughly than in the past. Credit scores are only the start; solid documentation of employment, assets, and debt are all passed through strict underwriting standards before closing. During the days of sub-prime lending, banks were funding loans with scores as low as 560! This, coupled with many zero-down loan programs and the risky terms mentioned above, left many new homeowners with little to no equity. When you have little or no equity it is very easy to bail.

In addition to heartier credit scores, down payments have increased significantly. According to Attom Data Solutions the average down payment is 18%. To put this in perspective, the median price in Seattle Metro in the first quarter of 2018 was $775,000. 18% of that is $139,500! There is a marked difference in the connection to one’s investment with such a large amount on the line versus the common 0% down loans of the sub-prime era. When people have high equity levels they are not likely to abandon their home or miss payments.

Our Thriving Local Economy, Job Creation & Californians
According to Matthew Gardner, Windermere’s Chief Economist, it is forecasted that there will be 46,000 more jobs in the Seattle Metro area in 2018. This has created high numbers of residual migration into our area from other states. In 2016 there were 50,000 people that moved here, and 47,000 in 2017. Many of these new Washingtonians are former Californians, specifically from the Bay Area. Unbelievably, our prices are attractive to this group, as they can take a similar tech job here and make the same income with a lower cost of living. If untethered and up for a move, it’s a no-brainer.

The most influential factor that has led the run on prices has been low inventory levels coupled with high housing demand. It’s simply the concept of supply and demand. The growth of companies like Amazon, Google, and Facebook in our area has created increased demand, especially for homes closer to job centers resulting in shorter commutes. When you have increased demand and not enough homes to absorb the buyers, prices go up. Over the last three years we have easily seen a 10%+ increase in prices year-over-year. That is above the norm, and will slow down once inventory increases. That slowdown will be welcomed and it will not be a collapse in values or a bubble bursting.

Interest Rates
Interest rates are increasing, and it is predicted they will reach close to 4.95% by the end of the year. This will naturally curtail price growth because it will not be as cheap to borrow money, which will cause buyers to temper their pricing ceilings. Bear in mind, that an interest rate of 4.95% is still historically low, we’ve just been incredibly fortunate to be able to secure long term loans with minimal debt service. The average interest rate over the last 30 years is 7%.

We understand that the recent increase in home prices has been big and that it might remind you of the previous up market before the crash. Hopefully digging into the topics above has shed some light on how it is different. We always welcome the opportunity to have conversations about these hot topics and discern how they relate to you. As always, it is our goal to help keep our clients informed and empower strong decisions. Please let us know if we can answer any questions or help you or anyone you know with their real estate needs.

Posted on May 1, 2018 at 10:16 pm
Kristine Stevens | Category: Market Update, The More you Know