It is very important that consumers understand the difference between long-term interest rates and short-term interest rates. Long-term rates involve home mortgages such a conventional 30-year fixed, Jumbo, FHA, and VA loans. Short-term rates involve car loans, credit cards, and Home Equity Lines of Credit (HELOCs). While both types of rates have gone up over the course of the last year, they have not had the same trajectory.

In an effort to combat inflation and slow spending, the Fed has made consistent increases to the short-term rate over the last year. I am sure you are running out of fingers on your hands to count the number of times you have heard this as a top story on the news: “The Fed Raises Rates!”. A huge misconception has been that the rates the Fed are referring to are mortgage rates.

As you can see from the chart above, the short-term rate has had a consistent upward trend and the long-term rate has had a more volatile journey. In some cases, when the Fed has increased the short-term rate, the long-term rate has gone down! My point in all of this is to illustrate that what the media reports is not always about mortgage rates and that it is important to stay connected to accurate data.

Matthew Gardner, Windermere’s Chief Economist recently recorded a video update featured below that speaks to some of the misconceptions about interest rates, specifically mortgage rates. Many consumers are confused and misinformed which is dangerous. Investing in real estate is the single largest wealth-building opportunity and to not be accurately connected to the latest trends could get in the way of a successful financial picture.

Prices in many markets have already bottomed out from the 2022 correction and mortgage rates have come down off the peak. In some areas, we are already seeing appreciation again! This quote from Matthew sums up where we are headed. “Myself, and every economist I know, believe that rates will slowly pull back as we move through 2023, and I haven’t seen a single forecast suggesting that mortgage rates will rise to a level this country hasn’t seen in decades”.

With inflation slowing and year-over-year CPI (Consumer Price Index) numbers becoming less extreme, mortgage rates will start to soften. In fact, there are some important reports coming up in May that will tell this story. Real estate is a long-term hold investment that has been the cornerstone of wealth in our country. The wave we have had to ride post-pandemic related to supply chain issues and consumer demand is coming to the shore and real estate will remain an investment safe haven.

Another point to consider is while real estate is an investment is it also where you live. Life changes, good or bad, lead to moves. All this to say, remain nimble by being well-informed. Knowledge empowers strong decisions and accuracy matters. You can count on me to provide you with the information you need to successfully navigate your real estate decisions. Please reach out if you’d like to discuss how the current trends relate to your goals.

Shred Day & Food Drive was a huge success!

Big thank you to everyone who came by to utilize our free shredding services and drop off food or cash donations for the Volunteers of America Western Washington food banks!

We filled two trucks of shredding and collected over 2,000 pounds of food and $3,372 which will go to our neighbors in need. Thank you for your generosity!

ATTENTION GARDENERS: Windermere Community Service Day is coming and we’d love your help!

Since 1984, Windermere associates have dedicated a day of work to complete neighborhood improvement projects as part of Windermere’s Community Service Day. After all, real estate is rooted in our communities. And an investment in our neighborhoods gives us all a better place to call home.

Our office will spend the day with the Snohomish Garden Club working to put fresh produce on the tables of local families who need a little help. We will plant over a half-acre of veggies and fruits that will be harvested over the summer and into the fall.

If you’d like to pitch in, we are looking for additional veggie starts. Let me know if you have some starts already going or if you would like to prepare some now that you would be willing to donate. Our planting day is Friday, June 9^th; I can arrange the details with you for drop off or pick up!

The garden specifically needs:

• Scallions
• Snow/Pod Peas (please no shelling peas)
• Chard
• Lettuce (the food banks require headed varieties, rather than loose-leaf)
• Squash (any kind, EXCEPT yellow crookneck)
• Cabbage/Broccoli/Kohlrabi/Cauliflower/Collards/Kale
• Peppers (early maturing varieties work great: ~70-day range)
• Herbs (never enough Basil and Parsley!)
• Flowers (marigolds, nasturtiums, or any annuals)

Three key elements to pay attention to when assessing prices and the real estate market.

As we round out the first quarter of 2023, three real-time trends to pay close attention to in order to truly understand what is happening in the real estate market are absorption data, interest rates, and inventory levels. Right now, we are in the midst of the market heating up due to seasonality, pent-up buyer demand, and rates finding their new normal. The media will often lag in reporting the latest information (pending sale data) and will latch onto closed sale data, which is outdated. I am here to keep you on the frontline of market activity so you are connected to the most current data to keep you well informed.

Let’s start with absorption data. Month-to-date (3/1/23-3/27/23), days on market are shrinking and sale price to original list price ratios are climbing. This means that houses are selling faster and negotiations are becoming more competitive for buyers. I was able to determine that these trends are fluid from Snohomish County to King County by analyzing four zip codes: 98296 (City of Snohomish), 98020 (Edmonds), 98155 (East Shoreline), 98117 (Ballard).

Available inventory is constricting due to an increase in absorption and new listings lagging. As we head into spring, we will see a seasonal uptick in new listings which will be welcomed by a healthy buyer audience. Month-to-date, inventory levels based on pending sales show a seller’s market (0-2 months). You calculate months of inventory by taking the number of available homes and dividing it by the number of pending sales. If no new homes came to market the trend suggests we would sell out of homes in this amount of time. Month-to-date the actual number of homes available in each zip code is quite limited and a welcome sign for more new listings as we head into Spring.  Again, I pulled the data for the four zip codes to represent a sampling of both Snohomish and King Counties.

Both of the trends above have been determined by buyers becoming more comfortable with the new normal of interest rates. The correction in the market that we experienced in 2022 was a result of a 3-point increase in interest rates. After prices adjusted to levels that would work with the higher rates, buyers started to return to the market. 2-3% and maybe even 4% interest rates will be folklore we tell our grandchildren about. People that want to make a move have come to terms with adapting to the higher rates and making these important life transitions. Today’s rates are much more in line with the average over the last 30 years.

At the start of 2023, the 30-year fixed mortgage was at 6.48%, then dropped to 5.99% in early February, peaked at 7.1% in early March, and is now back down to 6.54% at press time. Rates have been volatile as the Fed tries to manage inflation. You can access a video below from Matthew Gardner explaining the effect of the Fed and the recent bank failures on interest rates and the real estate market overall.

One item to note is that mortgage rates are long-term interest rates, and when you hear about the Fed raising rates they are referring to short-term rates such as car loans, credit cards, and home equity loans. The media does not make that distinction, often confusing the public. In fact, in some cases when the short-term rate has been increased, we have seen mortgage rates drop. Here is a great website to follow to get a real-time read on rates.

Interest rates finding their way, the psychological acceptance of the new normal, and people needing to make moves to adapt to their life changes have led to prices starting to stabilize and even grow in some markets. I pulled the month-to-date median price data for the four zip codes and it appears prices are leveling and growth is happening or will be in the near future. Bear in mind, that the bottom often comes in the form of a bounce before there is a consistent straight shot up.  All signs are pointing to recovery from the correction in these areas noted. This growth will be added to the immense long-term price gains we have seen. Currently, 93% of all homeowners in the U.S. have positive home equity and 48% of homeowners have more than 50% equity.

During this time of change, it is important that each neighborhood and price point is researched individually. From the four zip code breakdowns above, it is clear that the trends vary. When I am asked the question, “How’s the Market?”, I am always curious to know what you have heard and what you want to learn about. Sweeping statements are dangerous and I am committed to diving into the data to educate my clients on how the trends affect their investments and their lifestyle.

With the market correction of 2022 in the rearview mirror and the recovering market of 2023 upon us it is important to understand that opportunity abounds. That opportunity is rooted in research. Solid research and discerning the data gathered help empower strong decisions and build trust. This is my process and my passion and it is all about helping people! If you are curious about how the latest trends match up with your investment and lifestyle goals, please reach out and we can dive in.

You’re invited to our annual Paper Shredding Event & Food Drive. We partner with Confidential Data Disposal to provide a safe, eco-friendly way to reduce your paper trail and help prevent identity theft.

Saturday, April 15th, 10AM to 2PM*
4211 Alderwood Mall Blvd, Lynnwood
Bring your sensitive documents to be professionally destroyed on-site. Limit 10 file boxes per visitor.

This is a paper-only event. No x-rays, electronics, recyclables, or any other materials.

We will also be collecting non-perishable food and cash donations to benefit Volunteers of America Western Washington food banks. Donations are not required, but are appreciated. Hope to see you there! *Or until the trucks are full

Markets change fast! We experienced a substantial shift in 2022 with the first half of the year feeling like a completely different market than the second half of the year. A 3-point increase in interest rate was the main culprit along with inflation and affordability for the 2022 market correction we experienced.

A market correction is defined by prices reverting by 10% or more. In January 2022 the median price in Snohomish County started at $700,000 then peaked at $830,000 in April, and ended the year at $689,000 (-17%). In King County, the median price started at $794,000 then peaked at $1,000,000 in May, and ended the year at $820,000 (-18%). Bear in mind that the December 2022 median price was also up 17% over the January 2021 median price in Snohomish County and up 12% in King County. This illustrates that the correction was only off the peak of spring 2022 not off of the strong equity that was built prior to that intense run-up.

As we find ourselves in mid-Q1 2023 all data points and anecdotal stories are pointing to the worst of the market correction being behind us and yet again, another shift. Interest rates peaked in November 2022 at just over 7% and have since come down. Experts are predicting rates to find themselves under 6% as we travel through the easing of inflation in 2023.

The well-defined price correction and interest rates lowering have brought many buyers back to the market. In fact, pending sales in Snohomish County in January 2023 were up 52% over December 2022 and were up 3% over January 2022. Even more so an indicator: pending sales are up 80% month-to-date (MTD) in February over January 2023! In King County, pending sales in January 2023 were up 63% over December 2022 and were up 2% over January 2022, and up 61% MTD over January 2023.

This pent-up demand has come at a time when listing inventory is seasonally scarce and has tilted the market from a balanced market back to a seller’s market in many areas. Months of inventory is how we define market conditions. 0-2 months is a seller’s market, 2-4 months a balanced market, and 4 months plus a buyer’s market. In Snohomish County, we ended 2022 with 2.3 months of inventory based on pending sales, and in January 2023 had 1.2 months, and MTD is sitting at 0.9 months. In King County, we ended 2022 with 2.6 months of inventory based on pending sales, and in January 2023 had 1.3 months, and MTD is sitting at 1.1 months.

After months of price reductions and searching for the bottom, we are now starting to come across some multiple offers and price increases. This is leaving clues that the bottom was reached and that we are now stabilizing and looking toward the predicted growth that 2023 has to offer. Buyers are eager for additional selection and will welcome the spring influx of new listings. If sellers are ready, they should not hesitate. Should rates lower as the new listings arrive, sellers will be well supported by a willing buyer audience ready to absorb any growth in inventory.

Buyers need to understand that rates and prices are closely related and that waiting for rates to hit a certain point may be detrimental to securing a stabilized price. Many buyers are heading into today’s market with a refinance in mind down the road. They are aware that prices will rise as rates lower, so they are looking to obtain a lower price now with a higher rate and once the rate hits their desired level, they will refinance to lower their payment all while holding on to their lower basis point.

For example, if a buyer bought now at $750,000 with 20% down and a rate of 6.5% their monthly principal and interest payment would be $3,792. If a year from now, rates are at 5.5% and prices are up 5% and that same buyer refinances, they will save $364 a month on their payment and $37,500 in principle. This would also be $192 lower than what the payment would be at the appreciated price with the lower rate!

Real estate moves are driven by life changes. It was completely understandable that many buyers took a pause as the market corrected. Now that the market is showing signs of stabilizing these life changes are pushing buyers to find the home that better fits their lifestyle. Sellers need to keep in mind that their homes need to be priced right and show up to the market well-appointed and properly prepared to get the best results.

We’ve learned a lot over the last year. Once the historical 3-4% interest rate disappeared, consumers had to adapt to the new normal. Now that consumer sentiment is leaning towards a resurgence in demand, opportunity abounds for sellers who are ready to make a move. Please reach out if you are curious about the market trends and want to discuss your goals. It is always my goal to help keep my clients well-informed and empower strong decisions. 2023 is going to be a great year for real estate, I can feel it!

At Windermere we help people buy and sell homes, but we also help build community. I’m proud to support the Windermere Foundation which has raised over $50 million in the past 34 years for low-income and homeless families right here in our local community.

Between holiday parties, family obligations, work, and the pressure of finding the perfect gift, this time of year can come and go in a flash. At Windermere North, we never want this season to go by without coming together to lift up our community and give back in meaningful ways.

Our office-wide annual holiday giving project is in two parts. First, all the brokers in my office joined together to provide $4,242 in grocery gift cards for 16 families, comprised of 48 individuals. Some of these families are dealing with grief and loss this season, some are coming out of domestic violence, some are homeless or unemployed. It is our privilege to partner with Pioneer Human Services for this every year, to help lift some of the burdens for these families.

We also had the joy of helping to bring some holiday cheer for homeless youth in our area. We partnered with WA Kids in Transition who works with social workers in Edmonds School District schools to collect wish lists from homeless students living in shelters, tents, cars, transitional housing or other temporary housing. We fulfilled the wish lists for 14 kids, plus several hygiene kits.

The other Windermere North holiday giving tradition that I love, is volunteering at Christmas House in Everett. Christmas House is a 100% volunteer, non-profit organization that provides an opportunity for qualifying, low-income, Snohomish County parents to select free holiday gifts for their children age infant-18. This is an amazing day helping families in need have a joyful Christmas.

What better way to celebrate Windermere’s 50^th anniversary than reaching $50 million in total donations to the Windermere Foundation? Windermere offices across the Western U.S. came together to raise over $4 million this year for low-income and homeless families! Thank you to everyone who helped us get here by giving their time and donating funds. To our clients: a portion of every home sold or purchased goes to the Windermere Foundation, so we couldn’t have done it without you. Here’s to $50 million raised!

Are you curious about the economy during these changing times?  

Are you trying to make plans, but crave credible information to assist you?

 Please join me for a very special virtual live event:

AN ECONOMIC FORECAST FOR 2023 & BEYOND

with Matthew Gardner, Chief Economist for Windermere Real Estate

 Wednesday, January 18, 2023  •  6:30pm – 8pm

Presentation from 6:30-7:30pm, Q&A to follow

Please RSVP by phone/text or email by January 13th, 2023 to receive an emailed link prior to the event.